According to the latest data from leading estate agent Savills, Indians are now the biggest foreign buyers of London property, overtaking China for top spot.
India’s economy continues to grow rapidly, the middle classes are growing and more and more people are becoming wealthy enough to invest in property on a grand scale. With the Indian property market now showing signs of failing, more Indian investors are looking abroad and apparently now London is becoming one of the favourites.
“There there are more buyers coming from India and Pakistan than China – and they’re spending more,” the Savills report said. “This group is now the most important to the London market among the emerging economies.”
India, once a beacon of hope for the international property market, is now looking just a little too much like Dubai in 2008 for my liking. Developers’ sales and profits are turning downwards, which is making the banks increasingly wary to lend. This drop in liquidity, combined with falling sales and profits has left many developers looking severely overleveraged. Like Dubai many of these now stricken-looking developers are in the middle of constructing mega projects in India’s cities.
Indian investors are looking to invest abroad, and London’s booming market is looking incredibly attractive. London property prices have been growing consistently since mid-2009, and most areas have now recouped any ground lost during the crisis. Now, as all the UK joins in a rental market and buy to let boom, London once again booms bigger and brighter than anywhere else.
The UK housing market saw prices fall heavily throughout 2008, continuing the first signs of a crash starting in 2007. But in mid-2009 the indices turned positive and by March 2010 house prices had grown by 8.1% year on year according to Land Registry data. However in Kensington and Chelsea, arguably the prime borough of London prices grew by 19.4% during the same period according to the same Land Registry data.
The market has since turned again, and in the England and Wales as a whole prices fell 1.7% in the year ending March 2011, meanwhile in Kensington and Chelsea prices continue to grow, and were up 4.8% in the year ending March.
This growth has been attractive to foreign investors for sure, but they have also played their part in it. First attracted by the fact that prices in London had fallen, which combined with the weak pound made it a bargain too good to miss and foreigners from around the world poured in. Foreign demand for London property has been growing since 2009, and is incredibly strong in 2011. Demand from India and wider Asia is currently thought to be the fastest growing, having been slow over the past 2 years when Asian markets were booming.