Why Invest in UK Real Estate from India?
Key Findings for investment in UK Real Estate from India:
- Over 800 businesses have invested in the UK, delivering a combined turnover of £48 billion
- 43% of investors choose the UK because of the potential rental yields and 32% choose it because of the stability it offers
- UK offers an average rental yield of 4.8% while India sits at 3.3%
Property investment is often a common strategy for building financial security in later life – a tangible investment that provides flexibility, two-income streams and more stability than other common asset classes. In the current climate, the UK market can offer substantial price increases in regional areas and excellent potential return on investment – putting it firmly at the top of many international investor’s wishlists.
With investments into London by Indian companies hitting an all-time high last year, there’s something about the UK capital that is attracting Indian investment – but why should Indian investors look to the wider market for their next investment opportunity?
Indian Investment in the UK
Rising Investment Growth
The number of Indian investors in the UK has increased over the last few years despite ongoing political uncertainty, with roughly 800 Indian businesses choosing the UK in 2018. That number has increased to 842 in 2019 – delivering a combined turnover of £48 billion. Expanding on that with figures from the Office for National Statistics, investment from all Indian sources in the UK has risen by 321% to £8 billion, the highest rate of growth across the world.
Foreign Direct Investment (FDI)
Foreign Direct Investment (FDI) from India into London increased by 255% between 2017 and 2018, with initiatives now being put in place to increase collaboration. The UK is hoping to encourage more Indian investors to look at the UK market for their next opportunity by establishing strong trading foundations, bolstered by the security the UK market can provide. In the SevenCapital Brexit survey, we found that 43% of investors choose the UK because of the potential rental yields and 32% choose it because of the stability it offers.
London and the Commuter-belt
While London remains a priority target for many Indian investors, the Commuter Belt represents an untapped resource. Offering more affordability and better yield performance, regional locations such as Slough, Reading and Bracknell provide accessibility with the capital without the issues that are plaguing its market. Over the last 20 years, the Commuter Belt has seen prices rise by around 313%, making it an appealing prospect with transformational developments such as Crossrail on the horizon.
Looking at the average property prices, London and Mumbai are similar – London has an average price per sq.ft of £842 while Mumbai sits between £800 and £1,000. Slough, on the other hand, has an average price per sq.ft of just £381, making it much more cost-effective with much better-predicted growth. It’s these regional hotspots that should be on the radar of every international investor, emerging markets that can deliver excellent returns thanks to their amenities and the demand they’re generating.
Comparing the UK and Indian Property Markets
For international investors, particularly from India, the question right now is how Brexit will impact the UK market in the long-term. With 343,000 high-net-worth-individuals (HNWI) and 4,900 ultra-high-net-work-individuals (UHNWI) in India, it’s encouraging to see Indian investors maintaining a positive outlook on the UK’s potential:
“We all wondered how the Brexit process would have affected the investment sentiment from India and now we have the answer – Indian business retains its positive outlook towards the UK,” said Ruchi Ghanashyam, the Indian High Commissioner to the UK.
Anuj Chande, Partner and Head of South Asia Group at Grant Thornton UK LLP, noted:
“Given the continuing uncertainty driven by the UK’s exit from the European Union (EU), it is encouraging to see that Indian investors continue to invest confidently in the UK and in fact, there are now more Indian businesses active in the UK than ever before.
“The fall in the value of sterling has also had a role to play, making UK assets increasingly attractive to overseas investors. Low rates of corporation tax and the ease of doing business in the UK also remain significant draws.”
In a direct comparison, choosing an overseas investment in the UK over India seems more straightforward – the UK offers an average rental yield of 4.8% while India sits at 3.3%. Yield security is a huge driver of long-term success and the UK’s performance is reassuring for many investors.
Favourable exchanges rates are also playing a huge part in facilitating purchases. The rupee has grown by 2% since August 2018 and a weakened Sterling means Indian investors can stretch the value of their currency. Combine this with ‘Brexit discounts’ due to political uncertainty and it’s easy to see what has prompted a 15 – 20% increase in the number of property investors from India.
Financing your property
Obtaining finance has also become much easier for international investors. Traditionally, securing a mortgage was a challenge for expats and overseas investors. The process has been streamlined by the rising number of specialist lenders that tend to have a ‘wider outlook’ and a larger suite of products that can be adapted to an international investment strategy.
London Commuter Belt Developments
There’s no doubt that the market remains a preferred option for Indian investors that want consistency, stability and above-average returns. This is demonstrated by the continued interest from Indian investors in 2019 – a trend that doesn’t look set to stop. We have several investment opportunities in the South-East, providing excellent transport links to London without compromising on forecasted price growth and rental performance.
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