Forget the Alps – as the US dollar soars, a better currency game is on a chalet in Japan
A strong US dollar has spurred a wave of Americans to seek homes in Europe, but those looking for the biggest bargain should skip the alpine ski lodge and add snow Niseko, Japan, to their short list.
The best exchange rates in a generation offer opportunities for American shoppers beyond London and Paris – though these have received the most attention – with even greater savings to be had in premier Asian cities. plan. In Japan, the dollar now has around 28% more purchasing power than the five-year average, according to analysis by Mansion Global with help from the Dow Jones Market Data team.
“Inquiries have increased due to the weak yen,” said Miwa Urata, a Tokyo-based real estate agent handling inbound clients for List Sotheby’s International Realty. These are expected to turn into sales once Japan fully reopens after nearly three years of Covid-related travel restrictions on October 11.
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“Expectations are high once travel borders are lifted,” Ms Urata said.
Americans are free to own real estate in Japan, unlike some countries like Thailand which restrict foreign ownership. Besides Tokyo, an obvious place to invest in the country, many American buyers are drawn to scenic spots, such as the resort town of Karuizawa in Nagano Prefecture, Ms. Urata said.
Grab a modern lantern-shaped chalet near the ski slopes in Niseko Town, Hokkaido. The listing price of 350 million yen now equates to about US$2.4 million, nearly US$800,000 less than a year ago.
“Many people are interested in ski resorts in Japan because they are cheaper than
in other countries,” Mr. Urata said.
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A double deal in Seoul
Our analysis looked at nine major currencies in mid-September against their five-year averages. After Japan, Americans got the biggest exchange rate advantage in South Korea, followed by the UK and Euro countries.
The opportunity to own an apartment in Gangnam, Seoul’s expensive pop music district, is not lost on buyers armed with US dollars. Today, the dollar is stronger than it has been in a decade against the South Korean won, with the exchange rate up about 20% from the five-year average.
But currency is not the only game in South Korea. Soaring real estate prices in Seoul, a hot political issue, have finally begun to subside amid monetary tightening and other measures. This has led many savvy overseas buyers to adopt a wait-and-see approach.
“Elite apartments in Korea’s Gangnam District are down after rate hikes,” said. Lei Wang, president of Korea Sotheby’s International Realty. “Although house prices are falling, potential buyers aren’t flocking to brokers to try and secure a property.”
American buyers rank among the top three nationalities of foreign customers in South Korea, along with those from mainland China and Japan, Wang said.
“American buyers take into account the exchange rate. But that doesn’t naturally trigger buying decisions right now because they’re also waiting to see more price cuts with better trading room,” he added. Many are interested in Nine One, a residential development in Hannam along the Han River, and Ph129, a building in Gangnam that houses Seoul’s most expensive apartment. It sold for £11.5 billion, or US$9.79 million when it was sold in 2021, but only US$8.05 million today.
Korean home prices, which rose about 20% from the start of 2020 to the end of 2021, are down about 1.5% from their 2021 peak, according to data from the Bank for International Settlements. . Wang said he expects Americans and dollar-backed buyers to become more active in the market over the next six months as home values are expected to bottom out.
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One foot abroad
The soaring dollar comes as more Americans than ever are looking to set up shop overseas, said Juerg Steffen, CEO of Henley & Partners, a London-based investment migration consultancy. Americans have become the company’s largest client group, which helps wealthy people migrate or obtain foreign residency and citizenship, which sometimes requires buying real estate. As a result, Henley is in the process of opening three new offices in the United States.
“Before Covid, the majority of customers came from emerging markets. Most or all of these applicants had weak passports,” Steffen said. Today, “we’ve seen a huge boom” among customers in developed markets.
The agent network of global real estate consultancy Knight Frank saw a similar migration. In addition to hard-hit regions like Paris, Venice and Tuscany, Americans are flocking to Europe’s so-called “sunbelt,” Knight Frank’s international head Mark Harvey wrote in a recent research note. American buyers are showing interest in Majorca, Sardinia and the south of France, “which deviates from the norm”, Mr Harvey wrote.
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It’s not just the exchange rate at play. Indeed, the currency is an afterthought for Henley’s wealthiest U.S. clients, Steffen said. On the contrary, the accumulation of uncertainties in the United States since the pandemic, including political and quality of life concerns, are at the root of the exodus.
“If you could see our client list, a third party would know because they are the wealthiest Americans,” Mr. Steffen said. During the pandemic-fueled shutdowns, they realized that “even if they could take their private jet to New Zealand, they wouldn’t let them in.”
“When Donald Trump won [the U.S. presidency in 2016]our phones were ringing all the time, or when [Joe] Biden won [in 2020]our phones were ringing every time things changed,” Steffen said, adding that most US clients apply for EU citizenship through Malta or Portugal, although some look to Australia or South America, and many want “two or three different options”.
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