Real estate: “Descent” of Americans in the European real estate market

South Florida interior designer Laetitia Laurent has long had her heart set on a pied-à-terre in Paris.

This summer, with the dollar soaring and Paris property prices holding steady, he made the leap. The 42-year-old, who lives in Boca Raton, paid €758,000, or $758,606, for a 460-square-metre, one-bedroom apartment in the Golden Triangle – the prime residential and commercial area between the Seine and the Champs-Élysées in the pricey 8th arrondissement. district of the French capital.

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“I’ve been looking for a place for a long time,” Laurent tells US newspaper The Wall Street Journal, who plans to use the apartment for her work when she visits Paris to find designs for American clients, as well as holiday with her husband and three young children.

The US dollar is rising

What helped her move from simply looking to the spot market was the strength of the US dollar – “a huge factor” in the market, she says – which has risen 15% in the past year and is at or near parity since the middle of July.

The dollar is going up so much and so fast, Laurent estimates she saved about $80,000 between when she first saw the apartment in early 2022 and when she closed the deal in July.

Taking advantage of the most favorable exchange rates in years and reeling from explosive price growth at home, American buyers are ignoring other sources of volatility – including the threat of a resurgence of the coronavirus, rising interest rates, travel disruptions and the war in Ukraine – to spend their dollars on European real estate, with savings on luxury properties reaching seven figures compared to last year.

Where do Americans buy real estate?

Kate Everett-Allen, head of international residential research at Knight Frank in London, identifies six European markets where US interest is now most notable: London, Paris, Provence, Tuscany, Northern Italy’s Lake Como and Lisbon.

According to Knight Frank’s latest global housing index, prices in the greater London and Paris area rose by less than 5% between the first quarter of 2021 and the first quarter of 2022, while prices in Florence, the capital of Tuscany , decreased by 1.6% over the same period.

By comparison, America dominates Knight Frank’s study, with nine of the top 20 places occupied by American cities. The top three, Phoenix, Miami and San Diego, saw prices increase by 29% or more. Everett-Allen points out that while increases in both London and Paris are modest by US standards, both are seeing their strongest performances in several years.

“The euro is weaker than ever”

Ulrich Leuchtmann, head of foreign exchange and commodities research at Germany’s Commerzbank, says the current rate between the euro and the dollar is actually somewhat misleading, making the euro appear stronger than it is.

Using the more relevant measure of real purchasing power, he says: “The euro is weaker than ever.”

He credits America’s status as a net energy exporter and the Federal Reserve’s monetary policy for strengthening the US currency, while he blames some of the euro’s weakness on the instability created by the war in Ukraine.

Dollar buyers can expect the bargains to last. He foresees a near-term continuation of current exchange rates, with the euro remaining slightly below the dollar until the end of the year.

London more attractive than ever

The dollar is also surging against the British pound, allowing London, Europe’s most expensive capital, to become even more attractive to a range of American buyers, says Rory McMullen, head of Savills’ North American office.

With sterling hovering around $1.15, the current exchange rate offers the best London property opportunity for the dollar-based buyer since 2008, he says.

McMullen says Americans look for iconic homes in central London neighborhoods such as Mayfair, Chelsea and Knightsbridge, and are generally less willing to look further afield, in more recently developed areas of the city, which Londoners themselves may regarded as the pinnacle of luxury, such as Clerkenwell, close to the traditional financial district, known for its Victorian lofts.

Shopping “safari” in expensive areas of Italy

Nashville-area business owner Robin Adkins has fallen in love with Capri, the Italian island off the coast of Naples. She says she’s been thinking about buying for some time, and the new exchange rate means she’s upped her budget from about €450,000 to €500,000, which now translates to $500,000 – enough for a “starter” apartment in Anacapri, the western community of island, known for its historic villas. The strength of the dollar “definitely affected my search,” he says.

Adkins’ agent, Cristina Carrani of Capri-based Engel & Völkers, says she’s starting to see clients from the Pacific Northwest and Midwestern states — a first, she adds, in the many years she’s been selling homes on the island.

Elsewhere in Italy, American interest is much higher in traditional favorite markets such as Lake Como and Tuscany, but is also finding its way into new areas, says Diletta Giorgolo Spinola, head of residential sales at Italy Sotheby’s International Realty.

American second-home buyers are splurging everywhere from Puglia, on the heel of Italy’s boot, to the heart of Milan. It says sales around $2 million are of most interest to its American customers.

Once, American second-home buyers were eager to find romantic fixes in places like Tuscany and Umbria, but now, Giorgolo Spinola says, Americans interested in Italy are looking for “turnkey, with few exceptions” properties. .

In the expensive suburbs of Lisbon

In the Lisbon area, Americans have made their presence felt among buyers in Cascais and Estoril, the upscale suburbs west of the city.

Rafael Ascenso, founder and managing director of Porta da Frente, Christie’s subsidiary in the Lisbon area, says that Americans now make up a larger part of his agency’s clientele than any other nationality apart from native Portuguese and expatriate Brazilians, the who have long been the majority of buyers in the area.

Ascenso says the Americans now have a bigger budget than the Portuguese, with average sales of 1.7 million euros, or $1.7 million, for the first half of the year.

Another local realtor, Teresa Almeida Pinto, director of sales at Portugal Sotheby’s International Realty’s Cascais office, says American buyers fall into two categories: Young digital nomads looking for walkability in dense resort centers and retirees who can wanting access to golf courses further afield along the Atlantic coast. “Every day we have more and more Americans,” he says.

The article is in Greek

Tags: Real estate Descent Americans European real estate market

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