30th September 2017
I have been noticing a lot of interest in UK property from Indians in India.
We have had serious interest from numerous parties, on a site we sourced for our client, and three of these are big players from the Homeland. They have made their money in India and are looking to spend it on UK property.
One of the parties we had agreed the deal with, had placed the matter in their lawyers hands. The lawyers were going through the conveyancing process and then suddenly the buyers decided to renegotiate mid-way through the deal. You analyse the commercials of the deal first and agree the deal, prior to placing it in lawyers hands, otherwise you will end up with some very high legal bills and no deal; and a very annoyed counter party. Of course, we promptly withdrew papers.
Another group from Bangalore, decided to set up a company here and appoint a CEO. The CEO had plenty of construction experience, but very little in the art of deal making and negotiation. I would imagine he spent £10,000’s on due diligence on the site, in order to come to the position of making a low ball offer, which of course was rejected at the outset.
Clearly, he was the wrong man for the job. Several months later we approached the company again to see if they were still interested, at which point I heard he had been relieved of his position. If you’re bleeding expenses in analysing deals but cannot close one, at some point you will be subject to the wrath of the owners.
In regards to prime central London property, research shows 22% of all purchases are done by Indians with an average spend of £1.7m. The increased interest from Indian property investors has not only come from private individuals but has also from institutions and developers from the subcontinent who have been buying up large tracts of land in the UK.
Despite two years of slower price growth due to tax changes, and the UK’s Brexit vote, the UK has remained attractive to international buyers as a safe haven, with the rule of law and proper title to property. A clean title is something we take for granted, however, this is not something you can assume when purchasing in the subcontinent.
So why the interest? For the private buyer, relaxed laws mean each individual is entitled to remit $250,000 per annum. If you are living in a family unit of four, this entitles you to bring in $1m per annum. And, one cannot underestimate the emotional connection and history Indians have with the UK.
India has become a more challenging place to invest in, with high loan interest rates and rising prices in the main urban centres, together with increasing geopolitical and economic uncertainty.
Also, the weakened sterling represents a 20% discount for foreign investors, compared with two years ago. Indian buyers have now become a dominant force in the market place. They have overtaken buyers from the Middle East who have fallen to third place.
The increase in Indian buyers, however, has been set against a significantly decreasing number of European investors following the decision of the UK to leave the European Union. Buyers from Europe have been adopting a ‘wait and see’ stance.
It seems Indian institutions are coming with a view of placing their roots here, and will in time become a force to be reckoned with. Watch this space.