Attracted by its low taxes, high returns, security and status as an international transit hub, the skyscraper city – Dubai – is attracting growing interest from global investors, including Indian high net worth individuals (HNIs). . Since 2021, the Dubai real estate market has recorded a steady increase in the average value of residential real estate transactions, including villas and apartments.

To cite recent data from a report by real estate consultancy firm Knight Frank, the total number of homes available for sale in Dubai’s major markets fell by 47% in the first six months of 2024, as prices of prime residential real estate increased by 7%.

The report also highlights that 190 homes priced above $10 million were sold in Dubai during the first half of the year, positioning it as the most active luxury real estate market in the world, ahead of New York (130) and Miami (102).

However, despite soaring prices, Dubai remains one of the most affordable luxury real estate markets in the world. According to Knight Frank’s Wealth Report 2024, $1 million secures around 980 sq ft of prime residential space in Dubai, compared to 366 sq ft in New York, 355 sq ft in London, 1,109 sq ft in Mumbai and only 172 square feet in Monaco.

This affordability, along with other factors such as ease of purchasing property, favorable visa and mortgage policies, tax benefits, high rental yields and capital value appreciation , among others, have made Dubai a sought-after destination in recent years. So if you’re looking to invest in property in Dubai, here’s a detailed introduction to help you get started.

Legal mandates

Investment in real estate abroad, including in Dubai, by an Indian resident is governed by two key regulations, namely the Foreign Exchange Management Act, 1999 and the Income Tax Act, 1961.

Under FEMA regulations, an individual resident can contribute up to $2,50,000 (approximately ₹2.1 crore) per financial year under the liberalized remittance scheme for purchase of immovable property. This limit applies to an individual. Therefore, a family looking to purchase a larger property can contribute funds in larger amounts using their combined individual limits.

It should be noted, however, that borrowed funds or bank loans are not permitted for such transfers. However, family members can donate funds to each other and remit them under the LRS, which is permitted.

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“All income directly derived from such property is taxable in India. This includes rental income or capital gains,” pointed out Dhruv Chopra, managing partner at Dewan PN Chopra & Co.

Purchase and registration

According to real estate players, buying a property is a rather smooth exercise in Dubai. All you need to get started is a set of documents including passport, visa, proof of income, recent bank statements, no-objection certificate from developer, purchase agreement, payment information and proof of identity of the seller.

“Foreigners can purchase freehold properties in designated areas. (without residence visa). There is no need for a local sponsor,” said Akash Puri, international director of India Sotheby’s International Realty. He added that there is a 4% registration fee at the Dubai Land Department (DLD) and mortgage loans are available for foreigners, but the conditions depend on the resident’s residency status and credit history. buyer.

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“In contrast, Abu Dhabi primarily allows foreign ownership through rental agreements in specific areas like Al Reem Island and Saadiyat Island, where properties are leased for up to at 99 years old,” highlighted Manoj Dharmani, CEO of DUDigital Global Ltd.

The DLD updates the freehold areas each year. Some locations in this bracket include The Palm Jumeirah, Downtown Dubai, Burj Khalifa, Dubai Marina, Emirates Hills, Bartha Heights, Business Bay and Blue Water Island.

Privileged neighborhoods and prices

Sector experts listed Downtown Dubai and Palm Jumeirah are the city’s premier luxury residential areas. Meanwhile, Dubai Marina and Jumeirah Beach are popular among expats and professionals.

Puri highlighted that emerging areas such as Dubai Hills Estate and Dubai Creek Harbor are also gaining ground with their modern infrastructure and future growth potential.

“High net worth individuals are looking for prime properties, especially in areas like Palm Jumeirah, Business Bay and Emirates Hills. These buyers often purchase villas or penthouses in exclusive neighborhoods, with prices reaching millions of dollars,” said Rizwan Sajan, founder and chairman of Danube Group.

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Sajan added that middle-income buyers and investors are looking for properties in more affordable but well-developed areas such as Jumeirah Village Circle, JVT and Dubai Maritime City. This segment focuses on high quality apartments and townhouses offering good rental yields and capital appreciation.

The first-time buyers segment is made up of young professionals and expatriates looking for affordable housing or investments. Areas such as Al Furjan, Dubai Silicon Oasis and Arjan are popular among these buyers, offering a balance of affordability and lifestyle amenities.

According to data from real estate consultancy JLL, the approximate price per square foot of real estate in Jumeirah Golf Estate and Arabian Ranches currently ranges between ₹41 196 – 45 774. In the hills of Dubai, it is located ₹36,619 – 45,774 per square foot.

In the upscale localities of Emirates Hill and Palm Jumeirah, prices per square foot vary between ₹57,217 – 68,661 and ₹1,02,991 – 1,19,012, respectively.

Overall, the average house price in Dubai is around $7,60,000 ( ₹63.88 crores), by JLL. The real estate cost, however, depends on the location of the property, stage of construction, living area, quality of finishes as well as facilities of the residential complex, said Ritesh Mehta, senior director and head (North and West) residential services. and development initiative, JLL India.

Capital appreciation and rental yields

According to a report by Knight Frank, residential property values ​​in Dubai increased by 21.3% year-on-year and 5.3% quarter-on-quarter between April and June 2024. Prime residential values, which encompass neighborhoods of Palm Jumeirah, Emirates Hills, Jumeirah Bay Island and Jumeirah Islands grew by 7% annually during the first half of the year.

Apartment prices were up 20.7% compared to the second quarter of 2023, while villa prices saw an increase of 24.3% over a 12-month period to the end of the quarter ended June 2024.

During the first quarter of 2024, the total number of homes available for sale in Dubai’s main markets increased by 21.4%, reflecting the increase in residential projects under construction over the past three months.

A total of 261,243 units were under construction as of the first quarter, and are expected to be completed by 2029. Knight Frank estimates that apartments make up 80% of the total.

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“The performance of the Indian rupee against the UAE dirham has at times influenced purchasing patterns,” pointed out JLL’s Mehta.

At the same time, rental yields, according to experts, are between 5-8%, almost double the yields prevailing in India’s major metropolitan cities.

According to a report by real estate consultant Anarock, during the January-March quarter of 2024, Bangalore recorded the highest rental yield among India’s seven largest cities. Mumbai recorded a rental yield of 4.15% and Gurugram 4.1% over the three-month period.

Tax and visa programs

Among some of the most attractive factors for property buyers, Dubai offers a tax-free environment on personal income and capital gains, which is very attractive for Indian investors accustomed to higher tax rates.

Additionally, owning property in the city can lead to eligibility for a Golden Visa. However, certain conditions must be met. “To benefit from the Golden Visa, individuals must invest at least AED 2 million (approximately ₹5 crore) in real estate or approved investments,” Dharmani pointed out.

The Golden Visa is a long-term residence visa, renewable for 5 to 10 years, which allows foreigners to live, work and study in the United Arab Emirates while enjoying certain exclusive benefits.