High net worth individuals from India continue to buy real estate assets across the globe with the Gulf Cooperation Council (GCC) and the United Kingdom (UK) being favourable destinations.
The general increase in personal wealth amongst the Indian middle classes, both at home and for those who migrated to the UK, has seen a desire to invest in UK real estate. Although there has been interest in the other cities within the UK, London continues to be a top destination for Indians when they think of investing in an overseas real estate asset. With reports of Indians being among the highest number of property investors in London in 2022-23, the most preferred locations are Mayfair and Marylebone in the West End, tied in part to familiarity with these areas from regular holidays to the UK. The UK as a whole, however, offers a politically stable environment with a resilient real estate market despite recent economic pressures. Other attractions include high quality educational options, the ease of doing business, language familiarity and the potential for long term capital appreciation.
Investors who are acquiring property will require expert advice at the outset to navigate what is a tried and tested, but highly regulated property transaction regime. In particular, there are considerable complications associated with the UK tax system, with a number of changes having been introduced in recent years. This means that investors should factor in taxes being payable on acquisition (Stamp Duty Land Tax), rental income (Income Tax on investment assets) and the disposal of assets (Capital Gains Tax). Our team can advise on all aspects of the acquisition process, including direct and indirect tax implications, as well as the choice of corporate and financing vehicles to efficiently structure investments.
When it comes to investment into the GCC, this has seen continued increase in recent years. India has historically had long and close economic ties with the Gulf region, with the first recorded maritime trade route in the world being between the Indus Valley civilisation and the civilisation of Dilmun which was located in the Kingdom of Bahrain. Trade continues to flow between the two regions with trade exceeding US$ 184 billion during the financial year 2022-2023. The relationship between the GCC and India continues to prosper, with a reported 9 million Indians living and working in the GCC and through the years there have been many Indian success stories. Given the close ties, the GCC is also a favoured destination for Indians to acquire real estate. Real estate growth in the GCC is reported to be on an upwards trend with residential transactions in 2023 reaching nearly US$ 3 billion, with this figure likely to be exceeded in 2024. Of the countries which make up the GCC, the UAE has seen the most investment in the real estate market with Dubai being the favoured destination for Indian investors (as indeed it is for other investors generally).
The advantages of GCC countries are their strategic location and proximity to India, high rental yields and potentially significant capital appreciation. GCC legislation is relatively accessible and local regulators have been seen to be effective and keen to put in place registration mechanisms that help to protect investment. Most of the top GCC real estate developers have been targeting Indian investors for some time now and demand remains high. Many GCC countries also now offer residency tied to ownership of real estate, with the UAE recently offering a 'Golden Visa' for investors who are looking to buy properties valued at AED 2 million and above. The duration of the Golden Visa has recently been extended from five years to 10 years. Investors are also finding the GCC real estate markets ideal for joint ventures in the luxury sector as part of a larger master development.
Owning an overseas asset is now becoming the norm for successful Indians with an eye on growth and global markets.
Trowers & Hamlins is headquartered in London and traces its roots back to 1777. We have offices throughout the UK and GCC, and are well place to advise individuals and businesses exploring the option of investing in assets in these geographies. You can get in touch with our experts in our India Desk who possess extensive knowledge of both the Indian investment market and real estate transactions in the UK and GCC for further information.
