Strong rupee helps Indians to buy UK realty

Indians got maximum advantage from weakening of British pound

New Delhi, Aug. 17: Indians bought homes in London at a 14 per cent cheaper price during the March quarter than the year-ago period with the rupee gaining strength against the British pound, according to Knight Frank India.

The Knight Frank Global Currency Report 2017, which was released on Thursday, tracks the impact of currency movements for global investors purchasing luxury residential properties in key cities across the world.

“Luxury homes bought by Indians in London in the March ending quarter of 2017 were significantly cheaper as compared to the same period last year courtesy the strengthening value of the Indian rupee (INR) against the Great Britain Pound (GBP),” Knight Frank said in a statement.

The weakening pound because of development like Brexit made properties in London 14.1 per cent cheaper for Indian investors.

“As a result Indian investors had the second highest purchasing power for properties in London only behind the Russian Ruble denominated investors. For the latter the difference in prices courtesy currency fluctuation was a staggering 28.3 per cent,” the report showed.

The currency valueinduced discount for INR (Indian rupee) denominated investors was higher than Australia (11.7 per cent), United States (11.6 per cent), China (5.8 per cent) and Europe (5.6 per cent).

“Traditionally Indians have had a penchant for buying properties in London. Over the past couple of years the Indian currency has significantly strengthened against major global currencies on the back of some significant reforms,” said Samantak Das, chief economist and National Director, Knight Frank India.

“To top it up geopolitical developments in the UK starting from the Brexit had its bearing on the property market with decline in prices close to six per cent,” he said.

Until the March-ending quarter of 2017 the Indian currency appreciated by 14.1 per cent against the pound in comparison to the same period last year.

But when compared to June 23, 2016, Mr Das said the day of the Brexit referendum, the Indian currency was stronger by 18.7 per cent until Q1 2017. That explains why Indians now regard property purchases more attractive in London.”

A parallel analysis of property prices in London between January 2016 and December 2016 showed that luxury homes in the British capital was 20.4 per cent cheaper for INR denominated investors.

This study accounted for the decline in property prices in addition to weakening of the GBP.

Similarly the report identified key international buyers in six global cities and highlighted the extent to which currency shifts over the last year (between Q1 2016 and Q1 2017) have influenced purchasing power.

In Hong Kong, for instance, the Australian Dollar and Russian Ruble denominated buyers found it cheaper by 0.4 per cent and 19 per cent respectively while those with Singaporean dollar, Chinese yuan and British pound found it more expensive by 3.1 per cent, 6.3 per cent and 12.9 per cent respectively.