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Why do wealthy Indians own the most real estate in London?

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 High and ultra-high-net-worth individuals (HNIs/ UHNIs) from India have long favored London as a foreign real estate investment destination. The clientele has evolved from industrialists and Bollywood celebrities to Indians who want to invest in London’s real estate market for their children who are going to be attending university there. 

One of the largest groups of property owners in London is comprised of Indians. According to Akash Puri, Director of International at India Sotheby’s International Realty, “Some are students and families who buy homes while traveling to the UK for education, others are UHIs with vacation homes abroad, and others have lived in the UK for generations. 

These days, the cost of real estate in London is similar to that of Mumbai and Delhi at home; a 1BHK unit costs Rs 3.2 crore, while a 3BHK costs Rs 5 crore and more. Rich Indians have a few favorite spots in London, including Oxford Circus on the west side of the city and Mayfair and Marylebone in the city’s center. 

Important complete factors 

Wealthy Indians are drawn to London as a destination for real estate investments for multiple reasons, according to an expert who spoke with HT Digital. According to them, the city offers possibilities for business growth, steady capital growth, currency diversification, effective taxation, a good standard of living, and residence options through real estate investments. 

“Investing in a property on the outskirts of London makes more sense than paying exorbitant rents for an extended period, and we wanted to secure a safer, higher-quality future for our children,” stated a couple who recently made their purchase. 

“Real estate prices in the region have continued to grow in the past few years, despite Brexit, which was expected to disrupt London’s prominence as a property market,” stated  Vivek Rathi, head of research at property consultancy Knight Frank India. He said that London’s liberal culture and reputation as a center of high-quality education are other advantages. 

Indians are also purchasing real estate in London due to the consistent capital growth and rental yield caused by a supply-demand imbalance. 

Demand for housing in London is higher than supply, with a typical 35% shortfall. The city remains resilient despite economic challenges because of this disparity. HNIs have invested in London for the past few years due to the city’s favorable property prices and stamp duty holiday for buyers. 

There are ultra-rich Indians who view owning prominent properties in desirable cities like Mumbai, New York, and London as a matter of prestige and status. 

This is how the figures add up. 

A Knight Frank report states that in 2023, the number of ultra-high-net-worth individuals in India increased by 6.1% annually, outpacing the global average growth of 4.2%. A person with a net worth of at least $30 million is considered ultra-high net worth.  

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

According to the report, residential real estate accounts for about 32% of the wealth of India’s ultra-rich, with 14% of that property situated outside that nation. In 2024, about 12% intend to buy a new house. 

According to a survey conducted by the consultancy, when asked which nations or regions have high net worth individuals would most likely invest in real estate, as many as 47% of UHNIs from India stated that they would want to buy a property in the UK, 41% in the UAE, and 29% in the US. 

UK-based Indian developers

Due to the various benefits that the UK property market offers, several Indian developers have made an effort to include London in their global portfolio. 

As Macrotech Developers, the Mumbai-based Lodha Group entered the London market in 2013. It proceeded with two residential developments in the downtown area, No. 1 Grosvenor Square in 2017 and Lincoln Square in 2016. 

A more recent example is the $200 crore investment made by commercial real estate investment platform Property Share into the UK’s warehousing industry. The advantages of the location will allow the company to expand its operations further into the city.  

Marquee clientele 

Numerous powerful businessmen, such as Neeraj Kanwar, Lakshmi Mittal, Ravi Ruia, Mukesh Ambani, and the Hinduja brothers, are known to own real estate in London. 

Adar Poonawalla, the CEO of Serum Institute of India, reportedly paid Rs 1,446 crore for a 25,000 square-foot Mayfair mansion, making it the most expensive house in London in 2023. 

However, there are rumors that Mukesh Ambani owns Stoke Park, a 900-year-old hotel outside of London. There are thirteen tennis courts, fourteen acres of private gardens, and a 27-hole golf course on this 49-bedroom estate. According to reports, the billionaire purchased the hotel for 57 million pounds, or Rs 529 crore, in 2020.

Why are Indians so eager to buy pricey homes in London and Dubai?

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The recent global trend of India buying up real estate is a component of HNI’s and UHNI’s plan B options. 

Indians are now the largest group of property purchasers in Dubai, according to the recently released Betterhomes Dubai Real Estate Market Report for FY23. This is an intriguing trend.  

UHNIs from all over the world who want to participate in this booming real estate market share this interest in addition to expats already employed in Dubai. 

There are many reasons for this increase in interest, including the appreciation of capital, the high rental yields relative to India, the availability of 100% freehold properties, tax-free investments, world-class infrastructure, currency appreciation, and the golden visa. Furthermore, purchasing real estate in Dubai is more about the satisfaction of becoming a property owner in a major world city like Dubai than investing. 

The recent global trend of Indians buying up real estate is a component of NHI’s and  UHI’s plan B options. The new class of wealthy Indian families aspires to live in a world devoid of national borders that are open, globalized, and interconnected. 

Due to their culture of working from anywhere, these UHNI’s are eager to buy pricey properties outside of India in places like Dubai and London. This will enable them to pursue their professional and personal objectives and spend time abroad.  

Furthermore, as part of their generational planning, these families hope to invest their way into alternative residency or citizenship. Giving their children the best opportunities for a college education, improved career prospects and quality of life, retirement planning, new business opportunities, and visa-free travel to many countries due to their stronger passports is the goal in these situations. 

Global diversification 

Along with the benefits of geographic and currency diversification, international diversification lowers the portfolio’s overall risk. In addition to funds that invest across multiple geographies and provide access to real estate domains such as commercial, residential, land parcels, warehouses, etc., investors should also consider options such as REITs and InvITs when making real estate investments. 

After selecting the portion of their portfolio to be allocated to international real estate, investors should consider the demand and supply dynamics of the area, the likelihood of profits, and the trajectory of interest rates, which will eventually support real estate due to their gradual decline. Comprehending the impact cost, exit cost, and tax laws is imperative, as they play a crucial role in the rental or eventual sale of the properties. 

Before investing in foreign real estate, investors should inquire if their wealth management team has local partnerships in different markets. In the future, collaborating with a local partner can benefit investors in several ways, including advisory, execution, monitoring, and resale. 

This is because after a property is purchased, it requires a lot of supervision, and when it comes time to sell, factors like impact costs, exit costs, and tax laws become important. 

If it is a commercial property, local teams would also have a fair idea of how to rent out the business space. To put it briefly, the local partner will undertake all of the legal and financial due diligence needed to buy, maintain, and resell the property. 

In conclusion, purchasing property overseas is a wise choice, particularly for those who want a backup plan– Plan B— that they can always turn into Plan A. The most popular nations among HNIs and UHNIs considering alternate residency or citizenship are the USA, Portugal, Canada, and the UK.   

Hence, investors looking to acquire international properties should go through a wealth advisor who, with their astute advice and expertise in the local markets, can help simplify and fasten the investment process, which will, in turn, help investors achieve their global mobility goals.