Indians today are the most prolific foreign investors in real estate in Dubai. The second highest investment in the Dubai real estate comes from the United Kingdom. Indians today claim almost one-third of business investment in the UK; so it can be safely presumed that the investment flowing in the Dubai real estate from the UK also has strong Indian component. Indians invested about Rs 13,000 crore in the Dubai real estate during the first half of this year in over 3,000 transactions. In the last three years, Indians invested Rs 70,000 crore in Dubai’s real estate market.
One of the most telling examples of Indians’ strong presence is found at the Burj Khalifa, the world’s tallest building in Dubai. Most of the apartments in the 160-storey building which rises to a height of 838 metres are owned by Indians. One of them bought a whole floor in 2005 for Rs 76 crore. Last year, a builder launched a project to develop 175 townhouses at Al Furjan, a residential hub in Dubai, by 2016. The proposed townhouses were three- and four-bedroom houses with a built-up area of 2,500-3,000 square feet and prices starting at Rs 4.2 crore. The entire project was sold out on the very first day and the largest number of buyers was Indians.
Who are these Indians who are buying real estate in Dubai? Indians make up the largest number of expatriates in the Persian Gulf. They constitute nearly one-thirds of the Dubai population. India has provided a major stream of cheap labour supply to the Persian Gulf countries for several decades. For the Indians who migrated to the Gulf the attraction was far higher wages and salaries there than they could expect anywhere in India. A number of Indians earned good money and stayed on. A stream of Indian businessmen too flowed to the Gulf, mainly to Dubai owing to the ease of doing business and a good atmosphere. Then there are businessmen based in India who also looked for investments in Dubai. All these sections of Indians have been buying property in expensive districts such as Burj Khalifa, Downtown Dubai, Dubai Marina, Jumeirah Lake Towers and The Palm Dubai.The buyers are not only affluent businessmen. According to official records, the number of investors buying apartments through home loans in the Burj Khalifa tower had doubled in the first nine months of 2014, compared to the same period in 2013.
One of the major reasons why Indians are buying properties in Dubai is that property rates in the city are much lower as compared to those in metropolitan cities in India, such as Mumbai. The average price of an apartment in prime locations in Mumbai is Rs 6 crore whereas the corresponding price for a posh apartment or villa in Dubai is Rs 3.4 crore to Rs 5.1 crore. Even in an upscale location such as Dubai Marina, whose long waterfront is crowded with yachts, property prices are cheaper than in many Indian cities. Property prices in Dubai are even cheaper than in international cities such as London where too Indians have been investing in real estate. Properties in London cost three to four times more than in Dubai. No wonder, a number of real estate developers from India are developing properties in prime locations in Dubai.
The second reason is that it is much easier to invest or do business in Dubai than in India. In Dubai there are no trade union problems, shortage of labour and even restrictions on using land. Adding to that is fast and comfortable commuting in the city for both business and recreational purposes. Then there is the attractive factor: there is no tax charged in Dubai on rental income, which means that investors can make free and clear profit on rents, unlike in India where rental income is added to the annual income and the landlord has to pay tax on that. Yet another factor is the decision of the RBI to allow Indian investors to send up to $2,50,000 freely overseas to buy property. This easing has boosted the investment even more.
Indians are known for a mindset of putting their eggs in several baskets. No wonder they top the foreign property investment chart in Dubai. The Indians benefitting from the dynamics of Dubai real estate is a growing sign of the boldness of Indian investors. The importance of the whole development is that these investors come not necessarily from traditional business classes but also from Indians who went to Dubai as migrant employees and earned and saved money enough to invest in an apartment or a villa. That actually is a success story of globalisation.