Currency Risk – Should Property Investors Worry?

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Currency values can fall dramatically catching out unwary investors.

Currency fluctuations can be an investors friend or their worst enemy and there have been some major currency fluctuations in recent years

(PRWEB UK) 24 June 2012

The value of Brazil’s Real is down again against the dollar and sterling (Source: Reuters, 21 June 2012), however property investors will have no need to worry if they have the right long term investment strategy, according to Colordarcy.com.

Loxley McKenzie, Managing Director of Colordarcy.com comments, "Much has changed in property investment in recent years, pioneering property investors have grown older, wiser and a lot more cautious about Europe than they were back in their youthful pioneering days.

"Currency fluctuations can be an investors friend or their worst enemy and there have been some major currency fluctuations in recent years."

McKenzie added, “Looking at Sterling versus the Euro, the value of these currencies was virtually the same for a brief spell in 2009. Yet the value of the Euro has dropped by 25% against Sterling since then, which is why investing in European property in Spain and perhaps even Portugal now seems like a good idea to some investors – particularly with property values at rock bottom.”

However everything seems like a good idea at the time and buying property abroad can throw up some unexpected problems if there is no strategy according to Colordarcy. What happens for example if finance to invest in that property is in Euros?

The chances are investors may end up paying more interest, which may not be much of an issue after the savings they can make on your currency being stronger than the Euro.

McKenzie added, “If the situation affecting Greece and the Euro is sorted out sooner rather than later, then we may see the Euro rise against other currencies making those mortgage payments higher if they are converted from a weaker currency.

"This is something to consider before borrowing to invest and taking a short term view.”

According to analysts at Colordary.com, Turkey property is looking attractive at the moment as is property in Brazil. These two countries have seen the value of their currencies fall dramatically in the case of Turkey and Brazil.

The Brazilian Real has fallen by nearly 20% against sterling in the past two years while the Turkish Lira has fallen 30% against sterling since 2008. (Source: xe.com)

However, raising finance in Turkey might cost more with the interest rate currently at 5.75% as opposed to 0.5% in the UK and 1% in Europe.

In the case of Brazil, investors still need to raise finance in their home country which is probably a good thing anyway with interest rates above 9%.

McKenzie continued, “The best opportunities right now are in markets where you can raise the cash to invest in your home country and invest in property that pays for itself in countries that have strong stable economies.

"That way even if there is a major shock and the currency is devalued, you can bet that it will bounce back as the economy becomes more competitive as exports become cheaper and we see the value of the currency rise once again.

"So by taking the long term view in countries like Turkey, Brazil and the United States, currencies going and up and down will have very little impact on your return on investment.”

Notes to the editor:

Colordarcy is a leading property investment company that specialises in finding positive cash flow investment properties worldwide. Colordarcy investment property portfolio includes some of the best properties for sale in Atlanta, Brazil, Florida, Turkey and the United Kingdom.

For more information, supporting pictures or logo artwork, please contact:

Steve Billing
PR Manager

Tel: +44 (0) 207 100 2393
Email: press(at)colordarcy(dot)com
Web: http://www.colordarcy.com/

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