Secrets of the Rich in India: Mumbai Family Offices & HNIs buying into London Real Estate
Over the years Real estate investing has proven to be one of the most successful strategies to grow and protect wealth domestically. With the world becoming more interconnected, more global and integrated, the demand for stable real estate markets is witnessing a new trend of offshore/foreign real estate buying amongst the rich. One might confuse the observed traction as fashionable trend and not financial prudence (but I with few case studies of clients consulted by our partners which actually proves the financial soundness in these decisions being made).
If you are a seasoned investor into the Mumbai property market and have aspirations to grow your real estate investment portfolio for diversifying your real estate bets you must pay attention to this blog till the end. This will be one of the longest blog articles because making money and that too handsomely (high return on investment) requires some homework.
What defines a Real Estate Investment Opportunity
- Information Asymmetry (Knowledge & Information available only amongst the few)
- Micro market driven opportunity (on the back of demand supply mismatch, limited supply)
- Technical & legal know how to execute such property transactions (right partners helps in execution)
Why Invest in London Market Today: Investor Lens for higher ROI
(i) Brexit phobia has created sentiment based opportunity, (ii) Mismatch of demand and supply in micro market: zone 1 of central London (iii) Mature & Safe property market evolved over decades.
Top 3 Promising developers in London delivering homes in the Property Market
(i) Berkely Group (The largest premium developer by net sales)
Berkeley Group builds beautiful, successful places, blending homes, parks and public realm with great facilities to create fantastic communities where people love to live. We work together with trusted partners to tackle the shortage of good quality homes. They have built 19,500 homes in the last five years, across London, Birmingham and the South of England. It is a publicly-owned and listed on the London Stock Exchange as a FTSE 100 company.
(ii) Barratt Homes
They build the highest quality homes recognised by our HBF 5 Star customer rating, the only major house builder to have achieved this for the tenth consecutive year. Their homes are characterised by great design, which is at the heart of all their developments -meeting the Building for Life 12 design standards.
- They are famous for affordable housing in suburbs and have a massive portfolio under construction in London
- They build both private and affordable housing and in their last financial year delivered 17,579 new homes.
- They have a broad product offering with prices for private homes outside of London ranging from c. £70,000 to more than £1m.
(iii) Tailor Wimpey
One of the UK’s largest residential developers. As a responsible developer they are committed to working with local people and communities. They are responsible for more suburb based construction as of today compared to the above two developers. There focus like most other developers is around regeneration projects.
Why is London a favoured destination for a Stable Property / Real Estate Market
(i) Medical: One of the most recognised and advanced medical services – Famous Harley Street
(ii) Higher Education: 4 London Universities feature in the global Top 10 list, which speaks volumes about the promise
(iii) Head Quarters: A Financial Hub, having head quarters of many FTSEs companies
(iv) Strong Legal System: A transparent, thrift and actionable system that gives protection to landlords and property buyers.
(v) Public Transport: A world class network of subway, trams, trains and buses encouraging public transport (one of the world’s most evolved network of transportation which proud of its density connectivity)
To buy a Property in London or for that matter in any foreign country the following considerations are Important
(i) Property Title: Quality of Title ( How Transparent is the property market in that Country)
(ii) Finance: How easy is it to create a leverage on the property [Mortgage using property as a collateral to fund the transaction)
(iii) ROI History: Typical history of annualised return on investment percentage (capital gain) in last 3 decades
(iv) Currency FX: How currency movement (at the time of buying, eating rent and selling) between GBP(Pound) & INR affect my returns
(v) Tax: What are the tax implications for rent and capital gains once property is sold.
(vi) Proof of Funds: What are the capital controls in terms of fund repatriation in investment country(here UK) and India