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Indian HNWIs snap up London property after rules changes

Indian HNWIs snap up London property after rules changes

Wealthy Indian investors are moving into prime real estate in central London, after remittance rules were changed to allow them to move more money in to assets overseas, according to property investment firm London Central Portfolio.

LCP said that 22% of sales of prime central London property between August 2016 and August 2017 were to Indian buyers. By value, they represented a third of all sales, with an average purchase price of £1.77 million ($2.30 million).

The firm attributes the jump to changes to India’s liberalised remittances scheme, which limits the amount that citizens can move overseas. In 2015, the government raised the individual allowances from $75,000 to $250,000 per year.

The following financial year, remittances under the scheme jumped from $1.3 billion to $3.8 billion. Two years ago, before the changes to the rules, Indian buyers were involved in only 5% of prime central London property sales, according to LCP’s data.

‘As India has become a more challenging place to invest in with high loan interest rates and rising prices in the main urban centres, together with increasing global political and economic uncertainty, Indian buyers with a larger amount of capital to spend have increasingly turned to London as an investment destination of choice,’ Naomi Heaton, CEO of LCP, said in an email.

Central London property has long been attractive to international investors looking for a relative safe haven. Although the UK’s vote to leave the European Union and the subsequent political chaos has reduced the sense of security in British assets – and has deterred European investors from its property markets – it also led to a major fall in the value of the pound sterling.

‘As sterling has weakened against foreign currencies, representing a 20% discount for USD denominated investors compared with two years ago, we are now seeing Indian buyers becoming an increasingly dominant force in the marketplace,’ Heaton said.

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