Dubai has always been an attractive real estate investment destination for Indians, but the intensity of interest has increased considerably over the past few years. As per latest data released by the Dubai Land Department, the quantum of real estate investments by Indian has reached INR 42,000 cr in the last 18 months alone - almost 40% higher than what it was in 2014. Today, Indians are the largest foreign investors in Dubai real estate by a comfortable margin.
While there are various reasons for such a high interest, the key attractions bear highlighting:
- Attractive returns: As per historical data, Indians can reap approximately 8–10% tax free returns by investing in the Dubai real estate market - without a doubt, extremely attractive capital appreciation and definitely much better than what they can currently expect in many cities in India.
- Ease of investing: As per the current RBI norms, an Indian can remit as much as USD 250,000 per annum to Dubai (or any other country) which effectively means that within just two years, an individual (just one year for a couple which clubs their remittances) USD 500,000 can be invested in Dubai - enough to buy a quality property there. Further, the distance between India and Dubai is short and the frequency of flights is abundant, further adding to Dubai's viability and attractiveness as a property investment destination.
- High transparency: Transparency plays a pivotal role in real estate investments, especially when investing in a foreign country. To illustrate, foreign investments into Indian real estate surged immediately after the announcement of RERA. The Dubai real estate market has consistently been highly transparent in all aspects, making it very attractive for Indian investors.
- Lower budget requirement: Compared to Tier 1 Indian cities like Mumbai and Delhi, an investor needs to shell out far less for investing into the Dubai property market. As per recent reports, the average property price per square foot in the central parts of Dubai is approx. INR 25,000, which is sizably lower than what one would have to invest in Central Delhi or Mumbai. In other words, investors with less-than-spectacular budgets have the opportunity to invest in a highly lucrative market.
- Investment churn: In the past few years, the Indian stock markets have delivered high returns to investors. With every rise the risk of fall increases, which causes investors to book profits earned in equities and invest them in other lucrative asset classes. Real estate, being an asset class which can absorb a sizable corpus, becomes a preferred choice – be it in Indian real estate or other lucrative options like Dubai.
In addition to the above, the issues that investors in Indian real estate have faced in the past decade in terms of delays in development, lack of exit options and high ticket sizes have also played key roles in this outbound investments.
If this scenario does not change or changes too slowly for the sensibilities of serious real estate investors, Indian investments into the Dubai real estate market will continue to grow.
Shobhit Agarwal, Managing Director – Capital Markets & International Director, JLL India