Dubai property remains attractive for Pakistanis

Pakistanis were ranked among major investors in the Dubai real estate industry (in the non-Arab foreign investor category) in the past few years. The trend is likely to continue despite a remarkable improvement in the Pakistan property industry, which is seeing drastic growth owing to investments by overseas Pakistanis.

With an investment of Dh30.64 billion in the Dubai property market during the past five years, Pakistanis are among the top three non-Arab foreign investors, which also include India and United Kingdom. The major portion of this investment is accounted for by Pakistan expats in the UAE and Gulf regions who prefer to invest in Dubai because of good rental yields.

Industry experts say investment in robust markets such as Dubai should be welcomed as they provide buyers with an extra stream of income, a majority of which returns to Pakistan in the form of remittances, helping the nation's current account balance. The experts added that buying property in the UAE is costlier than in Pakistan, but the exceptional returns make the investor forget the initial hardship.

With the UAE dirham pegged to the dollar, any rise in the dollar's value improves the dirham's buying power as well. Therefore, a rental income in dirhams travels much farther than one in rupees, encouraging many Pakistanis to take a leap of faith into the UAE real estate market.

Dubai remains a very attractive investment market because of high rental yields, which hover around eight per cent to 10 per cent. In many cases, investment in Dubai or any other foreign market creates avenues for remittances back to Pakistan through profits from sales or rental income of properties owned by Pakistanis, which ultimately contributes to the economy.

Remittances received in July to December from the UAE increased 9.4 per cent to $2.1 billion on a yearon-year basis. Inflows from the UAE had registered the largest increase (26.1 per cent) from any major remittance-sending country in 2014-15 when Pakistan received $4.1 billion from expats in the UAE, State Bank of Pakistan (SBP) data shows.

The major portion of remittances to Pakistan from the UAE is contributed by expats residing in Dubai. In the first seven months of the current fiscal year 2015-16, remittances from Dubai have recorded a 39.7 per cent year-on-year surge as Pakistani expats in Dubai remitted $1.67 billion to their country. A Dubai-based Pakistani expat said he invested around Rs4.5 million in Lahore two years ago and now the value of his property has almost doubled due to ongoing infrastructure and development projects in the city. He intends to take a personal loan and invest more in the property sector, indicating his faith in the industry's strong recovery and better returns on his investment.

With a marked improvement in the law and order situation in general and the economy in particular, overseas Pakistanis are investing in major housing schemes in key cities. The Pakistan real estate industry seems to be more attractive for expats as they invest primarily in houses, residential and commercial plots.

Karachi, Lahore and Islamabad are the prime focus of overseas Pakistanis who preferably want to invest in Karachi due to a stability in the security situation. The country's property market is facing a sharp upward price trend for houses and residential plots in major cities as it attracted a major chunk of record $18.79 billion remittances in fiscal year 2014-15. Industry insiders say a lot of Pakistanis invest in properties abroad, especially in Dubai, while on the other side, a major portion of income generated in foreign lands finds its way back to various economic sectors, including property. A recent research report shows that approximately 93 per cent of Pakistani expatriates in the UAE want to purchase properties back home.