The Hindu Business Line : For a piece of London…

It’s an absolutely heady feeling to know that according to a latest research report, over the next 10 years, Indians could potentially own 20,000-30,000 residential properties in the UK!

The report, done by Jones Lang LaSalle titled ‘UK-India Cross-border Residential Investment’, which is very bullish on Indian real estate investors, says, “The number of HNIs (high net worth individuals) in India is growing at a fast er pace than in any other nation.” It forecasts that in 10 years there will be 400,000 HNIs, four times the number existing today; and 1.9 million semi-HNIs.

What is even more interesting is that the number of middle-class Indians with the potential to invest in UK residential property is expected to “rise to 583 million by 2025. The number of Indians with wealth exceeding $100,000 is forecast to be 29 million by 2017.”

In the company’s definition, an HNI is a person with financial assets over $1 million (about Rs 4.25 crore), excluding their primary residence; ultra-HNIs would have financial assets over $30 million, excluding their primary residence; and semi-HNIs over $500,000, excluding their primary residence.

“They already have a holiday home in India and now aspire to buy something in the UK." - Raminder Grover

Raminder Grover, Managing Director, Homebay Residential (a subsidiary of Jones Lang LaSalle Meghraj), which brought two road shows on UK properties in Delhi and Mumbai earlier this month, says UK-based property developers are increasingly interested in attracting investors from India. They are targeting not only HNIs but also the upper middle segment. At the moment, Arabs are the largest buyers of property in the UK, followed by Russians (oil money, what else), Chinese and Indians.

Taking the super rich first, about the £117-million mansion in Kensington that the steel tycoon Lakshmi Mittal was supposed to be negotiating for purchase, Grover says, “He has already bought it! From what I know they have bought three properties in the UK — all of them large villas — recently. Of course, the actual prices have not been disclosed; but all the three are residential properties and in Kensington.”

More often than not, forget the actual prices, even the persons are not disclosed! And so you have much talk swirling around — celebrities buying this mansion or that in some exotic locale. Take for instance the properties supposed to be bought by Bollywood megastar Shah Rukh Khan. Asked about SRK’s reported statement that he would love to own a property in the UK, Grover says, “Nobody knows anything about it. They said he had something in Delhi and it turned out that he didn’t have. These are all rumours. Confirmation on who has bought what, where is very difficult to get because these things are done very discreetly.”

Awesome interest

But he is enthused by the “awesome interest” the two road shows — “the first of their kind in India by UK property developers” — have generated, and the road shows brought about 150 queries. Obviously they were from HNI businessmen, professionals such as doctors and chartered accountants, and CEOs and MDs of companies. The most popular locations for owning properties in the UK are in areas such as Kensington, Knightsbridge, Mayfair Gardens and Hyde Park. “Of course the price of properties in Central London is much higher but the point is that when you buy a South Mumbai or South Delhi property, those prices are not going to decline; lack of supply pushes prices up in such places.”

Other places popular in the UK are Harrow, Middlesex and Manchester, as these cities have a huge Indian population and the property prices are cheaper too. One of the major reasons for buying property in the UK is the investment angle. “The UK is a very stable and mature property market and these people know that even if the market takes a downturn their property value will not come down more than 8-9 per cent a year; if it goes up, it will be more than that. The UK represents a very amenable market for Indian investors — the British Pound is far more stable than the rupee, there is far greater transparency in the UK real estate market, UK tenants sign long leases of up to 25 years and their long-term income generation capacities are extremely stable, not to forget the London Olympics in 2012. These factors are of great importance to investors in such projects,” says Grover.

Unfortunately, Indian women have not yet made it to ultra-HNI bracket, so the women who have approached the company for prospective purchases have done it at the behest of their husbands. But women, he adds, are increasingly wielding more influence in the property the family buys. While most of the queries have come from Mumbai and Delhi, there have been queries from even places such as Chennai, Kolkata and Punjab.

Emotional buyers

So how do Indian property buyers compare with other nationalities; are they hard-nosed buyers who have done a lot of homework or is it more an emotional decision?

“Oh, they are very emotional buyers. The purchase doesn’t have to be an investment all the time… it is like: ‘Yar ek ghar chahiye hamey waha par. Jab hum retire ho jayengey aur hamarey doston ko milney jayenge tau waha rehney key liye ek ghar chahiye. (I just need a house to stay when after retirement I visit my friends there.) The other trait of Indian buyers is that ‘I want a piece of London’!”

Apart from this psychological reason of owning a property in a country that had once colonised India, quite a few buyers take this decision because “they have their children studying in the UK and want to spend their summers with their children there. I’ve just had a client who is buying a £2 million three-bedroom apartment in Central London because his son is studying there; he is a businessman from Delhi and a very high net worth individual,” says Grover.

Then there are corporates looking for residential property in London, where they fly frequently to attend to their business interests. “They are tired of staying in hotels and want an apartment where they can get service, basically that of a concierge; you’ve got your clothes there, so you just take your laptop and business bag and fly out to London, stay there and return.”

Other times, there is the aspirational element. “They already have a holiday home in India and now aspire to buy something in the UK. Many of our HNIs go at least once or twice a year to the UK for a holiday and from there they travel to other places in Europe like Spain, Portugal, Greece, Switzerland, making London their base.”

But more than anything else, the single largest factor that makes an ultra-rich Indian want to own a property in the UK is the sheer number of resident Indians in that country, not to mention the English language, which makes an Indian feel comfortable there. He knows that he can stop another Indian on the street and ask for directions.

And then there is the all-important food factor!

“Like somebody told me that when ‘I go to Geneva waha mujhe bhendi packet me milti hai (I can buy ladies finger only in a packet); but in the UK I can buy it fresh’. It’s surprising to hear such emotions, but you really understand it only after meeting these people,” says Grover. He adds that much more than a Geneva or Paris, Indians are delighted to find Indian restaurants and snack bars at every street corner in London. “They know that they can go to a restaurant and ask for food without onions or garlic. Or say that today is Tuesday, so no meat for me please!”

Quizzed on whether Indians are tough customers who want things customised according to their taste in the homes they buy, such as how large the bedroom or how high the ceiling should be, Grover says, “Not really, except for vaastu. They want north-east facing properties and they don’t need vaastu experts either; they know all about vaastu and know exactly what they want.

Gleanings from the report

Indian GDP growth forecast to rise by 7.3 per cent a year over the next 10 years, more than double the global average.

India has risen from the world’s 10th-largest economy in 1992 to the 4th-largest in 2007.

Indians account for 4 of the 10 wealthiest individuals.

There are 53 Indian billionaires with a combined wealth of $341 billion.

HNIs in India are growing at a faster pace than in any other nation.

In 10 years four lakh HNIs, four times the number today, likely in India.

1.9 million semi-HNIs (financial assets over $500,000, excluding primary residence) expected by 2017

Middle-class (annual income $23,500-118,000) Indians with potential to invest in UK residential property expected to be 583 million by 2025.

Indians with wealth exceeding $100,000 expected to be 29 million by 2017.

Response may be sent to rasheeda@thehindu.co.in

Related Stories:
Indian realty firms make beeline for overseas projects
Indiaproperty looks to tap overseas market

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