Monday, August 19, 2013

Will Indians continue to be topmost real estate investors in Dubai in future?

Indians planning to purchase international real estate at attractive valuations are now facing the hitch, despite attractive valuations in Dubai, UAE and other Gulf cities.

The Wealth Report 2012 by the leading global property consultancy, Knight Frank, revealed that value of prime luxury properties in Mumbai are nearly double the prices in Dubai. Besides, cost of purchase in the case of a newly built residential property in Dubai, is much lower than in India, where the residents will have to shell out registration fee, VAT etc.

The Dubai Land Department revealed that Indians purchased more than Dh.8bn worth properties already during first half of this year, in comparison to Dh.9bn which they invested in the whole of 2012. Over the years, Indians have topped the list of expat real estate investors in Dubai.

However in an effort to support the falling Rupee value, the Reserve Bank of India (RBI) recently cut the limit of remittances made by resident individuals from $200,000 to $75,000 per financial year under the Liberalised Remittance Scheme (LRS). The notice also said that residents cannot use money from LRS to acquire immovable property outside India directly or indirectly.

These new restrictions by RBI pertaining to Indians investing in international real estate under the LRS have been introduced in an effort to stabilize the rupee. This move will have medium to long-term implications. Individuals, who were planning to purchase international real estate at attractive valuations and planning for their kids education and housing abroad, will have to change their plans now, said Om Ahuja, Chief Executive Officer – Residential Services, JLL.

Moreover, at present, there are several options in the international real estate market that offer attractive rental yield and valuations, making the proposition of investing in property abroad a potentially lucrative one.
Although cash transactions by Indians may dampen, a few local banks in UAE have begun giving mortgages to non-UAE residents although loan-to-asset values have been capped at 50 percent of property value. This may help boost sales to certain extent, but, it needs to be watched as to how many non-residents will resort to such home financing.

1 comment:

MusicChamberDubai said...

Yes, I think that they will because they have more craze for real estates and they like to buy properties.