Growing investor’s interest in Dubai
With recent economic changes in India and lack of incentivized benefits for investments, especially in the real estate sector, Indian investors are looking for alternate means of achieving higher returns on investments from different avenues. As such, they are setting their sights on Dubai.
Dubai, due to its diverse population and cosmopolitan lifestyle, offers its residents and businesses a unique environment enriched with hundreds of cultures and a quality of life and work unrivalled in the Middle East. This encourages potential and lucrative investment opportunities from around the world,especially India.
The recent visit by Sheikh Mohammed bin Zayed, the Crown Prince of Abu Dhabi to India has only made the existing ties stronger between the nations with key issues like cooperation in the areas of trade and investments, expanding the bilateral cooperation and new areas under the strategic partnership, defense and security being addressed. Hence, Dubai remains one of the most sought-after property destinations for investors all over the world. It also has its irresistible appeal as a city offering safe, secure, peaceful and most modern lifestyle environment.
The Dominance of Dubai
- Dubai is a commercial capital for 3.5 billion people from the Indian subcontinent, Africa, the Middle East and CIS nations — roughly 40% of the global population
- Dubai has emerged as a strong business hub offering various investment incentives and tax-free policies
- Dubai ranked 5th global city that matters, outperforming major cities such as Shanghai, Paris and Sydney. (Knight Frank 2016 rankings: 1-London, 2-New York, 3-Singapore)
- Dubai attracted over 14.2 million overnight visitors in 2015 up 7.5% over 2014. Dubai International Airport also ranked no. 1 busiest airport in the world in 2015 (up 10.7% from 2014).
- The UAE is the third safest country in the world according to a report from the World Economic Forum (WEF)
- The Quality of Life in Dubai stands at an index score of 143 which is excellent compared to other leading cities such as Paris – 135, London – 122, Hong Kong -103, Mumbai – 51.8
- The GDP of the UAE is expected to grow 4-5% every year between 2017 and 2020 due to public/private sector activity and preparations for Expo 2020. Over Dh25 billion investments is expected in infrastructure-related projects, with 277,000 new jobs being created.
Advantages of Dubai’s real estate market:
- The government of Dubai has strict rules and regulations in place to protect investors
- Property investment is the most feasible investment opportunity Dubai
- When you invest $1 million, you could buy 153 sq m of land in Dubai compared to 20 sq m in Hong Kong, 22 sq m in London, 42 sq m in Singapore.
- Dubai has a strategic geographical location and is easily accessible to the rest of the world
- Dubai’s property sector is projected to see ramp up in 2018, thanks to a growing demand for new residential units ahead of Expo 2020
- Gross rental yield for apartments in Dubai ranges from 7-10% per annum compared to 2-3% in other global cities.
- Investors will benefit from Dubai being the most sustainable city in the region and a safe haven in terms of real estate investments
Current Indian Market Scenario
Given the recent developments in the Indian economy, the repercussions have lowered sales for the Indian real estate sector. According to recent reports, the second half of 2016 saw a 23% fall in in sales volume and 46% drop in new launches. Post demonetization, and the latest announcement of the economic survey report, Indian investors who would wish to invest in second homes or invest their recently converted old money to new money, seem to have limited lucrative options of achieving higher returns in India.
Why Indians invest in Dubai
- 2016 saw foreign investment in Dubai real estate market approaching AED 44bn, from 22,834 investors of 136 nationalities.
- In recent years, the trend of Indians investing in Dubai has surged due to exponentially increasing property prices in India – Almost 25% of Dubai Real estate investments are contributed by Indians.
- Indians topped the real estate investments in Dubai for 2016, making AED 12bn worth of property transactions across 6,263 investors
- Perks of tax free returns
- Capital appreciation of 20 to 30% annually.
- One can earn more than 2.3 lakhs tax free rental income per month when investing in Sobha Hartland, Dubai
- Ease of registering a property in Dubai in comparison to India
- Dubai is just a 4-hour flight from India, making it easy for Indians to invest and live in Dubai properties
- Stable returns as the currency is pegged to the US dollar and unaffected by currency fluctuations
- Under RBIs Liberated Remittance Scheme, a couple can transfer 3.4 crores legally per year which can buy them a 2-bedroom apartment in Sobha Hartland Dubai
- By investing more than 1 million AED in a property in Dubai, one also gets the eligibility acquire a UAE residence visa.
- The Foreign Exchange Management Act (FEMA) came into effect on 1st of June, 2000, replacing the Foreign Exchange Regulation Act (FERA). The intentions of the FEMA are to revise and unite laws that relate to transactions of foreign exchange and encourage an orderly maintenance and development of the foreign exchange markets in India
Dubai has been a hotspot not only for businesses but for all sectors like tourism, real estate, etc., for the past few years. It is considered a viable international hub because of its consistent and steady economic growth, good infrastructure, city planning and ease of access to the rest of the world. Its inviting and inclusive culture and tolerance for multiple nationalities is welcoming and beneficial for residents and businesses alike. Investors will benefit from Dubai being considered the most sustainable city in the region and a safe haven in terms of real estate investments.
PNC Menon – Chairman & Founder, Sobha Group