British property investors who bought overseas four years ago in real estate hot spots could make significant gains if they sell up now, it is claimed.
Research from Close Treasury, a division of merchant bank Close Brothers, indicates that if they bought without a mortgage, current exchange rates means that despite the global property crash they are sitting on a good profit.
In a report it says that those who bought in Italy and Spain are among the winners. ‘When British investors calculate the value of an overseas property they bought a few years ago, they not only need to look at how real estate prices have changed, but also what has happened to the exchange rate between Sterling and the local currency,’ explained Mark Taylor, head of foreign exchange at Close Treasury.
‘Even though overseas property prices tend to have fallen in the last year, in many cases the fall in the value of Sterling will have offset this, and many people may still have seen the value of their homes increase in Sterling terms,’ he added.
The report shows that an Italian property bought in Euros in June 2005 would have seen the Sterling value of the property increase by around 65%, four years later. The calculation includes a 30% rise in property prices over that period, supported by the 27% increase in the value of the Euro compared to Sterling, over the same period.
In another example, those who invested in property in Spain in June 2005 will have seen the Sterling value of their investment increase by 59% four years later, due to a combination of rising property prices and a fall in the value of Sterling against the Euro.
Foreign Currency Direct has made a similar point, reporting that some Britons are actually choosing to sell up and make a profit by taking advantage of a weaker pound. The currency exchange specialist said it had seen a significant increase in the number of British clients selling property abroad and transferring their receipts back to the UK.