We are almost at the end of the first quarter of 2022 and unfortunately the words "Covid-19" and "pandemic" are still all too common. The year started with the same uncertainties as 2021 due to the prevalence of Covid cases, but this time the UK appeared to be in better shape to deal with it due to advancements in infrastructure, testing and vaccinations. But what does this mean for the UK real estate sector and particularly for Indian investors looking to invest in the UK real estate market. Is it still as uncertain or are investment opportunities becoming more clear-cut?
Think back to 2019/early 2020 and the UK real estate sector was questioning how BREXIT would impact the market in the long term. London had seen an 11% year-on-year rise in the number of Indian homebuyers in prime London markets in FY19 (2018-19) according to a property report by Knight Frank [1]. London was also seeing a number of Indian hotel and restaurant chains opening and major Indian residential developers developing in the UK. Within the space of a few months we were in the midst of the Covid-19 pandemic. A study has shown that during the pandemic, investment activity slowed down dramatically affecting all three major real estate sectors: office, industrial, and retail, so it is inevitable that Indian real estate investment fell with it. Between the second quarter of 2019 and the second quarter of 2020, retail real estate investment fell by approximately 58 percent, while office real estate investment decreased by close to 68 percent [2]. However, even during 2020 Indian investors continued to acquire targets in the UK with ten acquisitions and according to one report the UK attracted more deals than any single EU country [3].
It was predicted in Sotheby's International Wealth Report in 2015 that India's High Net-worth Individuals would pump a billion pounds annually into UK real estate [4]. Of course, this was guesstimated in a pre-pandemic era, but this is likely to increase even more post-pandemic as Indians have been shown as the highest investors in foreign real estate with a 50 percent market share, according to an Asia-Pacific Wealth report, and a recent Grant Thornton report has shown that Indian diaspora-owned companies contribute overall to 13% of the real estate and construction sector in the UK [5]. The UK is one of the top destinations attracting Indians with over 3,000 Indian families owning some of London's most affluent addresses. Commercial and development opportunities are also seen as high yielding investment opportunities financially for Indian investors thinking more long term.
With Boris Johnson announcing his "living with Covid" measures it will likely result in a boom in investment as the UK navigates the new normal. Unfortunately though, as has been the case for the last couple of years, we are not out of the woods with the period of uncertainty and Howard Kennedy can help with this. Howard Kennedy specialises in real estate investment and development opportunities in London and throughout the UK. We act for investors and developers alike within India and the diaspora and have a strong India practice with a team of lawyers that understands the culture and that have experience working within this space. If you have any questions on the process or need any assistance then please contact Chirag Rao on Chirag.Rao@howardkennedy.com.
[1] Knight Frank, Winter 2019, London Super-Prime Sales Market Insight
[2] Statista Research Department, 6 October 2021, Y-o-y change in commercial property investment in the UK Q1 2017 – Q1 2021, by sector
[3] Grant Thornton, 22 April 2021, India Meets Britain Tracker
[4] Wealth-X and Sotheby, 2015, The Global Luxury Residential Real Estate Report 2015
[5] Grant Thornton, 18 February 2020, India in the UK: The Diaspora Effect
Want to hear more from us? 
