London’s luxury housing market is a tale of two types of international buyers, according to a new report out today. Property Vision, a London-based buying agent, said that currency fluctuations can be a cloud or a silver lining, depending on where you’re from. For example, for dollar-backed buyers—or those with any currency pegged to it, such as the Hong Kong dollar or the Saudi riyal—London property was about 15% cheaper last year. On the other hand, Russians buying with rubles saw property prices double over the same period. These fluctuations are creating dilemmas for sellers and developers, especially those behind London’s iconic Battersea Power Station. This development on the Thames promises luxury apartments, office space and shops by Sime Darby, a Malaysian developer. The development was launched at an extravagant, star-studded party where Sir Elton John performed wearing a pair of Battersea Power Station sunglasses.
But many of Battersea’s investors are Malaysians paying on installment plans as the apartments are built. Prices were fixed at the time of purchase, but the ringgit has dropped nearly 20% over the last year. There are reports of some buyers already flipping their apartments. “The market in new developments on the south side of the river has become somewhat soggy,” Property Vision said. “As the construction finance is dependent on these stage payments, there must be some nervous developers out there.” Separately, Property Vision found that sellers are reducing prices to entice buyers put off by stamp duty hikes. Even the most bullish sellers are getting the message that, when headwinds pick up, the right reaction is not to ask 20% more than the market will pay, according to the report. Contrast this to last year, when sellers saw no need to share the stamp duty pain. “We are negotiating deals today that would have been impossible even in the late autumn. This is translating into more sensibly priced new stock, as well as stale news freshened up by a price cut,” Property Vision said.