Indian investors driving the surge - A dive into Dubai's booming real estate market
Dubai’s thriving real estate market offers a wide variety of properties, attracting individuals from all over the world, including India, who are increasingly purchasing and investing in real estate in Dubai. Indians have consistently been among the top 3 nationalities to buy properties in Dubai, since 2004. Between 2015 to 2021 alone, India investors purchased real estate worth AED 83.62 billion in the city.
Aside from residential properties, Dubai is also home to significant commercial real estate projects, including office spaces, retail canters, and hospitality properties. The presence of free zones and various business-friendly policies has attracted international companies, thereby positively impacting the demand for rentals.
Real estate is one of the crucial drivers of the UAE economy, with the sector contributing to nearly 5.5% of the total GDP. As Dubai is experiencing a strong post covid recovery, so is its real estate market.
Dubai’s Economic Recovery
Dubai has seen a swift economic recovery post-Covid, largely driven by a boom in the property market, increased tourism, and inflows of foreign capital. The city has set large ambitions with a 10-year economic plan, known as D33, aiming to double the economy's size and make Dubai one of the top four global financial centres within a decade. Further, government initiatives such as the golden visa have played a significant role in attracting foreign investment, talented individuals and boosting issuance of new business licences by over 50%.
The property market has been a strong player in Dubai’s economic recovery, with average property prices rising 12.8% in Q1 of this year and villa prices increasing by nearly 15%. Dubai was the world's fourth busiest ultra-prime property market last year, with 219 home sales valued over $10 million.
As Dubai solidifies its position as a regional hub for finance and business, we are seeing a direct impact of this on the real estate market that is attracting investors and driving further development in the sector.
Dubai’s Real Estate Market
Dubai’s real estate market is expected to grow to over AED 300 billion by the end of the year. Unique Properties, a leading real estate agency in Dubai has stated that they see a strong surge in the sector for the second half of 2023. Data indicates that both the residential and commercial markets grew with significant margins in 2023, when compared to 2022. The residential market registered about AED 93 billion in sales in the first half of the year, which is a 46.7% jump from 2022, while the commercial sector experiences a 30% jump from 2022, to reach AED 2.86 billion in sales.
This notable growth in the real estate market can largely be attributed to the government initiatives that are attracting foreign investments and a strong recovery from the Covid-19 pandemic.
Dubai’s commercial real estate space is looking very promising, at a time when real estate advisors agree that it is important to invest in office spaces. JLL, a leading professional services firm specialising in real estate highlighted the wider impact of the future of work on the real estate sector at their ‘future for work’ event in Dubai. According to JLL’s Future of Work Survey, 77% of commercial real estate leaders agree that investing in high-quality office spaces will be a greater priority than expanding the total footprint of their developments. When it comes to the UAE, the country’s office sector has rapidly bounced back from the pandemic woes. According to the Demand Study conducted by JLL- for Grade A office spaces in Dubai, in the last two years, not only has the sector seen a resurgence in demand, but it also saw the first half of 2022, nearly matching pre-pandemic levels.
Real estate and tech
Dubai’s real estate sector recognises the importance of embracing innovation, leading to the emergence of prop-tech or property technology. These innovative technologies aim to streamline the processes associated with property deals and contribute to the continued growth of the market. Prop-tech solutions are further trying to increase the convenience of searching and purchasing real estate and ultimately enhancing market access by providing more accurate data about the market.
The UAE is already home to 55% of prop tech startups in the MENA region. “With Dubai's ambitious plans to double the population by 2040 to 5.8 million people, further residential supply will be required to meet the growing demand,” said Rami Tabbara, co-founder at fractional real estate investment platform Stake. “Couple the growing market with a strong startup ecosystem, ease of business formation and low taxes, Dubai is ripe to be disrupted through proptech innovation.”
In just two years, we’ve enabled thousands of investors to buy AED 154 million worth of properties in Dubai and paid them over AED4.6 million in rental income” Tabbara said.
Indian Demand for Dubai’s real estate
According to data from the Dubai Land Department (DLD), Indian’s have been the dominant force in Dubai’s property market over the last decade. In 2022, Indian’s emerged as top home buyers in Dubai, with purchases worth Rs 35 thousand crores, according to the recent reports. Indian’s have spent almost twice the money on buying residential properties in the city over the last 2 years, with the average price of houses bought by Indians ranging from Rs. 3.6 to 3.8 crores. This trend is largely driven by businesspeople and active investors.
The high rental yields is one of the main factors that is attracting Indian investors to Dubai. Real estate investors can expect a return on investment of about 5-7% in rental yield, which has remained stable over the past few years. For many investors Dubai offers better rates than large Indian cities like Mumbai and Delhi. However, there are a number of factors that make Dubai an attractive spot for Indian investors, besides the rental yields.
Dubai is strategically located between Asia, Europe, and Africa, making it an ideal hub for international trade and commerce. This is a major push for Indian investors and business owners who are looking to expand their operations into new markets.
Dubai’s stable political climate and business-friendly environment have helped in creating a secure environment for Indian investors to safeguard their investments. Further, the government has also supported foreign investments and several implemented measures to make the city more attractive to investors.
Dubai’s strong and growing economy presents numerous opportunities for investors from India who seek to capitalise on the region's growth potential. With no income or capital gains taxes, Dubai positions itself as an attractive destination especially for Indian’s who may have to pay significant taxes back home.
Dubai is renowned for providing its residents with a great quality of life. The city offers world class infrastructure, top notch residential and commercial properties, business and shopping centres, and a safe environment making it an ideal place for people to live. The large expat community in Dubai, including the substantial Indian population contributes to a sense of familiarity and comfort for Indian investors and residents.
Above all, due to the diversification strategies of Dubai, a thriving real estate market has been created, and this market is only expected to grow, and Indian investors do not want to miss out on the opportunities presented by this dynamic market.
The demand for Dubai’s real estate market is only expected to grow in the years to come, with Indian investors playing a pivotal role in its growth. Some of the key drivers for this optimistic outlook are the tech boom with a growing amount of support for startups, which is transforming Dubai into a global hub for innovation. Additionally, government support with significant infrastructure projects such as the extension of the metro’s red line and the upgrading of roads and bridges, will only continue to stimulate economic growth, create more business opportunities, and attract more investments.
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