U.S. investors venturing into international real estate must navigate not just property values, but also the complex interplay of currency markets and bond trends. Exchange rates can swing purchase prices by double-digit percentages, and global interest rate shifts influence both financing costs and local economic conditions. Below, we explore why many countries favor the U.S. dollar (and what a strong dollar means for them), identify regions where currency volatility creates real estate discounts, discuss how savvy financing can exploit devaluing currencies, consider the future role of stablecoins in property transactions, and examine demographic and currency trends shaping opportunities in Latin America, Europe, and Japan.
Why Certain Economies Prefer the U.S. Dollar
In many countries with unstable local currencies or high inflation, the U.S. dollar is the preferred unit for trade, savings, and even real estate pricing. The dollar’s stability and global acceptance make it a trusted store of value when the domestic currency sees rapid devaluation. For example, in economies that have experienced hyperinflation or repeated currency crises (think of Argentina or Zimbabwe in recent history), locals often keep savings in dollars or price big-ticket assets like property in USD to protect against value loss. In fact, the U.S. dollar is widely used as an unofficial or secondary currency in numerous nations – from parts of Latin America to Southeast Asia – precisely because it holds value when local money does not. Even some governments have formally “dollarized” their economies by adopting the USD as legal tender (Ecuador and El Salvador, for instance, use the U.S. dollar as their official currency).
This dollar preference means that a strong or weak USD has outsized effects on those economies. When the U.S. dollar strengthens, countries tethered to the dollar (either officially or unofficially) may see their exports become more expensive and tourism less competitive, potentially slowing local growth. On the other hand, a strong dollar helps these countries keep imported inflation in check (since commodities like oil are priced in dollars) and maintain economic stability. However, nations that borrow heavily in dollars face rising debt burdens when the dollar appreciates. A recent surge in the dollar’s value led to painful adjustments in many emerging markets – for example, over the course of 2024 the Mexican peso fell about 16% and the Brazilian real 20% against the dollar, making dollar-denominated debts costlier to service in those countries.¹ In short, a strong dollar is a double-edged sword: it can stabilize prices in dollar-using economies even as it strains growth and increases the local cost of financing.
Markets Where Currency Volatility Creates Real Estate Discounts
For U.S. investors, currency fluctuations abroad can make foreign real estate suddenly more affordable – or more expensive. A favorable swing in exchange rates can effectively grant a “discount” on overseas property prices when converted to dollars. Several regions have seen such opportunities in recent years:
Latin America: Volatility and Opportunity
Latin American currencies are known for periodic volatility, which can spell opportunity for dollar-based buyers. For instance, Brazil’s real and Colombia’s peso have experienced significant swings in value over the past decade. When these currencies depreciate against the dollar, the price of local real estate drops in USD terms. A sharp devaluation can let an American investor buy, say, a beachfront condo in Brazil or a rental building in Colombia for a fraction of the dollar price it would have cost before. Of course, investors must be cautious – extreme currency weakness often accompanies economic turmoil. But in more stable emerging markets like Mexico, moderate shifts can be advantageous. In 2022 the Mexican peso lost value amid global uncertainty, briefly making Mexican properties cheaper for foreigners (though the peso later rebounded strongly). Smart investors who monitor central bank policies and political risk in Latin America can time their entry when currencies are near cyclical lows. It’s a balancing act: one eye on the property’s fundamentals, the other on the forex chart.
It’s also worth noting that some Latin American markets price high-end real estate in U.S. dollars precisely to avoid local currency risk. For example, in Argentina – a country with chronically weak pesos – many property listings are in USD. In those cases, a U.S. investor won’t get a big currency discount on the purchase price (since it’s already effectively “dollarized”), but they might benefit later if the dollar remains strong, as rental income or resale value (often tied to local incomes) could shift in their favor. Overall, Latin America offers growth potential thanks to a young demographic and urbanization, but currency volatility means investors should have a strategy for moving money in and out. Hedging instruments or simply keeping a long-term perspective can help manage these currency-driven highs and lows.
Europe: Strong Dollar = Bargain Hunting
When the euro and British pound weaken relative to the U.S. dollar, American investors often seize the moment to buy European real estate at a perceived “bargain.” A recent case in point: in 2022, the euro’s value fell to a 20-year low against the dollar, even briefly reaching 1:1 parity. This gave U.S. buyers tremendous purchasing power across Eurozone countries. In France, Italy, Spain, and Portugal – all popular locales for overseas homebuyers – Americans found that their dollars stretched much further. One U.S. buyer who purchased an apartment in Paris during the euro’s slide estimated they saved nearly $100,000 on the deal purely due to the favorable exchange rate swing.² In other words, the property became about 12-15% cheaper for them than a year earlier, thanks to currency movement alone.
These conditions led to a surge of American and other dollar-pegged buyers in European markets. Real estate firms reported an uptick in U.S. buyers in places like Paris, Tuscany, and coastal Spain when the dollar was near its peak. A strong dollar effectively put European homes “on sale.” Of course, currency tides can turn – by late 2023 into 2024, the euro had regained some strength as European central banks hiked interest rates to combat inflation. But even then, the euro remained below its pre-2022 levels, and the British pound was also relatively soft after Brexit and economic uncertainties, continuing to entice dollar-wielding investors. The lesson: savvy international buyers watch the euro/dollar rate as closely as local housing indices, ready to act when transatlantic economics tip in their favor.
Japan: Yen Weakness Spurs Foreign Buying
The trend continued into 2023. By early 2023 the yen hit its weakest level in about 50 years – a staggering opportunity for those converting strong currencies into Japanese assets. One major bank in Thailand even publicized that Japanese real estate was roughly 30% cheaper for investors due to the yen’s decline, calling it a “once in a half-century” chance.⁴ Tokyo, Osaka, and regional cities saw foreign capital pouring in to snag properties before the yen could rebound. (Notably, Japan places no restrictions on foreign buyers owning real estate, making it easy to transact.) This influx of foreign demand has helped push up property prices in Japan’s major markets despite the country’s declining population. It’s an intriguing dynamic: even as Japan faces a surplus of empty homes in rural areas due to an aging populace, foreign investors are bidding up prime urban and resort real estate because of the currency discount and Japan’s reputation for stability.
How Smart Financing Can Leverage Devaluing Currencies
Exchange rates don’t just affect the price you pay – they also open up strategic considerations for how you finance an international purchase. When a currency is steadily devaluing (or expected to weaken), there may be ways to structure debt and payments to maximize your purchasing power and reduce risk:
- Borrowing in the Local Currency: One strategy is to take out a mortgage or loan in the same currency as the property’s local currency. If that currency is declining against the dollar, the real cost of your loan repayments (when converted to USD) could decrease over time. For example, during the recent period of yen weakness, some foreign investors chose yen-denominated financing for their Japan deals. They locked in loans at Japan’s ultra-low interest rates (near 0%) and reasoned that if the yen stayed weak or weakened further, each dollar of income would convert to more yen for making loan payments. Banks even encouraged this: Bangkok Bank highlighted that it could provide loans in yen so investors could “take advantage of [Japan’s] negative interest rates” and eliminate currency exchange risk on the financing.⁴ Essentially, if you expect the foreign currency to keep depreciating, borrowing in that currency can be a win-win: you get a low interest rate (common in weak-currency environments) and the future loan balance effectively shrinks in USD terms.
- Hedging and Forward Contracts: Investors who want certainty often use financial hedges to manage currency risk on financing. For instance, if you take a loan in euros to buy a property in Italy, you might buy a forward contract or options to lock in an exchange rate for converting your dollars to euros for the next year or two of payments. This way, even if the euro spikes in value, your costs are fixed. Hedging adds an expense, but it can protect against adverse moves that would increase your loan cost.
- USD Loans for Stability: Conversely, some international buyers opt to borrow in USD (if possible) to avoid currency swings altogether. Certain markets (like some Latin American countries) offer USD-denominated mortgages precisely for foreign investors. The upside: your debt is in the same currency as your income/source of funds, so there’s no exchange-rate surprise. The downside: if the local currency plummets, you don’t get the windfall of easier payments – you still owe the same amount of dollars. Thus, USD financing sacrifices potential currency gain in exchange for predictability.
- Watching Bond Yields and Spreads: Bond trends reflect interest rates, which influence mortgage rates. When U.S. bond yields rise relative to, say, European yields, the dollar tends to strengthen (as investors flock to higher returns). That can set the stage for the kind of currency discounts we discussed. It also means U.S. investors might face higher borrowing costs at home than abroad. We saw this in the last few years: the U.S. Federal Reserve hiked rates faster than the European Central Bank and Bank of Japan, widening the rate gap. A U.S. investor could borrow in euros or yen at a much lower interest rate than in dollars. If they also expected those currencies to stay weak, it was an attractive proposition. However, one must be mindful: exchange rates can change quickly if bond trends reverse (for example, if Europe starts raising rates aggressively, the euro could strengthen and negate the benefit).
The key is to align your financing choice with your currency outlook and risk tolerance. Some investors truly “play the currency game” – financing in whatever currency they believe will fall in value. Others prioritize matching currencies (asset and loan in the same currency) to avoid headaches. There’s no one-size-fits-all answer, but every cross-border investor should at least consider the currency dimension of financing. With careful planning, you can tilt it to your advantage or at least shield yourself from unfavorable surprises. As one expert at JLL advised, “obtaining financing in the same currency as the property purchase” is often wise to mitigate exchange risk – but if you have a strong conviction about a currency’s trajectory, structured properly, it can become a source of profit rather than just risk.
Stablecoins and the Future of International Real Estate Transactions
Traditional currencies aren’t the only game in town. The rise of cryptocurrency – and specifically stablecoins – is beginning to reshape how cross-border real estate deals can be done. Stablecoins are digital tokens pegged to a stable asset (often the U.S. dollar), combining the stability of fiat currency with the speed and borderless nature of crypto. Here’s how they could impact international real estate:
Bypassing Currency Controls and Volatility: In countries with strict capital controls or very volatile currencies, stablecoins can be a lifeline. Consider an investor in a high-inflation economy – converting their savings to a USD stablecoin protects value from local currency depreciation. In Latin America, stablecoin adoption has surged for exactly this reason: they help people hedge against currency devaluation and function as “financial lifelines” amid instability.⁶ For real estate, this means a buyer from, say, Argentina could use stablecoins to accumulate stable dollar-value funds and then deploy them to buy property abroad (or even locally if the seller agrees), sidestepping the pitfalls of their peso. We’re already seeing properties listed for crypto in some markets – developers and sellers are waking up to the fact that accepting a USD-pegged stablecoin can broaden their pool of international buyers who don’t want to deal with local currency conversions.
Tokenization and Liquidity: Beyond payments, stablecoins tie into the broader trend of blockchain tokenization of real estate. A property could be tokenized into fractional shares on a blockchain, and those shares could be traded and settled in stablecoins. While still an emerging concept, this could unlock liquidity – imagine being able to sell a 10% stake in your overseas apartment and seamlessly receive payment in a globally accepted stablecoin. It’s like creating a global market for real estate equity, where stablecoins grease the wheels. Several startups have already experimented with selling fractional tokens of properties (from condos in Manhattan to villas in Bali) purchasable with crypto. Stablecoins make the volatility issue moot – nobody wants to buy a house with Bitcoin and risk its value changing 10% in an hour; a stablecoin solves that by holding steady at $1. As regulatory frameworks mature, we may see stablecoins become a standard tool in international property investing, offering fast settlement, transparency, and perhaps even interest-bearing potential (if you hold them before deployment).
Of course, challenges remain. Not all jurisdictions recognize or allow crypto transactions for real assets yet. There are security considerations (you must safeguard your digital wallet keys) and counterparty risk (ensuring the stablecoin is truly backed and redeemable as claimed). But the trajectory is clear: real estate deals are gradually going digital. From a seller’s perspective, accepting a stablecoin is essentially like taking cash, but faster. From a buyer’s perspective, it’s a way to avoid bank hassles and move money efficiently. In the coming years, U.S. investors might routinely use stablecoins to park funds while scouting international deals and then quickly snap up properties when the right opportunity arises – without waiting days for a wire to clear.
Demographic and Currency Trends Shaping Global Investment
Zooming out, it’s important to consider the macro forces of demographics and long-term currency trajectories, as these set the stage for where real estate demand (and opportunity) will grow or stagnate:
Aging Societies vs. Youthful Populations: Some of the world’s biggest economies (and most mature real estate markets) are facing demographic headwinds. Japan is the poster child – with roughly 29% of its population over 65 years old as of 2021.⁷, the country is literally shrinking in population each year. This has led to millions of vacant homes in rural areas and smaller cities. While foreign investors might cherry-pick deals in Tokyo or Kyoto thanks to the yen situation, one must be mindful that domestic housing demand in Japan will likely keep dwindling long-term. Parts of Europe are not far behind: by 2040, countries like Italy and Spain are projected to have a median age near 50, meaning even fewer young first-time homebuyers and more seniors downsizing.⁸ An aging population can dampen real estate appreciation (fewer people competing for homes), shift demand toward smaller units or senior housing, and even prompt policies to attract foreign residents (as Japan has started doing) to fill the gap.
In contrast, other regions boast youthful, growing populations, which generally bodes well for real estate demand. Much of Latin America falls into this category. While birth rates have declined, the region still has a relatively young median age (e.g., Mexico around 29, Brazil in the early 30s) and a large cohort of working-age adults. This “demographic dividend” can drive urbanization and housing needs for decades. In fact, Latin America is currently in a sweet spot where the working-age population is high relative to dependents.⁸, potentially boosting economic growth and household formation. For U.S. investors, that means markets like Mexico, Colombia, or Peru could see increasing demand for quality housing, retail spaces, and logistics real estate as their middle classes grow – assuming their economies stay on track and political stability holds. Younger populations also tend to adopt new technologies faster, so things like proptech, co-living, and fintech-driven transactions (including crypto) might gain traction faster in those markets, leapfrogging traditional practices.
Long-Term Currency Outlooks: Currencies don’t only move in short-term cycles; they have long-run trends influenced by fundamental factors like productivity, debt levels, and geopolitical shifts. An investor with a 10–20 year horizon might ask: which currencies are likely to weaken persistently, and which might strengthen? This can inform which markets you favor. For example, many analysts believe that the U.S. dollar’s current dominance could gradually erode over the long term as emerging markets play a bigger global role – though no one expects the dollar to lose reserve status overnight. If the dollar were to structurally soften, future American investors might not get the kind of big currency discounts we saw in 2022. On the flip side, a country like India (not our focus here, but as context) has high growth and inflation, and its rupee tends to depreciate slowly over time; foreign investors account for that in their return expectations. In our focus regions, consider that Japan’s policy of low yields may keep the yen relatively weak until something changes domestically. The euro has proven resilient, but Europe’s slower growth and higher energy costs compared to the U.S. could constrain it. Latin American currencies, historically volatile, could stabilize as institutions strengthen – or not, depending on politics.
Finally, these demographic and currency trends often intersect. A country with an aging, shrinking population (leading to labor shortages and lower growth) may resort to very loose monetary policy to stimulate the economy – which can weaken its currency. Japan again is illustrative: its demographics pushed it toward zero interest rates decades ago, which contributed to a long-term weakening of the yen that foreign investors are now capitalizing on. Conversely, a youthful, booming country might face inflationary growing pains, also pressuring its currency at times (until growth catches up). The savvy real estate investor keeps an eye on these big-picture currents. They inform which markets will have enduring demand and which currencies (and thus property values in USD terms) will hold up or slide over a generation.
In summary, understanding demographics helps target the right market (e.g., a vibrant young city vs. a retirement village), and understanding currency macro-trends helps set strategy (e.g., hold for rental yield vs. flip for appreciation). The global landscape is always shifting, but those who grasp the underlying trends can position themselves ahead of the crowd.
Ready to capitalize on international real estate opportunities?
Sources:
¹ RSM US – “Identifying countries at risk as the dollar surges” (Jan 2025). The report discusses how a strong dollar pressures emerging markets and notes currency declines like the peso’s 16% drop and real’s 20% drop over the prior year.
² MoneyWise – “Rich Americans are snatching up prime real estate overseas…” (May 2023). Features an example of an American buyer saving ~$100k on a Paris apartment due to the euro’s drop below parity with USD.
³ Uchi Japan – “The Yen Just Keeps Getting Weaker…” (July 2022). Explains how a 25% year-over-year drop in the yen made Japanese property 20-25% cheaper for foreign buyers paying in USD.
⁴ Bangkok Bank News – “Japanese real estate…30% cheaper due to weakest yen in half a century” (Feb 2023). News release highlighting the yen’s 30% depreciation and promoting yen-based loans for Thai investors to leverage low rates.
⁵ CoinTelegraph – “Tether brings USDT stablecoin to UAE real estate market…” (Feb 2025). Details a partnership enabling real estate purchases in the UAE using the USDT stablecoin, showcasing adoption of crypto in property transactions.
⁶ CryptoSlate – “Stablecoin usage surges in Latin America amid high inflation” (Oct 2024). Notes that stablecoins are increasingly used in Latin America as a hedge against currency devaluation and economic instability.
⁷ RE/MAX Apex (Japan) – “The Relationship Between the Aging Population and Real Estate” (June 2023). Cites that 28.9% of Japan’s population is 65 or older (as of 2021), reflecting the country’s demographic challenges.
⁸ U.S. National Intelligence Council – “Global Trends 2040: Demographics” (2021). Provides insights into how regions are aging at different paces. It notes Latin America is in a high working-age population window now, whereas many developed nations will see 25% of their population 65+ by 2040.
