[ecis2016.org] When it comes to choosing between a luxury property located in India and one located in Dubai, many Indian HNIs seem to prefer the latter. We look at what makes Dubai properties so attractive to Indian investors
Rajeev Sood was negotiating for a sea-facing luxury property in Mumbai, at a whopping price of Rs 50,000 per sq ft. However, before he could close the deal, a business trip to Dubai completely changed his outlook. This software entrepreneur realised that he could afford some of the most luxurious properties in Dubai, at a lesser price than Mumbai. “In terms of price point, luxury properties in Dubai are more attractive than any option in Mumbai or Bengaluru. Moreover, no Indian city can match the rental returns in Gulf cities. Add to it the benefits of tax-free returns and attractive capital appreciation. Last, but not the least, is the quality of life in Dubai,” says Sood.
You are reading: HNIs find Dubai property more attractive than Indian real estate
Property prices in Dubai
Sood is not alone, in having changed his mind, after being exposed to the property market of Dubai. It is, hence, no surprise that Indians are the largest buyers of properties in this city. Around six to seven thousand properties are taken by Indians, every year. As per the Property Monitor of Gulf, the cost of an apartment in Dubai is Arab Emirate Dirham (AED) 642 (Rs 11,235 at a conversion rate of 17.50) per sq ft in International City; AED 846 (Rs 14,805) per sq ft at Dubai Investments Park; AED 883 (Rs 15,452) per sq ft at Jumeirah Golf Estates; AED 1,257 (Rs 21,997) per sq ft at Mohammed Bin Rashid City; AED 1,333 (Rs 23,327) per sq ft at Dubai Festival City; AED 1,471 (Rs 25,742) per sq ft at Business Bay; AED 1,623 (Rs 28,402) per sq ft at Dubai Marina; AED 2,013 (Rs 35,227) per sq ft at Palm Jumeirah; and AED 2,383 (Rs 41,702) per sq ft at Downtown Burj Khalifa.
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Even for HNIs seeking luxury villas, Dubai has better price attractions than many of the Indian cities. Real estate portal Propertyfinder, which has analysed the costliest areas in the Emirates, suggests that a luxury villa would cost roughly AED 2,604 (Rs 45,570) per sq ft. A property in Palm Jumeirah would cost AED 2,437 (Rs 42,647) per sq ft, while The Lakes community, which sits next to Emirates Hills, would cost AED 1,369 (Rs 23,957) per sq ft.
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Dubai property: A magnet for Indians
- Property prices more rational than Indian cities.
- Rental returns, in the range of seven to 12 per cent, are tax free.
- Attractive capital appreciation.
- Hassle-free buying and selling, with no tax liability.
- A global city with better quality of life.
Why Indian investors are lured by Dubai’s real estate market
Attractive capital values are just one of the temptations, for HNIs. Dubai also offers rental returns in the range of seven to 12 per cent, which is higher than most global cities. For example, Jumeirah Village Triangle (JVT) has the highest rental yield for apartments in Dubai at 9.2 per cent, despite witnessing one of the steepest decline in prices, by about 12 per cent, says Propertyfinder. In comparison, the rental yields in London are 3.5 per cent, while in Hong Kong it is 2.82 per cent and 2.83 per cent in Singapore. Dubai’s tax-free status makes rental income more profitable. Even purchasing a commercial or residential property, does not entail taxes.
For a property that has already been purchased, owners do not have the liability to pay additional taxes in the future, for having freehold property.
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PNC Menon, founder and chairman of the Sobha Group, points out that there has been a 12 per cent growth in Indian travellers to Dubai. After the demonetisation in 2016, Indian investors seem to have limited lucrative options that offer high returns in India. “In Dubai, Indian investors can avail of tax-free returns of eight to 10 per cent and a capital appreciation of 20 to 30 per cent annually, as the AED is pegged to the US dollar and is unaffected by currency fluctuations. The RBI’s Liberalised Remittance Scheme allows an Indian investor to transfer USD 2,50,000 (USD 5,00,000 for a couple) legally per year, which can buy them a 2-BHK apartment in Dubai. Registering a property in Dubai is easier, as compared to India and one can automatically get a residence visa, on investing AED one million,” explains Menon.
With recent studies showing that Dubai has become the second most attractive real estate investment market for high net worth individuals after London, it is not surprising that Indians are the leading foreign investors in Dubai properties, along with Pakistani, British, Chinese and Canadian nationals.
(The writer is CEO, Track2Realty)
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