Study Abroad: Education fuelling real estate demand in London
London is seeing a shift in real estate trends with Indians preferring to buy property instead of renting accommodation for their kin pursuing higher studies.
For eons, London has been a much sought-after destination for Indian students pursuing higher studies and the numbers are growing each year. In June this year, a total of 142,848 student visas were granted by the United Kingdom to Indian nationals which was a 54% jump from the YoY numbers.
The surge in numbers has led to greater demand for housing in the capital city. Now, Indians who have the money are buying property in London instead of renting accommodation for their children pursuing higher studies in the city.
In an exclusive interview, Stuart Leslie, International Sales and Marketing Director for Barratt London, a market-leading residential developer, delves into the advantages of buying property in London versus renting and in-demand neighbourhoods for real estate investment.
Is education fuelling London’s real estate demand?
Yes, a lot of Indians are buying property in London for their children's education. Around 40% of our India enquiries are related to education and nearly 32% of our Indian clients buy for their children's education. Over the past year, there's been a 64% increase in demand from Indian investors.
Who is buying and why?
At Barratt, we have seen two main types of Indian buyers - parents looking to send their children to schools and universities in London, having a bolthole that allows them to visit their children more freely. For some, London property is chosen purely for its perceived value as a relatively safe and lucrative investment.
Which housing type & neighbourhood or borough within London are popular amongst Indian buyers?
Among Indian buyers, we see an interest in one-, two- and three-bedroom apartments right across the city. According to UK Government statistics, some London boroughs are particularly popular with those of Indian origin, with the top four locations being Harrow, Barnet, Brent and Hillingdon – all having access to fantastic educational facilities.
Why is London’s real estate so attractive as an investment for international students?
With so many of the world’s finest universities being in and around London, and with UK student accommodation being notoriously expensive and poor quality, for many families it is a shrewd financial move to purchase a property, especially if they have several children likely to study overseas.
Also, a regular influx of individuals looking for accommodation results in a constant stream of rental income for property owners, making London real estate an extremely lucrative investment. Nearly 7% of our landlords are of Indian origin.
What are the advantages of investing in residential property in London as opposed to renting for students?
There are considerable advantages, to being based in the UK rather than just flying in for term times as an international student. For university students in the capital, the rent averages around £800 a month for a basic room, up to £2,000 a month for a studio, meaning that buying an apartment instead of renting can not only be a good option but an economically sound one as well.
For example, a £330,000 apartment at Barratt London’s Eastman Village development, with a 10% deposit and a five-year fixed rate mortgage of 6%, would cost £1,914 a month. Add to it the potential for capital growth over the degree period and private rental income afterwards.
Tell us about the London neighbourhoods/boroughs offering promising investment opportunities for students/parents.
Eastman Village (Harrow) is set in a major regeneration area where the site of a disused Kodak factory is being transformed into 2,000 homes + other facilities. In the past year (from January 2022 to January 2023), property values in Harrow have increased by 4.8% and is expected to achieve 14% rental growth in the next 5 years.
Hayes Village (Hayes) on the site of a former Nestle factory, is a mix of newly built homes and apartments sprawled across 9 acres and a short stroll from Elizabeth Line Crossrail services. The Village will eventually provide 1,386 one- to three-bedroom apartments priced from £329,000. These properties are an ideal investment and as Benham & Reeves reports, investors could achieve rental yields of up to 5.9%.
Hendon Waterside, a thriving new waterside neighbourhood will have 2,000 homes by 2028. Prices start from £391,000 for a one-bedroom apartment and property here could achieve rental yields in the region of 5-6%.
Wembley Park Gardens, next to Wembley Park Underground station as well as the legendary sporting venue, is one of London’s most successful regeneration projects with a nearly 50% price growth in 10 years and rental value expected to grow 3% year-on-year until 2027.
Bermondsey is a rare opportunity in an upcoming neighbourhood of London, with average asking prices increasing by 3% in the last six months alone. The main tower of Bermondsey Heights, a development by Barratt London, will have 26 storeys of high-quality residential accommodation and commercial units, with 163 private one-, two- and three-bedroom apartments plus courtyard gardens. Prices start from £482,000 for a one-bedroom apartment.