India Property Trends for 2020
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As we head into the new year, we’re examining the state of key property markets around the globe, following an eventful 2019. As market performance continues to be impacted by external factors, we’re identifying the trends that are driving property markets around the world.
In the UK market for example, unprecedented levels of foreign investment and on-going uncertainty have been the key trends driving the direction of UK property – both of which look to be trends that will continue into the new year.
At the same time, policy changes in India and the opportunities afforded by positive foreign exchange rates have meant international investors are increasingly looking abroad for a better deal.
As part of our wider 2020 trends forecasting, we’re examining the outlook for the UK and Indian markets as we head into the new year, as well as some of the global property trends that will shape real estate in 2020.
India Property Trends in 2020
One of the most prominent trends has been the increase in the level of investment from India. With over 850 Indian businesses investing in the UK during 2019 – nearly 50 more than the year before – figures from the Office for National Statistics (ONS) shows that Indian investment into the UK has risen by 321% to £8 billion, the highest globally.
When it comes to property investment it’s no surprise that Indian investors are looking overseas for their next asset. The average Indian yield sits at around 3.3%, much lower than the UK average of 4.8%. Yield security is often a key indicator of long-term success and the UK’s reputation as a stable, robust market is a reassurance for investors.
At the same time, housing market activity in India is expected to be relatively stunted heading into 2020. With price rises of just 1% on average in 2019 and forecasts suggesting rises of 2% in 2020, this growth will still fall short of the current 3.15% rate of consumer price inflation.
Outside of property investment, we’ve seen record-breaking levels of investment from the US and Asia in the UK technology sector – nearly £5.5 billion was invested by US and Asian firms in the first seven months of 2019 alone. This is a major demonstration of the links that the UK and India are building, particularly in terms of how their respective technology sectors are working together and pushing benefits into key surrounding markets.
This shows renewed investment into a UK tech sector that has made huge contributions to the success of the property market in the South East. UK tech is attracting a wave of ambitious new professionals that want to work in one of several global businesses that call the sector home, driving incredible demand for residential property in the surrounding areas such as Bracknell and Reading.
The Brexit Opportunity
The political uncertainty that follows an event such as Brexit has proved to be a catalyst for investment for overseas buyers. Favourable currency exchange rates as well as prices levelling out due to Brexit has helped encourage property buyers around the world and India is no different.
In the SevenCapital Brexit Survey – which asked 450 international investors about their preferred investment markets – 85% of respondents still highlighted the UK as the top choice despite Brexit. In some cases, Brexit itself has even acted as an ‘accelerator’ for investment, with 30% of respondents citing the referendum as a reason for investing.
With a general election around the corner, it’s likely that regardless of who comes into power, a decision will be made on Brexit and a deadline will be established. With a clear timeline of events, uncertainty will be less of an issue and investors can begin to plan their 2020 investments, making now an ideal time for international investors to get ahead of the curve.
Undersupply in the UK Market
During 2019, one of the biggest challenges for UK property has been residential undersupply. While prices across regional cores continue to rise, a lack of stock means the market remains incredibly competitive.
The upcoming General Election also seems to be contributing to the supply pipeline – new listings have fallen by 15% during November and while this generally happens in the run-up to Christmas, the potential for reforms to stamp duty and other housing policies seems to be causing reluctance within the market.
Heading into 2020, city-centre property in locations experiencing demand will continue to be incredibly competitive, offering the potential for consistent returns and positive market growth. For international investors, identifying these areas of demand will be vital for building on-going success and ensuring a quality development in a prime location.
Conclusion
The way the market reacts to the General Election will be a key identifier for the overall outlook heading into 2020. Housing supply is still an issue that needs to be addressed and a solid plan for Brexit could help mitigate the uncertainty plaguing the situation. What we can expect is consistent levels of foreign investment as exchange rates continue to favour overseas investors and above-average growth throughout key regional cities across the UK.
It’s expected that India will continue to be a top contributor, if not the leader, for investment into the UK and Indian property investors will be able to benefit, particularly in emerging markets throughout the London Commuter Belt. As tech and business links between the two countries grow, demand will follow suit as people look for jobs in top technology companies the UK is home to such as Oracle, Microsoft and HP. In turn, this will have a knock-on effect on property prices, especially in key locations such as the Thames Valley which are both affordable and accessible.
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