_Currency play: opportunity for Sydney prestige property
The Aussie dollar reached a multi-year low in late March 2020, and though the currency has since gained some ground, the weaker AUD is sparking plenty of interest among expats and offshore buyers.
Adam Ross, Associate Director, Prestige Residential Knight Frank, says he is seeing a significant uptick in enquiries from expats keen to discuss price points and gain insights into the Sydney market. Adam believes this interest is being spurred on by the weaker dollar, which is giving offshore buyers a boost to their purchasing power – plus plenty of value on an international scale.
As evidence of this, Knight Frank Research shows that at the end of 2019, US$1 million would have purchased just over 50 sqm of prime Sydney property. By the end of March 2020, that same sum would buy closer to 57 sqm of prestige property.
The lower Australian dollar is also making Sydney’s prestige property more competitive on an international scale. In London and New York for instance, US$1 million will buy around 30 sqm of prime property – half the space this sum would buy in Sydney.
As a guide to the level of offshore interest in Sydney’s luxury home market, a prestige Upper North Shore property currently listed by Knight Frank at 19 Mackenzie Street, Lindfield, attracted over 360 enquiries in the first fortnight of listing alone.
“Around 25 percent of enquiries came from offshore, mainly Hong Kong and Singapore, with additional interest from the United Kingdom,” notes Adam. “One expat I spoke with isn’t planning to return to Australia for another two years, but is keen to buy now because the AUD is so low.”
Travel restrictions are no deterrent
While NSW has re-opened the door for ‘open home’ inspections and on-site auctions, travel restrictions remain. However, this is not deterring overseas buyers.
Adam explains, “A number of luxury homes on Sydney’s Upper North Shore have recently sold to overseas buyers solely on the basis of virtual inspections. We are seeing this play out with 19 Mackenzie Street, Lindfield. One buyer was so impressed by the virtual tour that they waived aside our offer to guide a Sydney-based relative through the property, and instead opted to arrange an immediate valuation prior to submitting an offer.”
How Sydney’s prestige market has performed
For a local buying residential property with Australian dollars, Sydney prices grew by 4.7% in the year to 31 March 2020. However, analysis by Knight Frank Research shows that for a buyer using US dollars to purchase residential property, prices effectively fell by 8.8% over this time. This currency advantage was as much as 10.5% for those buying with New Taiwanese dollars and 10.8% for Japanese yen.
Along with currency plays, the prestige market has been supported by a tight supply of stock. Adam Ross notes, “When COVID-19 first hit and lockdowns were introduced, vendors were withdrawing properties from sale. This created a shortage of stock, and we experienced a rush of enquiries for those properties where the vendor bucked the trend and listed their home.”
Enduring appeal of Sydney’s Upper North Shore
The weaker Australian dollar certainly isn’t the only point of appeal for overseas buyers looking at Sydney’s prestige market. Adam says that education is a key drawcard for expats and offshore buyers, and the Upper North Shore in particular, offers an exceptional selection of quality schools backed by excellent transport links. This combination of factors is driving a big spike in enquiries for luxury homes on Sydney’s Upper North Shore.
As Adam points out, “The Upper North Shore is also relatively affordable. Our listed property at 19 Mackenzie Street, Lindfield is sitting on half an acre of prime land (2,200 sqm). For the same asking price, buyers in the Eastern Suburbs or Lower North Shore locations such as Mosman, would normally be looking at 600 sqm of prestige property.”
More broadly, Australia’s track record on health and safety is also contributing to interest among offshore buyers, especially during COVID-19.
Shayne Harris, Head of Residential and Partner, Knight Frank, explains, “Australia’s handling of Coronavirus with extensive rates of testing by global comparison, our ability to lockdown borders, and the ongoing communication by State Governments on the steps being taken to protect the community has seen a growing number of expats consider a return to Australia.”
Good news for vendors
As Shayne points out, the lower Australian dollar is delivering another layer of buyers to Sydney’s prestige market as expats and foreign nationals take advantage of a currency play. That’s a plus for vendors.
“Having more people in the marketing mix for a sales campaign typically drives the price up to a strong result,” says Shayne.