Indian home buyers may account for 15% in 3 years in the UK: Barratt London

London’s real estate market has been attracting Indian investors for decades. While conventional investors comprise industrialists and Bollywood stars, the market is of late witnessing a shift in terms of Indians preferring to invest in property in London for their children pursuing higher studies in the city. Barratt London, a leading real estate developer in the city for more than 40 years, has eight projects, some of them regeneration projects. The company plans to add up to three more in the coming months.

“There is a change in clientele because affordability has come into the picture. Prices are comparable to Mumbai and Delhi. A 1BHK starts from Rs 3.2 crore and a 3BHK can set you back by almost Rs 5 crore,” Stuart Leslie, International Sales and Marketing Director, Barratt London, told Moneycontrol.

Buyers are typically in the age group of 40 to 60 years and may own two to three properties in India. “The London property is a first-time investment for many to diversify their real estate portfolio or to accommodate their children studying in the city,” he said.

“It has been seen that for 80 percent of buyers, it is their first investment in London,” he said.

Buying property in London

Why are Indians buying properties in London?

The main reason is the requirement. “Most of our customers are need-based — they either have a job in the area or they have sent their children to schools or colleges in London. We are seeing growth among investors who are getting into the London market in particular from India."

While the company has branches in Mumbai and Delhi, it plans to diversify into other markets such as Punjab, Bengaluru, and Hyderabad, and there is demand in these cities to invest in properties in London.

The percentage of international investors in the company has traditionally been around 30 percent. “While buyers from Singapore and Hong Kong have been buying properties in London for decades, Indian buyers comprised just about 5 percent. This is expected to touch 15 to 20 percent in the next three years,” he said.

According to him, Indians are also buying into London properties on account of the stable rental yield and capital appreciation. “This is due to the demand-supply mismatch that continues to exist. Demand is higher than supply,” he explained.

It should be noted that students are permitted to stay on campus, perhaps for a year, after which they may have to look for private accommodations.

Capital values and rental yields

Properties start at Rs 3.2 crore for a 1BHK, Rs 4.3 crore for a 2BHK, and Rs 5.5 crore for a 3BHK, he said.

The rental yield could be in the region of 5 to 7 percent. “One will have to include capital appreciation in the rental yield,” he said, adding that since some of the projects have been regenerated, the entire exercise of regenerating a brownfield site adds value to it.

A buyer has to invest 10 percent at the time of booking a property and 90 percent at the time of possession, he said, adding that, unlike Dubai, London is not a speculators’ market, as buyers generally stay invested for the entire cycle and exit only after having taken possession of the project and after residing in it for several years.

London’s regenerated projects versus Mumbai’s redevelopment projects

Land in London is not finite, hence the need to regenerate old brownfield sites. Some of these include the old Kodak and Nestlé factories.

The company launched its Sterling Place project recently. These units are located close to areas such as Wimbledon, Kingston Upon Thames, and Richmond Park. It takes in the former print works of Bradbury Wilkinson Co. Ltd, a printing company that pioneered polymer banknotes and created postage stamps and currency for numerous countries around the world.

“The muted green tones and patterns printed on banknotes in the early 1900s have inspired today’s striking brickwork, landscaping, pitched roofs, crittall-style windows, and balcony design,” he said.

The first homes will be delivered in the winter of 2025, with the site expected to be completed in 2027.

Earlier this year, the company launched Robertson Apartments, part of London’s Eastman Village Development, a mixed-use property development in West London. The village’s namesake was the founder of Kodak (James Roberts), the company that invented roll film and brought photography to the masses. These are due for completion in 2025. The company is constructing close to 2,000 homes on the site. The design features red bricks throughout the development to reference the original Kodak buildings, while subtle graphics in the signage and balcony screens are inspired by the site’s rich heritage.

The company is also constructing 1,500 homes in Hayes Village in west London, which is set on the grounds of the former Nestlé factory.

“The company’s focus is on regenerating projects that are located 20 minutes (by car or train) from Central London. We have a total of eight projects in London at the moment. We will be launching another three by next year,” he said.

The company works closely with housing associations that are set up to provide housing to the government. "Usually, a third of our projects would be designated for housing associations. The government offers a few schemes for domestic buyers to help them own property and get onto the housing ladder. These could be in the form of shared equity,” he said, adding that demand at the moment is for private residential development. This is popular among Indian buyers, as they often buy property outright.

Maintenance fees

A buyer purchasing a 1BHK apartment priced at Rs 3.2 crore may have to spend close to Rs 1.5 lakh per annum on maintenance fees or service charges that cover building insurance and maintenance of facilities. If the apartment is rented out, it is the tenant who will have to pay the council tax.

“An investor who has rented the place may also receive an allowance that is tax-free up to 12,500 pounds per person per annum,” explained Anita Mehra, Managing Director, Benham and Reeves, which has partnered with Barratt Homes. The property lettings and sales agents are responsible for selling London's portfolio of properties to Indian investors.