Kuala Lumpur – Knight Frank, the independent global property consultancy, launches the Global Currency Report which assesses the impact of currency movements for international investors purchasing luxury residential properties in key cities around the world.
· Currency market movements can have a significant impact not only on the return provided by an overseas asset, but also on the flow of international capital into property markets.
· The US dollar acts a good case study: The dollar appreciated by 21% between June 2014 and January 2016 making it more expensive for international buyers to purchase in the US which contributed to the 25% fall in non-resident property purchases in the US over the same time period; whilst purchases by US residents increased by 10% over the same time period (according to National Association of Realtors).
· Despite the significant impact currency can have on an overseas investment, fundamental market indicators such as price performance and yield should not be overlooked.
Mr Nicholas Holt, Asia Pacific Head of Research at Knight Frank, says, “Currency has, and will continue to be a driving factor for both property purchaser patterns and property asset performance. Given the monetary tightening cycle now taking place in the US, those with US Dollar or linked currencies will find their spending power enhanced compared to many other markets and could influence the direction of capital flows.
“Currency can influence returns at the purchase, hold and disposal stages and investors need to be aware of how fluctuations can impact total returns over the lifetime of an investment.”
Mr Dominic Heaton-Watson, International Project Marketing of Knight Frank Malaysia, comments “Whilst currency shifts can be significant, it is important to keep in mind the fundamentals which underpin property markets. These factors are often much less volatile and play a pivotal role in selecting a safe-haven investment destination.”
Ms Judy Ong, Executive Director of Research and Consultancy at Knight Frank Malaysia, says, “The recent rebound in Malaysia’s economy and the strengthening of the Malaysian Ringgit offer a ray of hope for recovery in the local property market. Malaysia remains as an attractive investment destination in the region due to its political stability, well developed infrastructure and stable property market with relatively lower entry prices that continue to offer reasonable returns.”
Global Currency Monitor
The report’s Global Currency Monitor identified key international buyers in six global cities and highlighted the extent to which currency shifts over the last year (between Q1 2016 and Q1 2017) have influenced purchasing power:
- In London, Australian Dollar and Russian Ruble denominated investors found it 11.7% and 28.3% cheaper respectively as compared to those with Turkish Lira who found it 16% more expensive.
- In Hong Kong, Australian Dollar and Russian Ruble denominated buyers found it cheaper by 0.4% and 19% respectively while those with Singaporean Dollar, Chinese Yuan and British Pound found it more expensive by 3.1%, 6.3% and 12.9% respectively.
- In Sydney, investors with South Korean Won found it cheaper by 1.8% while those with US Dollar, the Singaporean Dollar and the Euro, found it more expensive by 0.2%, 3.5% and 6.7% respectively as well as approx. 13% for those with Malaysian Ringgit or British Pound.
Currencies fluctuate due to a great number of reasons. The report’s Risk Monitor analysed four risks: global economic growth; political risk; protectionism; and other geo-political factors. These will have differing impacts on global residential markets. The six currencies that are likely to influence buying behaviour in 2017 would be the US dollar, the British pound, the Euro, the Japanese Yuan, the Chinese Yuan and the Russian Ruble.
Ultimately, however, despite the currency fluctuations, it is important to keep in mind the fundamentals which underpin property markets; as these can be the most significant drivers of performance.
To download the report, please click:
For further information, please contact:
Mr Nicholas Holt, Asia-Pacific Head of Research
firstname.lastname@example.org +86 10 6113 8030 @nholtKF
Ms Rachel Loke, Asia-Pacific Head of Marketing, Communications & Digital
email@example.com +65 6429 3587 @knightfrank
Ms Seline Soo, Marketing & Communications Manager, Knight Frank Malaysia
firstname.lastname@example.org +603 2289 9669 @KnightFrank_my
Notes to Editors
Knight Frank LLP is the leading independent global property consultancy. Headquartered in London, Knight Frank has more than 14,000 people operating from 413 offices across 60 countries. The Group advises clients ranging from individual owners and buyers to major developers, investors and corporate tenants. For further information about the Company, please visit knightfrank.com.
Knight Frank has a strong presence in Malaysia with its headquarters in Kuala Lumpur as well as branches in Penang, Johor and Kota Kinabalu. The company offers high-quality professional advice and solutions across a comprehensive portfolio of property services and is registered with the Board of Valuers, Appraisers and Estate Agents. The Company is licensed to undertake property, valuations / consultancy, estate agency and property management and is also on the panel of all leading banks and financial institutions. For further information about the Company, please visit www.knightfrank.com.my.