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New thresholds boost appeal of UK property to Indian investors

Indian UK property investments regulations
Apr 2, 2015

The threshold of the Liberalised Remittance Scheme  in India has been doubled to $250,000. Our resident property expert discusses this renewed financial freedom and the attraction of UK property, Serviced Apartments and Purpose Built Student Accommodation (PBSA).

 

Highlights

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Introduction

The UK's highest yielding property investment

The scene is set for property investors in India to take more interest in investing in the UK student housing market, particularly in the Purpose Built Student Accommodation (PBSA) sector. This follows on the back of recent news that the Reserve Bank of India (RSI) has doubled the Liberalised Remittance Scheme (LRS) from $125,000 per person, per annum, to $250,000.

The new LRS threshold also applies to minors resident in India. In effect this means that a family of 4 could invest as much $1 million in overseas property.

In recent years, returns on residential property in India have been down at between 1% and 2% per annum. Appreciation on the other hand is stronger and can be anywhere between 10% and 30% per annum. Although property prices continue to rise, rental income remains flat. This, together with the new LRS threshold, is prompting many Indian property investors to now look further afield for more lucrative opportunities.

 

Student property: a lucrative option

Recession-proof demand

The PBSA sector in the UK typically offers investment opportunities, with the potential for fixed net yields of up to 10% per annum. These guarantees can extend for up to 10 years, offering long-term investment. Good capital growth is underpinned by the chronic undersupply of top quality PBSA in the UK, against an on-going rise in demand, especially from overseas students.

The other advantageous thing about investing in PBSA is the hassle free nature of this type of investment since professional property management companies do all of the day-to-day work. They look after things like collecting rents, ensuring full occupancy, carrying out regular property maintenance, and dealing with any on-site issues.

The many advantages that PBSA offers have already stirred interest among Indian property investors. Opportunities like the PBSA development at the Tudor Studios development in Leicester are likely to be snapped up quickly; especially in view of the new development taking place at De Montfort University in nearby Loughborough, within easy reach of Tudor Studios.

 

Comparison of UK/Indian PBSA ownership

India vs the UK

Serviced Apartments could be next in line

The fastest growing UK hospitality sector

Of course it’s not just the PBSA sector that is attracting the attention of Indian property investors. The new LRS threshold also opens the door on Serviced Apartment investment opportunities. Although this is not a sector that has traditionally attracted Indian investors, that could be about to change.

With UK tourism forecasts being as positive as they are, Serviced Apartments offer robust earning potential and capital growth opportunity. With assured resale values that represent a 50% on capital invested, this surpasses the 10% to 30% growth experienced in the Indian domestic market.

 

The attraction of the UK property market

One of the world's safest property investment environments

With the revision of LRS in India, the percentage of world property investment taken up by Indian property investors is likely to increase significantly. The stability of the UK political system and its resurgent property market is certain to make the UK a prime target in terms of both residential and commercial property.

 

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