What Dubai’s real es­tate holds for In­dian in­vestors

HT Estates - - FRONT PAGE - Shob­hit Agar­wal ht­es­tates@hin­dus­tan­times.com The au­thor is man­ag­ing di­rec­tor, Cap­i­tal Mar­kets, JLL India

Dubai­hasal­ways­beenanat­trac­tive real es­tate in­vest­ment des­ti­na­tion for In­di­ans, but the in­ten­sity of in­ter­est has­in­creased­con­sid­er­ably over­thep­ast­fewyears. Asper­lat­est data re­leased bythe Dubai Land Depart­ment, the quan­tum of real es­tate in­vest­ments by In­dian has reached ₹42,000 cror­einthe­last18­months alone - al­most 40% higher than what it was in 2014. Today, In­di­ans are the largest for­eign in­vestors in Dubairealestate­by­a­com­fort­able mar­gin.

While there are var­i­ous rea­sons for such a high in­ter­est, the key at­trac­tions are as fol­lows:

At­trac­tive re­turns

As per his­tor­i­cal data, In­di­ans can reap ap­prox­i­mately 8–10% tax free re­turns by in­vest­ing in the Dubai real es­tate mar­ket - with­out a doubt, ex­tremely at­trac­tive cap­i­tal ap­pre­ci­a­tion and def­i­nitely much bet­ter than whatth­ey­can­cur­rent­ly­ex­pectin many cities in India.

Ease of in­vest­ing

Asperthe­cur­ren­tRBInorms, an In­dian can re­mit as much as $250,000 per an­num to Dubai (or any other coun­try) which ef­fec- tively meansthatwith­in­justtwo years, an in­di­vid­ual (just one year for a cou­ple which clubs their re­mit­tances)$500,000 canbe in­vested in Dubai- enoughto­buy aqual­i­typrop­er­tythere. Fur­ther, the dis­tance be­tween India and Dubaiis short andthe­fre­quency of flights is abun­dant, fur­ther adding to Dubai’s vi­a­bil­ity and at­trac­tive­ness as a prop­erty in­vest­ment des­ti­na­tion.

High trans­parency

Trans­paren­cy­playsapiv­otal­role in real es­tate in­vest­ments, es­pe­cially when­in­vesting­i­nafor­eign coun­try. To il­lus­trate, for­eign in­vest­ments into In­dian real es­tate surged im­me­di­ately af­ter the an­nounce­mentofRERA. The Dubairealestatemar­kethas­con­sis­tently been­high­ly­trans­par­ent in all as­pects, mak­ing it very at­trac­tive for In­dian in­vestors.

Lower bud­get re­quire­ment

Com­pared to Tier 1 In­dian cities like Mum­ba­iandDelhi, an­in­vestor needs to shell out far less for in­vest­ing into theDubaiprop­erty mar­ket.

Asper­recen­tre­ports, theav­er­age­prop­er­typri­ceper­square­foot in the cen­tral parts of Dubai is ap­prox. ₹25,000, which is siz­ably lower than what one would have to in­vest in Cen­tral Delhi or Mum­bai. In other words, in­vestors with less-than-spec­tac­u­lar bud­gets have the op­por­tu­nity to in­vest in a highly lu­cra­tive mar­ket.

In­vest­ment churn

In the past few years, the In­dian stock mar­kets have de­liv­ered high re­turns to in­vestors. With ev­ery rise the risk of fall in­creases, which causes in­vestors to book profits earned in equities and­in­vest theminother lu­cra­tive as­set classes.

Real es­tate, be­ing an as­set class which can ab­sorb a siz­able cor­pus, be­comes a pre­ferred choice – be it in In­dian real es­tate or other lu­cra­tive op­tions like Dubai.

In ad­di­tion to the above, the is­sues that in­vestors in In­dian real es­tate have faced in the past decadein­termsofde­laysin­de­vel­op­ment, lack of exit op­tions and high ticket sizes haveal­so­played key­rolesinthisout­bound­in­vest­ments.

If this sce­nario does not change or changes too slowly for the sen­si­bil­i­ties of se­ri­ous real es­tate in­vestors, In­dian in­vest­ments into the Dubai real es­tate mar­ket will con­tinue to grow.

GETTY IM­AGES

An in­vestor needs to shell out far less for in­vest­ing in the Dubai prop­erty mar­ket

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