by NADEEM BADSHAH
Wealthy snap up holiday homes
WEALTHY Indians are battling with buyers from Russia and the Middle East to purchase properties in the most exclusive postcodes of Britain.
Nearly a quarter of the sales in prime parts of central London went to buyers from India in the year to July 2017, up from five per cent in 2012, according to estate agent Cluttons.
Buying agency Black Brick revealed that Indians accounted for 13 per cent of its sales last year, compared to 2.6 per cent in 2016.
Experts say the trend is extending to other cities including Birmingham, Manchester and Leicester due to the value for money and regeneration of the areas.
Camilla Dell, managing partner of Black Brick, said most Indian clients buy apartments which start at around £2 million as a holiday home or for their children while they are studying.
She told Eastern Eye: “For wealthy and middle-class Indians they often have a strong affinity to the UK, and London in particular.
“Having a property in London is seen as a status symbol for some families and what they aspire to have.
“A lot of buyers like to spend time with their families here and go shopping; they like areas like Mayfair.
“Most of our Indian clients are buying as a holiday home or [while] their children are studying here.
“For wealthy Indians, buying for £5- £10 million or more, they are looking at Mayfair. With clients with smaller budgets, they will be more open to looking at new build developments along the River Thames.”
Over 50 per cent of Black Brick’s Indian clients follow the Vastu system when looking for a property, translated as “the science of architecture” which influences the design, layout, measurements and space of a building.
It is thought to date back around 5,000 years based on Hindu and Buddhist beliefs and is similar to the Chinese philosophy of feng shui.
Dell said the capital has become more attractive due to the weaker pound following the Brexit vote in 2016 and the Reserve Bank of India increasing the amount of money that people are allowed to transmit out of the country.
“The Reserve Bank of India (RBI) sets exchange control limits with today’s amount to $250,000 per family member, per year. This is a significant improvement from a few years ago, when the amount allowed was under $100,000 per family member, per year.
“It means that a family of four, after one year, will have $1 million to spend, and after two years $2m. It quickly adds up and explains why a lot of our Indian clients are buying in the £1m to £2m range.”
She added: “London is attracting clients globally from the Middle East, Russia, Africa, Asia, some European and domestic clients. The whole market has been massively affected by uncertainty around Brexit, stamp duty increases and political uncertainty.
“When it comes to foreign buyers, you always have people who are quite opportunistic and see these sorts of markets as an opportunity to buy much more cheaply than it has been for a while.”
Celebrities who have bought property in central London include Shah Rukh Khan, who paid around £20m for an apartment in the Park Lane area. His son Aryan, 20, attended Sevenoaks school in Kent.
The Lodha Group, India’s largest residential developer, purchased the Canadian High Commission in Grosvenor Square for a reported £306m in 2014.
Ray Withers, CEO of Property Frontiers in Oxford, said the reasons for the boom is the pound losing around 15 per cent of its value against the rupee at the end of 2016 following the Brexit vote, the growth rate of the country’s economy and the Indian government’s scrapping of high-value banknotes causing investors to look abroad.
He told Eastern Eye: “We have also noticed an uptick in Indian buyers for our investment properties – and I would argue they have their sights set wider than London. Northern cities with strong Asian communities and lower entry points, like Bradford, are in particularly high demand in our experience.
“We recently launched a residential investment product in Halifax that basically straddles the route from the town centre to neighbourhoods traditionally populated by Indian and Pakistani families.
“The Lloyds/Halifax bank headquarters in the town employs a large number of contract workers from the Indian subcontinent, so we have seen a lot of interest from both Indian investors and potential tenants in that development.”
Jaffer Kapasi, from the East Midlands Chamber business group, said there has been a similar trend in the Midlands region.
He said: “In other cities like Leicester, it is a known fact people of Indian origin buy a property in a prime area, say Broadway and Fairway of Oadby, demolish them and rebuild them to a very much Eastern way of life.
“I think it’s important to focus on the fact there is still demand for these properties and that it is coming from overseas; i.e., it’s a form of foreign investment in the UK, albeit on a relatively small scale.
“If it leads to people with money from anywhere overseas taking residence in the UK, then it suggests that other investment could follow and that can only benefit the UK economy in the long-term.”
Jonathan Stephens is managing director of property investment company Surrenden Invest in London. He said: “Indian investors are now the second biggest buyers of London prime properties, as they see UK property as a haven asset class with rule of law and proper title to property.
“Now we are seeing this trend start to trickle into the UK’s secondary markets such as Birmingham, Manchester and Liverpool, where there is more value to be found together with strong rental yields.”
Meanwhile, British Asian families are dominating the property market in the UK by ploughing their savings into developments, according to experts.
Eleven per cent of properties in England have an ethnic minority owner, according to the 2015 English Housing Survey. In the social and private-rented sectors, the proportion among the BME community was 17 per cent compared to the national average of 15 per cent.
Previous government research has shown first time buyers had the highest proportion of people from an ethnic minority background of 14 per cent. Of this group, five per cent were Indian and three per cent Pakistani or Bangladeshi. Popular areas of investment for Asian landlords are one or two-bedroom flats in Manchester, Birmingham and parts of north and west London.
Asian developers regularly appear on BBC show Homes Under The Hammer, which features investors who buy a property at an auction and spend thousands improving it to put it on the market.
Father-of-two Kumar bought a flat in Telford, Shropshire, for £62,000 on the programme and give it a £3,000 makeover with a family friend. He said: “I started buying properties ten years ago and the yield in this area was unbelievable. “That went well, everytime I think it’s the last property, it carries on. Before I used to buy through the estate agents, but I thought I would get my hands dirty this time.”