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Contrasting UK and India Investments

Sow & Reap offer turnkey investments in both UK and India. Turnkey meaning in India the purchase and resell is handled for you without you having to leave your armchair. For the bits in between such as checking title clearance and help with repatriation of funds etc we have experts who will ensure this will be a smooth experience.

Many of our initial investors who bought at less than Rs 1000 are now exiting their investments at Rs 2800-3000 over a 2 and ½ year period . Most without even seeing the development. Not surprisingly they want to now turn over their gains into other projects.

But how does one know where to invest? What are the pros and cons of UK vs India investments. Specifically Central London and Gujarat, these are the regions we focus on. Gujarat is said to be the growth engine of India and Central London is a bullet proof market. Therefore we will compare these.

This is an important question and we do both and therefore it is important for Sow & Reap to give the best advice to suit our clients. We will go through some of the considerations.

Therefore being of NRI status the Indian property market is open for you. There your £20,000 can be doubled or tripled within a few years. This level of growth has been demonstrated in the last few years with the investments we have recommended, and the growth curve of Gujarat is growing exponentially so future growth is likely to be sustained and increased.

The second is the shape of the investment. Assuming you have £100,000 liquid cash or sitting in your property. Where best to invest this? Central London is certainly open to you as this will allow you to purchase around £300,000 of property. You also have the option to invest in India with the additional option of gearing it up to £200,000 and purchasing a flat or plots.

The consideration would be the shape of the investment. The returns in UK could yield about 10-13% on your deposit as well as capital growth. The capital growth element will benefit from the gearing of your investment. What this means is a £75,000 will allow you to borrow a further £225,000. This means if the property is worth £300,000, and it rises 5% you will have made a £15,000 gain on your £75,000.

The returns are roughly split 50:50 between capital growth and yield. So about half of your return will come monthly. The other half will be in capital growth. The other angle to consider this from is the impact of taxation. When you make a UK investment you are liable for income tax and capital gains tax. This means if you’re a high rate tax payer you will not be getting a return as high as 13% this will be chopped in half.

The capital gain element only comes into play if the property is sold, if you never sell you never pay the tax. As these are cash cows, most investors decide not to sell. To extract the gain you can always remortgage your investment.

Contrasting this with India investment, most schemes will provide a lump sum when exiting the investment and nothing in between. This is because they will either be in stages of development hence you have not actually bought a property but have bought a  contract. With a plotting scheme you simply buy the land and wait for it to rise.

So, comparing the two: in UK part of your return will be a stream of return on your investment and in India the return will be a lump sum when you exit.

The gain in India will of course be subject to capital gains tax.

The other consideration when investing in India is of course the added variable of currency fluctuations. The Rupee vs GBP will enhance or reduce your investment.

The above are only a few of the considerations you should look at when deciding where to invest. A much more detailed  understanding is required before you commit to an investment. Sow & Reap can help you in this decision making process and will be with you all the way which ever you decide.

Suresh Vagjiani

MD Sow & Reap

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If you want to know more about how investing in Central London property can get you great results, then don't hesitate to give us a call.

Sow & Reap

Meridien House,
42 Upper Berkeley Street,
London, W1H 5PW

T: 0207 993 0103

Sow & Reap

1008, Gala Empire,
Opp. Doordarshan Tower,
Drive-in Road, Thaltej,
Ahmedabad - 380052
Gujarat, India