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American homebuyers find UK bargains, discounted by a weaker pound


Street in Chelsea district, London

Alexander Spatari | Moment | Getty Images

American homebuyers are trying to find bargains within the U.K., as a weaker pound contributes to double-digit price cuts.

The autumn within the British currency, which is off 17.5% against the U.S. dollar 12 months to this point, has made U.K. real estate cheaper for buyers paying in U.S. dollars. Prices in London are down nearly 20% over the past 12 months on price declines and currency impact, in line with real estate broker and advisory firm Knight Frank.

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Brokers and real estate experts say the drops have created a rare investment opportunity for Americans to purchase into the U.K. market — whether it is a $400,000 London pied-a-terre or a $30 million historic estate within the countryside.

“We have seen a gradual increase from Americans,” said Paddy Dring, global head of prime sales at Knight Frank. “There are those that are forwarding their plans, and can use this chance for his or her longer-term investment plans to diversify abroad.”

Knight Frank said the combined price declines and currency drops have created an efficient discount of 19% in London’s sought-after Chelsea neighborhood and 17% in Knightsbridge.

When put next with 2014, when the British pound was comparable to $1.71 and real state prices in London were 13% higher, the discounts are even greater, at over 50% within the Chelsea, Knightsbridge and Notting Hill, in line with Tom Bill, head of residential research at Knight Frank. The neighborhoods of Kensington and Mayfair have seen discounts of over 45%.

A property listed at 5 million kilos in Knightsbridge, as an illustration, would have cost $8.6 million eight years ago but $4 million today.

The savings are even larger on the most important and most costly estates. Steve Schwarzman, the billionaire CEO and chair of Blackstone, just bought a 2,500-acre historic estate in Wiltshire County, about 90 miles west of London, for 80 million kilos. The drop within the sterling meant he could have saved as much as $20 million or more on the acquisition compared with last 12 months.

Dring said American buyers run the spectrum — from older couples in search of smaller apartments, to families studios for a son or daughter attending school within the U.K., to the ultra-wealthy in search of rare properties that make for good long-term investments.

“We do not see much pure speculation,” he said. “The buyers are often driven by a business or education or lifestyle.”

But the provision of homes throughout the country is scarce, especially for history country estates, Dring said.

For those with money, though, the savings will be substantial. Brokerage Savills just listed certainly one of the U.K.’s most historic properties — a 1,922-acre estate within the English countryside called Adlington Hall. The property spans six farms, over 20 residential buildings, an event space and a village hall. It was once owned by the British Crown and has been in the identical family for over 700 years.

The asking price: 30 million kilos, or about $33 million with today’s currency exchange rates. That marks a savings of greater than $6 million for U.S. buyers, paying in dollars, compared with a 12 months ago.

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