For those who earn in dollars and have those dollars available to spend on residential property, the time has never been better for buying prime property abroad. The strength of the dollar against other currencies can benefit dollar buyers in two ways – either a reduced spend in dollar terms for the same property or an increase in home size for the same budget. Accounting for changes in the US dollar against other global currencies from December 2021 to the present, on average, a US$1million budget would now buy a property 14% larger based on the price per square foot for cities in the Savills World Cities Prime Residential Index. Cities where $1million buys the most additional square footage are Cape Town (+895sqft), Barcelona (+331sqft), Bangkok (+210sqft), and Amsterdam (+206sqft).

Conventional economic wisdom has long held that the US dollar is the global reserve currency  – the relative stability of the United States has long been taken for granted and this perception has underpinned the strength of the dollar. Even accounting for recent elements of uncertainty in the US political and economic spheres, this axiom still holds true. In times of increased uncertainty, investors and governments will often seek to hold US-denominated assets based on the presumption of strength, further bolstering the US dollar in a virtuous cycle.

When examining the currency effect – the effect of exchange rates on pricing – for buyers looking to purchase in dollars, the strength of the dollar since the start of the year offsets increases in prices in local currencies. This has the potential to make some markets look more appealing to dollar buyers. 

Dollar buyers in London gain an extra 132 square feet for $1million, an increase of 28% since the start of the year. While rising from a low base, this additional square footage means $1million buys just over 600 square feet of prime London property. Recent uncertainty in the United Kingdom has brought about a significant depreciation of the pound against the dollar. This pushes London front of mind for many dollar-flush buyers looking to purchase property abroad. Prime Central London in particular looks good value to US dollar denominated buyers. While prices are down by 17.8% in sterling since 2014, they have fallen by 47.5% on dollar terms, taking into account both price falls from peak and the weaker pound. The UK, and London in particular, offer several key appealing elements: a common language, shared history, a foothold into Europe, and easy access to other major cities. However, the city has one of the highest prices per square foot for prime property across our index, coming sixth behind cities such as Hong Kong, New York City, and Shanghai.

Several European cities provide the optimal balance between increasing size and larger starting point as the Euro also depreciates against the dollar. Barcelona and Amsterdam both offer properties larger than 1,000 square feet for $1million, and now appear better value to dollar buyers, offering 22% more space since January. Paris, while also seeing a dollar advantage against the Euro and an influx of American buyers, is one of the more expensive cities in the Savills World Cities Prime Residential Index, so doesn’t offer the same space per dollar as could be had in some of the southern European cities.

Regardless of the strengthening of the dollar, Cape Town provides the most value for money for dollar buyers in terms of the size of property a buyer can get. However, the exchange rate in the dollar against the Rand has resulted in a potential 28% increase of property for buyers with $1million to spend - from 3,200 to over 4,100 square feet, based on the current prime price per square foot in the Savills World Cities Index. 

Shanghai and Beijing would each provide about 12% increase in property size due to the increasing strength of the dollar. Singapore, on the other hand, could only see a 6% increase in property size dollar-buyers would be able to purchase. The Chinese and Singaporean economies have proved relatively stable and their currencies haven’t weakened nearly as much against the dollar as other currencies. Regardless of the target market, for residential buyers purchasing global prime property in dollars, the strengthening exchange rate and the additional space they are potentially able to purchase, many World Cities present ample opportunities for investment abroad.

Further information

Contact Paul Tostevin

Contact Kelcie Sellers

Savills North America Desk

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