Americans cash in strong dollars to scoop up luxury London homes

LONDON real estate broker Charles McDowell has sold six luxury central London homes in the last six months. Five of the buyers were American.

The broker’s recent sales involve homes in affluent areas including Holland Park, Notting Hill and Chelsea. Three of the properties sold for over £25 million (S$40.7 million), while another nearly hit the £50 million mark. At least half of the sellers were British, he said.

“Buyers from the US are making up a large part of the market, especially at the very top end,” said McDowell, whose Charles McDowell Properties firm advises wealthy clients on buying luxury London homes. “There is definitely an even stronger UK-US link forming with what seems like a number of hedge funds and other financial businesses moving to London.”

Americans made up 14.5 per cent of all overseas prime London property purchases in the first half of 2022, according to data compiled by Knight Frank. That’s up from 6.2 per cent in the previous six months and the greatest proportion in data going back to the start of 2018.

In some pockets, the share is even higher, according to Richard Gutteridge, co-head of Savills’s prime central London business, Savills Sloane Street. Americans account for at least a third of buyers of their top-end central London properties, compared with about 10 per cent over the past two years, he said.

“Activity is primarily focused in the £5 million or more market, where the exchange rate savings really start to count,” Gutteridge said. “Buyers are generally needs-based, the majority already based in London, who see this as a real moment of opportunity.”

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The influx of buyers is helping to prop up the more expensive part of the market, according to Richard Broer, Hamptons’s regional director for prime central London.

There has been an uptick in prime central London deals worth £3 million or more, he said. The broker recently sold a property in Sloane Square to a buyer who wanted to capitalise on the weakness of the pound.

“We have just sold to an American investment buyer who three to four weeks ago exchanged his dollars into pounds to take advantage of the exchange rate,” he said.

The pound has tumbled against the dollar this year, hitting an all-time low in September in the aftermath of then-Prime Minister Liz Truss’s “mini-budget”, which included a raft of unfunded tax cuts.

To be sure, the lows weren’t enough for some Americans seeking dollar discounts on luxury London homes, according to Robert Bailey, a London-based buying agent who sells properties to wealthy buyers including American bankers.

Some are waiting for the pound to reach parity with the dollar before buying, he said.

The surge in overseas interest offers some respite for London’s prime housing market, which saw bids from prospective buyers plunge by a fifth in October compared with the same month last year, according to data compiled by researcher LonRes. The drop in under offers was most prominent in areas of the capital where buyers rely on costly mortgages, while the top end of the market saw a 38 per cent increase in bids.

That’s because deep-pocketed buyers usually purchase homes predominantly with cash, and aren’t as affected by key mortgage rates settling above 6 per cent. Rather, the headwinds for Britain’s property industry may instead help them bag an even bigger discount if the widely expected fall in house prices transpires next year. BLOOMBERG