Here’s why London is the preferred overseas real estate investment destination for rich Indians

Here’s why London is the preferred overseas real estate investment destination for rich Indians

London has been a preferred overseas real estate investment destination for high and ultra-high net worth individuals (HNIs/UHNIs) from India for decades. From industrialists and Bollywood celebrities historically, the clientele has over time expanded to also include Indians preferring to invest in London’s real estate market for their children pursuing higher studies in the city.

Stable rental yields and capital appreciation are among some factors drawing wealthy Indians towards London’s real estate market. (Representational photo)(Unsplash)
Stable rental yields and capital appreciation are among some factors drawing wealthy Indians towards London’s real estate market. (Representational photo)(Unsplash)

“Indians form one of the largest communities of property owners in London. Some have lived in the UK for generations, others are UHNIs with holiday homes overseas, and some are students and families who purchase homes while traveling to the UK for education,” said Akash Puri, Director – International, India Sotheby’s International Realty.

Also read: Why rich Indians are buying marquee properties in London

Today property prices in London are comparable to that of Mumbai and Delhi at home, with pricing of a 1BHK unit starting from 3.2 crore, while a 3BHK commands 5 crore and above. Some of the preferred locations by wealthy Indians include Mayfair and Marylebone in the heart of central London, and Oxford Circus in the city’s western end.

Key pull factors

Experts who spoke to HT Digital cited multiple reasons for London’s popularity as a property investment destination amongst wealthy Indians. The city presents business expansion opportunities, stable capital appreciation, currency diversification and efficient taxation, along with a high quality of life and residency options through real estate investments, they said.

“It makes greater sense to buy a property than pay enormous rents for a longer tenure, and we wanted to ensure a safer, qualitative future for our kids,” said a couple that has recently invested in a property on the outskirts of London.

“Despite Brexit, which was expected to disrupt London’s prominence as a property market, real estate prices in the geography have continued to grow in the past few years,” said Vivek Rathi, who heads research at property consultancy Knight Frank India. Other factors which work in London’s favor include its status as a quality education hub and a liberal culture, he added.

Indians are also investing into properties in London on account of the stable rental yield and capital appreciation stemming from a demand-supply mismatch.

“In London, housing demand often surpasses supply, typically showing a 35% shortfall. This imbalance keeps the city resilient amid economic challenges,” Puri explained, adding that over the past few years, the stamp duty holiday for buyers and favorable property prices have drawn HNIs to invest in London, and this trend persists.

Others pointed out that owning marquee properties in prime cities such as London, New York and Mumbai is also a status symbol and matter of prestige amongst the ultra-rich Indians.

Here’s how the numbers stack up

According to a Knight Frank report, the number of ultra-high net worth individuals in India grew 6.1% annually in 2023, more than the global average of 4.2%. Ultra-high net worth individuals are defined as individuals with a net worth of $30 million and above.

“As the number of HNIs/UHNIs in India increase, wealth transfer to foreign destinations is likely to increase and this should find expression in London’s property market as well,” Rathi said.

As per the report, about 32% of the wealth of India’s ultra rich is invested in residential real estate, 14% of which is located outside the country. Around 12% plan to purchase a new home in 2024.

Also read: India’s ultra rich invest 32% of their wealth in residential assets: Knight Frank Report

A survey by the consultancy also said that high net-worth individuals when asked in which countries or territories are they most likely to invest in property, as many as 47% UHNIs from India said that they would want to purchase a property in the United Kingdom, 41% in UAE and 29% in the US.

Indian developers in the UK

Owing to the several advantages offered by the property market in the UK, several Indian developers have attempted to add London in their international portfolio.

Mumbai-based Lodha Group, listed as Macrotech Developers, forayed into the London market as early as 2013. It went on to launch two residential projects in the heart of the city – Lincoln Square in 2016 and No.1 Grosvenor Square in 2017.

In a more recent example, commercial real estate investment platform Property Share ventured into the UK’s warehousing sector with an investment of $200 crore. The company plans to further ramp up its business into the city owing to the benefits the geography offers.

Marquee clientele

Several corporate titans, including Mukesh Ambani, Ravi Ruia, Lakshmi Mittal, Hinduja brothers and Neeraj Kanwar are known to own properties in London.

With the purchase of a 25,000 square foot Mayfair mansion, priced at 1,446 crore, Serum Institute of India CEO Adar Poonawalla reportedly bought London’s most expensive house of the year in 2023.

Also read: Adar Poonawalla strikes a deal to buy London’s most expensive house of the year worth 1446 crore

Meanwhile, Mukesh Ambani is known to own Stoke Park, a 900-year-old hotel located in the outskirts of London. It is a 49-bedroom property with a 27-hole golf course, 14 acres of private gardens, and 13 tennis courts. The billionaire had bought the hotel in 2020 in a deal worth 57 million pounds, which is equal to 529 crore, according to media reports.

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