Tax-friendly laws and availability of immediate residency status through real estate investment starting at Rs 2 crore triggers the trend
During the two waves of COVID-19, wealthy Indians picked up second homes in Dubai, lured largely by its tax-friendly laws and the availability of immediate residency status through real estate investments, not to mention an international lifestyle and the distance from Indian shores.
Bollywood actor Sanjay Dutt received his Golden Visa in May.
Dubai’s real estate market has been booming over the past five months due to the influx of foreign investors, of which Indians pumped in 6 billion dirhams (Rs 12,100 crore) compared with 2.9 billion dirhams by UK investors and 1.4 billion dirhams by Chinese investors, Mahmoud AlBurai, senior advisor to the Dubai government, tweeted a few days ago.
These sand castles certainly don’t come cheap – the luxurious apartments, villas and even hotel rooms can set one back by Rs 2 crore to upwards of Rs 20 crore.
The city – only a short flight away from India – has attracted several Indian billionaires. The minimum amount to be invested in a property to obtain a residency visa is 1 million dirhams (Rs 2 crore). This is more affordable than investing 500,000 euros (Rs 4.4 crore) in real estate to obtain residency visas in Portugal and Spain, experts said.
The rise in numbers has also been on account of the UAE’s Golden Visa programme, which is available for international investors and top talent, providing them with visas for up to 10 years. This is open to doctors, specialists, scientists and inventors as well as to talented creative and sporting individuals, and business, startup and real estate investors in the emirate.
“The Dubai real estate market has done well during the pandemic and attracted several Indian investors primarily due to the way the COVID-19 situation was handled by the government there. Investment from both NRIs residing in UAE and HNIs from India totalled to around 6 billion dirhams in the last five months,” Akash Puri, Director International, India Sotheby’s International Realty, told Moneycontrol.
“There has been an increase in the number of people looking at Dubai market in the month of April 2021. Dubai’s property market witnessed more than 4,800 sales transactions throughout April worth $3 billion, which was the highest value in the last four years.”
In April, almost 60 percent of the sales transactions were for secondary or ready properties and 40 percent for yet-to-be-completed units. As many as 1,934 under-construction properties worth $841 million and 2,898 ready properties worth $2.15 billion were sold in April, Puri said.
Resident Indians are allowed to send up to $250,000 (Rs 1.85 crore) overseas every financial year. Real estate investors are eligible for a three-year Dubai residency visa if they invest not less than 1 million dirhams in a property and a five-year residency visa if they invest 5 million dirhams. The real estate investor visa includes permits for spouse and children, Puri explained.
Most sales took place in Mohammed bin Rashid City, Dubailand, Jumeirah Lake Towers, Downtown Dubai, Arabian Ranches, Palm Jumeirah and Emirates Hills.
What’s on offer?
A ready-to-move-in one-bedroom property in a well-located luxury condominium with good views can cost about Rs 3 crore. Villas are popular.
Depending on size and style, a 4-bedroom villa can cost upwards of Rs 7 crore.
The terms of payment, too, are simple. For under-construction properties, a buyer can pay 25 percent to 40 percent before handover and the remainder over a post-handover payment plan of three years or more. Rental yields are attractive, varying from 4 percent to 6 percent for a quality asset, said Puri.
“More than ever before, Indians are now eyeing properties in Dubai. Investing in real estate has emerged as the quickest way to get a residency permit in UAE, and since 2017, Indians have ranked amongst the top nationalities investing in property in Dubai,” said Shajai Jacob, CEO-GCC, ANAROCK Property Consultants in Dubai.
Dubai’s real estate market has been on a stellar growth track since January 2021. From the vantage point of June 2021, each of the past few months has been record-breaking with respect to real estate sales, he said.
Rich Indian homebuyers have a variety of formats to choose from – pre-leased hotel rooms, one- and two-bedroom apartments, and villas. A pre-leased hotel room can cost Rs 70 lakh to Rs 3 crore.
According to PNC Menon, chairman, Sobha Realty, Dubai continues to witness significant interest from Indian buyers looking to invest in real estate in the UAE.
“During the pandemic, we definitely saw a surge in demand from Indian buyers living in the UAE as well as overseas investors owing to the fact that the emirate is seen globally as a safe haven to live and work in. The recent reforms made by the government—be it the multiple visa programme, low interest rates and an increase in the loan-to-value (LTV) ratios being offered by financial institutions, coupled with the successful vaccine rollout, have resulted in Dubai’s property market reaching a 'record high' in Q1 2021,” he told Moneycontrol.
In response to the positive market sentiment, Sobha Realty launched the third phase of its customised villa project, which has been sold out completely and unveiled a 592-luxury apartment tower at its new Waterfront District—both part of its 8-million square feet flagship development, Sobha Hartland.
Besides businessmen, banking and financial services professionals have evinced interest in buying properties in the Gulf, said Ritesh Mehta, head of residential property sales at JLL.
“Indians prefer to invest in properties in Dubai because of the presence of attractive payment schemes,” he said. “The rental market too is well regulated and the yield is anything between 8-9 percent per annum.”
Prices are currently subdued as there is excessive supply of housing units in the market. The additional stock was created with Expo 2020 in mind but the event had to be rescheduled from October 2020 due to COVID-19, he added.
HNIs from Dubai investing in India
The reverse trend is also true. As vaccination picks up, expatriate Indians in the UAE and GCC countries are investing in real estate back home. Uncertainty, geopolitical issues and the need for expatriate Indians to keep a ‘safe nest’ back home seem to be driving this trend.
Some leading developers are offering expatriate Indians time-bound, assured lease rental schemes if they buy a home, said Niranjan Hiranandani, president of the National Real Estate Development Council.
A Hiranandani Group company built what was then the world’s tallest residential tower, 23 Marina, in Dubai a few years ago.
“Since that project, we have not forayed into the Dubai real estate market,” said Hiranandani.