The leave vote in the UK will have an impact on the British realty market. With the British pound at a 31-year low and its value likely to fall further in the near-term, real estate experts say Brexit provides an opportunity for Indian high networth individual (HNI) investors to acquire property in the UK at attractive prices.
London holds a special attraction for Indians, particularly HNIs, and the favourable exchange rate is likely to bring a Rs 9.5 crore property into the Rs 7.5 crore range, they said.
“The leave vote may pique the interest of foreign and Indian buyers who are so important for the London housing market,” said analysts from UBS Wealth Management, UK. “Even with a weaker pound, we believe the international buyer’s perception of the economic and political stability of the UK outside of the EU will be a key influence on international demand.”
London, where house prices have risen faster over recent years, is likely to be impacted more heavily by the exit than the rest of the country, they felt.
At least three Indian developers have struck mega deals in London, including Indiabulls Real Estate and Lodha Group. Both refused to comment.
Shishir Baijal, chairman and MD, Knight Frank (India), said “The combination of lower prices and devaluation of the pound should draw in Indian investors looking to acquire assets in the UK. It augurs well for the Indian investors to make their move now.”
An interest rate cut of 25 basis points is seen as a strong possibility at the Monetary Policy Committee’s meeting in July.
Those who are already invested in the UK should stay put as in the long term as the market will pan out, Baijal said.
UK-based companies invested in Indian real estate will see their pound denominated returns picking up by 10%, thanks to the depreciation of the pound, said Anckur Srivasttava of GenReal Advisers.
However, commercial leasing is likely to remain unaffected. The real estate sector in India will continue recovering on the back of a resilient Indian economy and strong capital inflows. “Brexit will not disturb that recovery much, since India’s office market leasing is dependent only to the extent of 5% to 7% on UK-headquartered companies, and investments and activity of PE Funds from the EU countries is more in India than in the UK,” said Anuj Puri, chairman and country head, JLL India.