Investing Abroad

Investing abroad: Should you consider buying a second home in Dubai?

For Indians looking to invest in a real estate in Dubai, the attractions include high rental yields of up to 7 percent, potential capital appreciation, and the opportunity to own a property in a global city.

Wealthy Indians have had a fascination for buying second homes in Dubai largely on account of its tax-friendly laws and the availability of immediate residency status through real estate investments

Wealthy Indians have had a fascination for buying second homes in Dubai largely on account of its tax-friendly laws and the availability of immediate residency status through real estate investments, as also an international lifestyle and the fact that it is a short flight away from Indian shores.
Indians find Dubai’s real estate market attractive due to factors such as rental yields, potential capital appreciation, and the opportunity to own properties in a global city. The city offers an average rental yield of 7 percent.

Bollywood actor Sanjay Dutt is among those who received the Golden Visa a few years back.

Why is Dubai a favourite among high-net-worth Indians?

Dubai has no personal income tax, capital gains tax, or wealth tax, making it an appealing option for individuals seeking to maximise their financial gains and optimise their tax liability.

“The city offers a wide range of residential and commercial properties, from luxury apartments to high-end villas and office spaces. Indians find Dubai’s real estate market attractive due to factors such as rental yields, potential capital appreciation, and the opportunity to own properties in a global city,” explains Ritesh Mehta, Senior Director and Head, West and North, Residential Services & Developer Initiatives, JLL

“Much of the residential demand surge is from population growth and overseas investment. We are seeing an increase in the migration of people and capital due to economic, geopolitical, and climate challenges, and Dubai is attracting much of that interest. Investors are attracted by the strong capital growth and tax-free yields of over 6 percent. Domestic demand is being driven by longer-term residents, golden visas, and increasing rental costs,” Richard Waind, Group Managing Director at Better homes, a real estate management firm, told Moneycontrol.

“Indian buyers have long been among the main investors across all areas in Dubai. In our transaction data, Indians are always within the Top 2 buyer nationalities. The Golden Visa program has made the UAE an attractive second home for many Indians,” said Waind.

The Dubai Land Department and RERA regulate property rentals and sales transactions in Dubai, ensuring protection to investors through an escrow account, and open data and transparency to the market, he added.

How the numbers stack up

Property Finder, a leading property portal in the MENA (Middle East, North Africa, and South Asia) region, has revealed key trends now dominating Dubai’s property market. In June 2023, there were 10,419 real estate transactions, up 17.78 percent from 8,846 in June 2022. The value of the transactions witnessed a surge of 34.1 percent compared to the same month last year, reaching AED 30.41 billion. This marks the highest transaction volume and value for the month of June in a decade.

According to Property Finder’s data for June 2023, 57.5 percent of property buyers were looking for apartments, while 42.5 percent were interested in villas/townhouses. The most commonly searched apartment size for purchase was two-bedroom, accounting for 34.1 percent, closely followed by one-bedroom apartments at 33.4 percent.

Government policies: The Reserve Bank of India (RBI) allows an Indian investor to officially transfer $250,000 to Dubai every financial year. The historic India-UAE Comprehensive Economic Partnership Agreement (CEPA) that came into effect on May 1, 2022, is expected to increase the total value of bilateral trade in goods to over $100 billion and trade in services to over $15 billion within five years.

Indians have historically been among the largest investor groups in Dubai’s real estate market. Indian investors accounted for 20 percent of all property transactions in Dubai in the first quarter of 2023, investing close to $2 billion. Indians constitute 43.5 percent of the total UAE population.

How much does an investor need to invest in real estate?

Property investment: To acquire a permanent residency visa in Dubai through real estate investment, the minimum property value required is AED 2 million (approximately $472,000). This investment should be in a ready property and not off-plan.

Long-term visa: The property investment allows investors to apply for a long-term residence visa, which is valid for five or 10 years, depending on the property value and other criteria.

Investment in Dubai companies

Shares in Dubai companies: No minimum investment amount has been specified for acquiring permanent residency through investment in companies in Dubai. However, it is generally expected that substantial investments need to be made in reputable and recognised businesses in Dubai.

Long-term visa: Similar to real estate investments, investments in Dubai companies could qualify for long-term residence visas.

Investment for Residency or Citizenship

This requires a public investment of at least AED 10 million or approximately $2.3 million in various assets or business creation which can require investment in a project with a minimum capital of AED 500,000.

Golden Visa in Dubai

Professionals and highly qualified individuals with advanced degrees and work experience are also eligible to apply under Dubai’s Golden Visa program. Numerous academic fields, including medical, science, engineering, information technology, business, and administration, as well as law, culture, and the social sciences, fall under this group. Additionally, the applicant must have a bachelor’s degree or higher and a monthly income of AED 30,000 or more.

Those owning one or more properties may be granted a UAE Golden Visa without a sponsor for a period of five years. This is renewable as long as the investment is maintained, said real estate consultants active in the region.

Regarding permanent residency status, the previous initiatives allowed for long-term residence visas but did not provide automatic lifelong residency. The specific duration of the residency visa would depend on the terms and conditions set by the Dubai government at the time of issuance, they explain.

Real estate options available for investment in Dubai

In the real estate space, several investment options are available in Dubai. These include apartments/flats, villas, townhouses, off-plan properties, hotel apartments, commercial properties, serviced apartments, and mixed-use developments.

Locations and their average prices in Dubai

Real estate consultants active in Dubai say that the popular real estate destinations include Jumeriah, where the average rate of the projects is around DH 2,367 per sq ft; Downtown Dubai (DH 2,344 per sq ft); Palm Jumeriah (DH Rs 2,281 per sq ft); Dubai Hills Estate (DH 1,847 per sq ft); The Old Town (DH 1,836 per sq ft); Mohammed Bin Rashid City (DH 1,785 per sq ft); DIFC (DH 1,776 per sq ft); Business Bay (DH 1,672 per sq ft), and Dubai Marina (DH 1,547 per sq ft).

Downtown Dubai: Known for iconic landmarks such as the Burj Khalifa and Dubai Mall, Downtown Dubai is a highly sought-after area. It offers a mix of residential and commercial properties, luxury apartments, and proximity to key attractions.

Dubai Marina: This waterfront community is known for its stunning high-rise buildings and marina views. It offers a vibrant lifestyle with an array of dining, entertainment, and recreational options.

Palm Jumeirah: An iconic man-made island shaped like a palm tree, Palm Jumeirah features luxury villas, townhouses, and apartments. It offers exclusive beachfront living and a range of high-end amenities.

Jumeirah Beach Residence (JBR): Located along the beachfront, JBR is a popular destination with a vibrant atmosphere, a waterfront promenade, and a mix of residential and commercial properties, including apartments and penthouses.

Business Bay: Positioned as Dubai’s business hub, Business Bay offers a mix of commercial and residential properties, including office spaces, luxury apartments, and waterfront living. It benefits from its central location and proximity to major business and leisure destinations.

Arabian Ranches: This villa community offers a serene and family-friendly environment with spacious properties, landscaped parks, and recreational facilities. It is known for its green spaces and golf courses.

Jumeirah Lakes Towers (JLT): A vibrant and diverse community, JLT features high-rise towers surrounding man-made lakes. It offers a range of residential and commercial properties and a well-connected location.

Dubai Sports City: As the name suggests, this development caters to sports enthusiasts with its sports academies, stadiums, and golf courses. It offers a mix of apartments, townhouses, and villas.

Dubai Silicon Oasis: Designed as a technology park, Dubai Silicon Oasis features residential and commercial properties, attracting investors interested in the technology and innovation sectors.

Dubai Hills Estate: This master-planned community offers luxury villas, townhouses, and apartments surrounding an 18-hole golf course. It provides a green and family-friendly environment with numerous amenities.

Things to keep in mind while buying property in Dubai

The first step to consider when wanting to purchase a property in Dubai is to understand and identify the end objective as purely investment or self-use. This helps maintain focus when selecting the most suitable option. Before concluding the purchase, it is essential to conduct thorough market research and use an established and competent agency to assist with the purchase, said Akash Puri, Director, of International Business, India Sotheby’s International Realty.

The next step, after finalizing the property, is to negotiate a comfortable payment plan and ensure the property purchase is within the liberalized remittance scheme limits of $250,000 per person per financial year. This way, a family of four can transfer up to $1 million per financial year. In addition, it is important to keep a margin to pay the 4 percent Dubai Land Department transfer fees. Also, following the latest Budget recommendations, investors should keep aside the 20 percent tax collected at source on funds sent overseas under the Liberalised Remittance Scheme from July onwards, he added.

Also, residential projects come with a monthly maintenance cost.

Buyers should factor in these costs while buying property in Dubai.