Thursday, August 29, 2013

Latest fund repatriation limits may hamper Dubai property market

With new limits being set for the extent of funds that high net-worth Indian investors can repatriate abroad per year, may hamper the real estate market in Dubai. It may prove to be particularly troublesome for developers with forthcoming installments due from Indian buyers in India.

This new regulatory limit permits a domestic Indian investor to invest only up to $75,000 (Dh.275,478) per annum, in comparison to $200,000 earlier. While this is likely to keep away prospective Indian investors from acquiring new properties abroad, it also implies that keeping up the instalments on completed transactions may prove to be a burden.

Damac and Emaar, the two leading developers in Dubai, were marketing their recently launched developments extensively in India. In particular, the sprawling upscale ‘Akoya’ by Damac, the golf-themed project, was extensively air-played on airports and media platforms in India.

Damac Properties has so far not commented on whether it would consider re-scheduling any payments due from India-based investors, in the wake of revised limits on fund outflows.

However, the Property Sales Manager at SPF Realty, which counts India-based investors among its client base, said that the developers in Dubai are re-working their installment programmes, as the current weakened state of Indian economy seems to be a temporary phase, and there are high prospects for the Indian government to pull back such temporary laws.

Although, the status of property market needs to be waited and watched, it is also said that Dubai property market is going through a steady up-growth as it is. Meanwhile, investment advisors too, are of the opinion that UAE property market can take the India move in its stride.

Speaking on this issue, Kalani Lal, CEO of KBC – Aldini Capital at DIFC, said that majority of the investors are either UAE or GCC residents or Middle East buyers. As for fund repatriation limits, Kalani said that the RBI has reduced remittance limit to overseas account to $75,000 (earlier $200,000) on annual basis, and this has been done to preserve forex reserves.

Such restrictions are unlikely to leave a major impact as historically the amount remitted by resident Indian individuals to overseas accounts have been very little.

No comments: