Investing in Dubai Real Estate: A Comprehensive Guide for Indian Buyers
Dubai's property market has been on a steady upward trajectory since 2021, making it an attractive destination for Indian high net worth individuals (HNIs). This guide provides essential insights and practical steps for investing in real estate in the cit
Dubai Real EstateProperty InvestmentLuxury HomesReal Estate MarketIndian BuyersReal EstateNov 04, 2024
According to recent data from property consultancy Knight Frank, the total number of homes available for sale across Dubai’s prime markets fell by 47% during the first six months of 2024, as prime residential property prices grew by 7%. The report also highlighted that 190 homes priced at over $10 million were sold in Dubai during the first half of the year, positioning it as the most active luxury homes market globally, ahead of New York and Miami.
Despite the surge in prices, Dubai remains one of the most affordable luxury real estate markets globally. As per Knight Frank’s 2024 Wealth Report, $1 million can secure approximately 980 square feet of prime residential space in Dubai, compared to 366 square feet in New York, 355 square feet in London, 1,109 square feet in Mumbai, and just 172 square feet in Monaco. This affordability, combined with other factors such as ease of property purchase, favorable visa and mortgage policies, tax benefits, high rental yields, and capital value appreciation, has made Dubai a sought-after destination.
Legal MandatesInvestment in real estate overseas, including Dubai, by a resident Indian is governed by two key regulations the Foreign Exchange Management Act, 1999, and the Income Tax Act, 1961. According to FEMA regulations, a resident individual can remit up to $250,000 (about ₹2.1 crore) per financial year under the Liberalised Remittance Scheme (LRS) for the purchase of immovable property. This limit is for an individual, so a family looking to buy a bigger property can remit larger amounts by utilizing their combined individual limits. However, borrowed funds or bank loans are not allowed for such remittances. Family members can gift funds to each other and remit them under LRS, which is permissible.
All income directly earned from such property, including rental income or capital gains, is taxable in India, as highlighted by Dhruv Chopra, Managing Partner at Dewan P N Chopra & Co.
Purchase and RegistrationProperty purchase in Dubai is a relatively smooth process. To get started, one needs a set of documents including a passport, visa, proof of income, recent bank statements, no-objection certificate from the developer, purchase agreement, payment information, and the seller's identity proof. Foreigners can buy freehold properties in designated areas without a residence visa and without needing a local sponsor, as noted by Akash Puri, Director - International at India Sotheby's International Realty.
There is a 4% Dubai Land Department (DLD) registration fee applicable, and mortgages are available to foreigners, though the terms depend on the buyer's residency status and credit history. In contrast, Abu Dhabi primarily allows foreign ownership through leasehold arrangements in specific areas like Al Reem Island and Saadiyat Island, where properties are leased for up to 99 years, as highlighted by Manoj Dharmani, CEO of DUDigital Global Ltd.
Preferred Neighbourhoods and PricingDowntown Dubai and Palm Jumeirah are the top luxury residential areas in the city. Dubai Marina and Jumeirah Beach are popular among expatriates and professionals. Emerging areas like Dubai Hills Estate and Dubai Creek Harbour are also gaining traction for their modern infrastructure and future growth potential. High-net-worth individuals often purchase prime properties in areas like Palm Jumeirah, Business Bay, and Emirates Hills, with prices reaching millions of dollars.
Middle-income buyers and investors look for properties in more affordable but well-developed areas such as Jumeirah Village Circle, JVT, and Dubai Maritime City, interested in high-quality apartments and townhouses that offer good rental yields and capital appreciation. First-time buyers, including young professionals and expatriates, prefer areas like Al Furjan, Dubai Silicon Oasis, and Arjan, which offer a balance of affordability and lifestyle amenities.
According to data from property consultancy JLL, the approximate per square foot property price in Jumeirah Golf Estate and Arabian Ranches ranges between ₹41,196 - 45,774. In Dubai Hills, it stands at ₹36,619 - 45,774 per square foot. The average home price in Dubai is about $760,000 (₹63.88 crore), as per JLL. The real estate cost depends on the property’s location, construction stage, living area, finish quality, and residential complex facilities.
Capital Appreciation and Rental YieldsAccording to Knight Frank, residential property values across Dubai grew 21.3% year-on-year and 5.3% quarter-on-quarter in the April-June period of 2024. Prime residential values, which encompass the neighborhoods of Palm Jumeirah, Emirates Hills, Jumeirah Bay Island, and Jumeirah Islands, rose by 7% annually during the first half of the year. Apartment prices stood 20.7% higher compared to Q2 of 2023, while villa prices increased by 24.3% over a 12-month period.
During Q1 2024, the total number of homes available for sale across Dubai’s prime markets increased by 21.4%, reflecting the rise in under-construction residential projects. A total of 261,243 units were under construction during the first quarter, expected to be completed by 2029. Knight Frank estimates that apartments will account for 80% of these units.
Rental yields in Dubai range between 5-8%, which is nearly double the prevailing yields in top metro cities of India. According to a report by real estate consultant Anarock, Bengaluru recorded the highest rental yield across the top seven cities in India, with Mumbai at 4.15% and Gurugram at 4.1% during the January-March quarter of 2024.
Taxation and Visa ProgrammesDubai offers a tax-free environment on personal income and capital gains, which is highly attractive to Indian investors accustomed to higher tax rates. Furthermore, owning property in the city can lead to eligibility for a Golden Visa. To qualify for the Golden Visa, individuals must invest at least AED 2 million (about ₹5 crore) in real estate or approved investments. The Golden Visa is a long-term, renewable residence visa for 5-10 years, allowing foreigners to live, work, and study in the UAE while enjoying certain exclusive benefits.
Frequently Asked Questions
What are the key factors driving the interest in Dubai's real estate market?
The key factors include low taxes, high returns, safety, and its status as an international transit hub. Additionally, the city's modern infrastructure and lifestyle amenities make it an attractive destination for both investors and residents.
How much can a resident Indian remit under the Liberalised Remittance Scheme (LRS) for purchasing property in Dubai?
A resident Indian can remit up to $250,000 (about ₹2.1 crore) per financial year under the LRS for the purchase of immovable property.
What are the top luxury residential areas in Dubai?
The top luxury residential areas in Dubai include Downtown Dubai, Palm Jumeirah, Business Bay, and Emirates Hills.
What is the average rental yield in Dubai, and how does it compare to other major cities in India?
The average rental yield in Dubai ranges between 5-8%, which is nearly double the prevailing yields in top metro cities of India. For example, Mumbai has a rental yield of 4.15% and Gurugram has 4.1%.
What are the requirements to obtain a Golden Visa in Dubai through property investment?
To qualify for the Golden Visa, individuals must invest at least AED 2 million (about ₹5 crore) in real estate or approved investments. The visa is a long-term, renewable residence visa for 5-10 years.
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