Indians have retained the title of top property investors in Dubai in the non-Arab category since 2012. They invested Dh18 billion through 7,353 real estate transactions last year.
Leading property developers descend on Mumbai to attract more Indians.
Published: Tue 3 Nov 2015, 11:00 PM
Updated: Thu 5 Nov 2015, 9:59 AM
Indians are likely to retain the top ranking in Dubai's real estate industry this year as one of the most popular property exhibitions is set to mark its footprint in the one-billion-plus market to showcase the emirate's realty projects in India this weekend.
The three-day Dubai Property Show, after a successful London foray in March, is scheduled to start in Mumbai on Friday and expected to attract 5,000 serious buyers that will help further strengthen the position of Indian investors who invested more than $2 billion in the Dubai real estate through 3,017 transactions in the first half of 2015.
Seven key factors for investment in Dubai
Low property prices
Rates in many locations in Dubai are comparatively lower than those of certain metropolitan cit-ies in India and Dubai real estate also offers better amenities at a lower price. The average ticket size for prime locations in Dubai including Dubai Marina, Business Bay and Dubai Downtown near Burj Khalifa is approximately Dh2-4 million ($545,000-$1.1 million), which is equal to Rs33.5-Rs66.9 million. The same kind of ticket size in a prime location in India would cost around Rs50-Rs100 million. This is the main reason Indians are seeing Dubai as their second home as well as the great return on investment opportunity for investors.
RBI's increase in limit
Indian investors are increasingly exploring foreign markets, such as Dubai, for a balanced real estate investment portfolio. The recent move by the Reserve Bank of India (RBI) allowing investors to freely send up to $250,000 over-seas to buy property has boosted the sentiment.
Close proximity to India
Dubai is an easily-accessible destination for frequent travel for both business and recreational purposes. More than 1,700 flights a month from most Indian airports and hassle-free visa availability has made Dubai first choice of destination for Indian investors.
Lucrative rental fetch
Dubai will be hosting World Expo 2020 and it marks as a security for its economic growth that will bring profitable dividends in both the long and short runs, particularly lucrative rental yield that ranges from four to seven per cent per annum.
Tax-free returns on investment
The Dubai government has not imposed any tax on property rental income, which means that investors can make free and clear profit on rents. Similarly, with zero per cent capital gain taxation and no property tax, the profit margin is much higher, making Dubai real estate a far more rewarding ven-ture compared to other countries.
Better transparency in deals
The sheer professionalism and transparency in Dubai real estate market encourages and instills confidence to invest in the emirate. The recent regulation in-troduced by the Real Estate Regu-latory Authority and the Central Bank of the UAE to ensure stable property sector has attracted Indians, who are the top non-Arab foreign investors since 2012.
Conducive environment
Dubai also offers a conducive en-vironment and peace of mind to Indian buyers that is often denied in India, courtesy land unions and taxes, among other reasons.
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Whether it is highest number of transactions or the gross total value, Indians have retained the title of top property investors in Dubai in the non-Arab category since 2012. They invested Dh18 billion through 7,353 real estate transactions last year and 2015 first-half figures indicate that the same trend will continue - keeping the growth momentum in Dubai's property sector.
"India is an enormous economic and demographic power at the global level experiencing high growth level. The UAE and India enjoy historical trade relations and periodic reports issued by the Dubai Land Department [DLD] indicate that the Dubai property market is of high appeal among Indian investors," said Sultan Butti bin Mejren, director-general of the DLD.
He said Indian investors always top the foreign property investors list in the Dubai market. "The Dubai Property Show in Mumbai will contribute to acquainting more Indian investors with meaningful opportunities offered to them by the emirate," Bin Mejren said.
Dubai's leading developers, including Emaar Properties, Nakheel, Dubai Properties, Falconcity of Wonders, Damac Properties, Deyaar Development, Meydan Sobha, Select Group and MAG Property, among others, as well as top brokers, are participating in the first-ever show in Mumbai to entice Indians to invest in the emirate's real estate sector. The DLD will be present as the official sponsor of the exhibition staged in the commercial hub of India and considered the hottest place to be for real estate sales in the country.
Sunil Jaiswal, president of Sumansa Exibitions, the organiser of the Dubai Property Show, said Dubai is the favourite destination for investors looking to live, work and invest on a long-term basis.
"As we understand, the Dubai property market is going to have a continuous supply of stock as master developers and sub-developers are launching new projects on a regular basis and have a lot in the pipeline."
"Keeping in mind that there is so much supply coming into the market, the way forward for Sumansa Exhibitions in partnership with the DLD would be to go out to people to convince them to invest in real estate, thus balancing the demand-supply ratio," Jaiswal told Khaleej Times.
Rated among the six "billionaire cities" globally, he said Mumbai is the nerve centre of India. He said Mumbai was a natural choice as the venue for the Dubai Property Show as it is the financial, commercial and entertainment capital of India and home to the country's ultra-rich class.
"India is home to more than 14,000 multi-millionaires whose sharp and intuitive business sense pushes them to explore lucrative ventures globally," he said.
To a question why Indians prefer to invest in Dubai real estate, he said the emirate's close proximity to India, lower interest rates, lucrative rental yield ranging from four to seven per cent annually, security, tax-free returns on investment, attractive payment plans and regulated market are some of the key factors for Indian investments in the Dubai property market.
Nakheel will showcase projects worth more than $4.6 billion in construction costs at the property exhibition in Mumbai. Indian investors already account for more than 11 per cent of Nakheel customers, buying almost 4,400 villas, apartments and land plots with a combined value of around $2.5 billion.
Nakheel chairman Ali Rashid Lootah said Indians are the top foreign property investors in Dubai, and key to Nakheel's own customer portfolio. He said Indians have already poured more than $300 million investment in Palm Jumeirah alone.
"We have a huge Indian customer base now, with one in 10 of our investors coming from India," he said.
In an online survey conducted by Khaleej Times, 64 per cent of participants show their willingness to invest in Dubai real estate while 48 per cent of the newspaper's Twitter respondents gave a positive view for investment in Dubai.
P.N.C. Menon, founder and chairman of the Sobha Group, said Indians looking to invest outside of India find Dubai to be a very easy place to do business and transact in real estate. They find great comfort in the improved regulatory environment for real estate that provides more transparency and consumer protection.
"The fundamentals of Dubai are very strong with tourism, the airline network and investment in local infrastructure. The lifestyle offerings in Dubai make it a magnet for international tourists and residents. From restaurants to shopping to nightlife and entertainment, Dubai is a home away from home for all the Indians," Menon told Khaleej Times.
Talal Moafaq Al Gaddah, chief executive of MAG Property Development, said the savvy Indian investor understands any investment should yield a decent rate of return with calculated risk.
"That is why India remains in the top three nations investing in Dubai today. Any investment in Dubai property consistently offers a realistically potential conservative rental yield upwards of between eight and 10 per cent in a safe and stable environment," Al Gaddah told Khaleej Times.
Mustafa Pooya, chief commercial officer of Select Group, said investors of Indian origin are part of almost every freehold development if not every project in Dubai.
"Dubai, with its unmatched infrastructure, secure environment and tax-free business opportunities, is still undervalued when compared to the process in a city like Mumbai. So we feel that all property types and price ranges have an appeal for a certain buyer segment in India," Pooya told Khaleej Times.
He said a healthy level of new supply is expected to enter the market over the next year or so, which also means that prices are not expected to sky rocket anytime soon.
"Also with a large number of speculative investors being weeded out of the market, the scenario offers a good opportunity for foreign investors. Off-plan projects are typically cheaper and may be available on better financial terms [with lower down payments], while ready-to-move projects have the advantage of being available immediately and avoiding potential uncertainties," he said.
Kalpesh Sampat, director of SPF Realty, said there are a number of reasons why Dubai property appeals to Indians. "They do not have to deal with Section 54 and other provisions relating to the Income Tax Act because there are no personal or income taxes in Dubai. Indians can get their money as a seller in 10 days [cash], or 45 days in case of mortgage, thanks to quick procedures, and commissions are paid to agencies very rapidly as well," Sampat told Khaleej Times.
Dev Maitra, chief executive of Indigo Properties, said his company will be showcasing its Indigo Zen project, which is spread over 4.5 million sqft with 346 villas and townhouses set amongst a verdant, tropical landscape in Dubai Golf City. "Our primary task is to get prospective buyers to visit Dubai and once they see the quality and quantity of what we have delivered so far in Dubai then the purchase decision is made easier," Maitra said.
- muzaffarrizvi@khaleejtimes.com
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