The United Arab Emirates is the richest nation in the MENA region, and Dubai is its richest city – according to recent data compiled by New World Wealth.
The city is known for its favorable tax status, modern infrastructure, stable economy, inclusive lifestyle, and world-class tourism. It is also increasingly emerging as an attractive destination for foreign investors, especially wealthy Indians.
Non-resident Indians make up a significant proportion of investors in Dubai’s residential properties in high-end areas such as Emirates Hills, The Palm, Arabian Ranches, Al Barari and Mohamed Bin Rashid City.
A number of factors contribute to Dubai’s popularity with Indian investors, including:
- Return on investment – residential real estate in India generates a return on investment of around 2-3%, while the average return in Dubai is around 5-6% per year.
- Mortgage financing – mortgage financing for real estate purchases in Dubai can be based on income in India.
- Currency – The Dirham (AED) is strengthening against the Indian Rupee (INR) year-on-year by around 3-4%, giving a de facto appreciation against similar Indian investments.
- Repatriation – The Indian government and the Reserve Bank of India currently allow individuals to repatriate funds of USD 250,000 (approximately AED 900,000) per year.
- Taxation – Investors who hold Non-Resident Indian (NRI) status (generally supported by staying out of the country for more than 240 days per year or being legal residents of another country) are exempt from the income tax in India on their aggregate income.
Residential property prices in Dubai, although on an upward trajectory in recent months, are still considered low compared to several other popular overseas cities. When it comes to prime real estate in Dubai, $1 million will buy you around 130 square meters of space. Compare that with 29 square meters in London, 22 square meters in Hong Kong and 30 square meters in New York.
Also consider transaction fees. Transfer fees payable to the Dubai Land Department are currently set at a flat rate of 4%. By comparison, non-UK resident buyers buying a second UK property worth £1.5m or more could face stamp duty of up to 17%.
Besides the hard economy, there are also soft factors at play. Dubai’s widely applauded handling of the Covid-19 pandemic has been seen by many as an example of the benefits of living in a country with strong leadership and leadership. infrastructure and resources to support decisive civic action. The geographical proximity to major Indian cities such as Delhi and Mumbai makes it an ideal location for a primary or secondary residence. Its unrivaled connectivity makes the UAE an obvious base from which to travel and do business with the rest of the world. And visa-friendly government measures, including the introduction of long-term property investor visas, are encouraging investors to view the city as a home, rather than just an investment opportunity.
Legal factors to consider before buying a property in Dubai
Most investors would not think of buying property in their home country without legal assistance. We encourage investors in the Dubai property market to think the same way. Whenever you are acquiring a relatively high value property, as real estate tends to be, we recommend that you hire a local lawyer with experience in UAE real estate.
Our Dubai real estate team can help you in the following areas:
- Due diligence on the legal title of the property – ensuring that the seller has the right to sell what he claims to sell.
- Due Diligence on Parties – checking whether any of the parties are subject to sanctions and therefore whether any payments will breach local or international regulations, exposing you to scrutiny.
- Structuring – advice on structuring options based on your priorities, including the use of foundations.
- Representation by POA – acting as a trusted advisor to sign documentation and oversee the transaction from viewing to completion and beyond.
- Funds – receiving and disbursing funds from our regulated client account, particularly where you may not have access to local banking services.
- Estate – advice on the availability of estate planning solutions, including DIFC Wills.