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Indian investors make their mark on UK buy-to-let

March 14, 2018Article by Charlotte Ashton

A study by Cluttons recently found that Indian buyers they accounted for 22% of prime central London purchases in 2017, up from 5% in 2012. Likewise, agents across the investment industry have noted an uptick in Indian buyers for buy-to-let properties – and their sights are set wider than London. Northern cities with strong Asian communities and lower entry points, like Leeds and Bradford, are in particularly high demand.

This is also true of our own experience. Our Martins Mill development in Halifax basically straddles the route from the town centre to neighbourhoods traditionally populated by Indian and Pakistani families. With the Lloyds/Halifax bank headquarters in the town employing a large number of contract workers from the Indian subcontinent, we have seen a lot of interest from both investors and potential tenants from that part of the world.

But what is behind this heightened level of interest from Indian buyers?

  1. The pound lost around 15% of its value against the rupee at the end of 2016, which is definitely a factor. It has recovered slightly since but British property remains comparatively cheap for Indian buyers.
  2. The Indian economy is now expanding faster than that of any other major country, so there is simply more money around – and investors are becoming more globally adventurous in where they spend it. That is partly due to a change in regulations around how much money can be taken out of the country – with the upper limit for a family of four rising from $400,000 to $1m.
  3. The demonetisation of high-value banknotes at the end of 2016 and the recent tribulations of state-owned banks have to some degree affected the confidence of Indian investors certainly in holding cash but also in the relative ‘safety’ of domestic assets. India itself is undoubtedly an extremely promising place to invest: if foreign ownership rules were to be relaxed we would be the first to get involved. But news items like these cause people to think outside the box and look into other options – and UK property is always attractive.

Our 2017 Predictions suggested that Indian investors would begin to rival the Chinese as a source of cross-border funds. Now, China is still by far the biggest source country, but the capital controls recently introduced there represent a rare opportunity for Indian investors to begin to compete with them in that field. What was previously a relative trickle of investment from the Indian subcontinent is starting to become a stronger current – and the UK market is all the better for it.

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