As highlighted in IPIN's 'Emerging Trends in Global Property Markets 2015' series, American property investors are harnessing the power of the dollar against the euro, snapping up real estate bargains in full force.
The dollar started its meteoric rise against all major currencies in June 2014 and still has plenty of way to go according to FOREX experts. The considerable boost to American purchasing power in Europe's real estate markets has proven irresistible to investors seeking to profit from capital growth and currency opportunities.
Jason Kumpf, real estate specialist at USForex said: "The US dollar is still strong and the economy is good and the rest of the world is a little softer. It's a great time to increase your pieces on the international Monopoly board".
With the dollar riding the crest of a wave, Europe is looking cheap
There are plenty of bargain properties across major European markets with many remaining heavily discounted to peak 2007 levels. With the dollar riding higher than it has for many years, real estate in Europe is looking about as cheap as it can get. As the US economy continues its steady recovery, a consistent increase in American property buyers in Europe is expected.
In high value transactions such as real estate, currency fluctuations can impact profitability dramatically. This year has already seen an increase in wealthier property investors buying and selling to gain on currency disparity, introducing liquidity into a traditionally illiquid market.
As an illustration, a €500,000 home would have set back an American investor $683,000 in July 2014. Now, the same property has a price tag closer to $558,000 which represents a huge 19% discount in less than one year!
Substantial € discounts resulting from $ strength
France, Spain, Italy and Germany have been identified as having the most appealing property for US buyers. Spain and Italy look particularly attractive because their slower economic recovery presents more heavily discounted opportunities.
Estate agents across Spain are reporting an increasing interest from American investors never seen before. US investor interest remains strong at the high end in luxury resort areas such as Barcelona and the Marbella on the Costa del Sol. Booming tourism in Spain adds a particularly attractive dynamic into the mix making property in one of the world's most popular tourist destinations very cheap at the current time.
American property investors in Spain are also eligible to claim golden visa residency under a scheme introduced by the Government in 2013. This provides non-EU investors in Spanish property markets with easy access to 26 other countries in the Schengen Area together among other benefits and is proving extremely popular with wealthy Americans this year.
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IPIN Global prides itself on the quality of research and analysis of global real estate markets. We identified a new trend for US investment in European property towards the end of last year and indicated its continued emergence throughout 2015 in our 'Emerging Trends' report series. We appreciate our Members are in the best position to make a considered investment decision when they have the best information available to them.
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- Friday 15 May 2015