Monday, August 26, 2013

Will weakening Indian Rupee affect Dubai real estate market?

According to experts, the weakening Indian rupee will affect several Indian investors in the Dubai realty market.

A UAE-based economist, Dr. Mohammad Al Asoomi, said that he does not expect investors to take their money back to India, at least in the short term. The Indian investment in Dubai realty market will see a decline, but, it may not impact an opportunity-rick market like Dubai in a major way.

He further said that Indian are the top investors in Dubai’s realty market and it is likely to continue that way. The Indian capital will not go back to India to take advantage of the currency’s depreciation.

In the short-term, investors will not take risk and direct their investments to India, as the rupee could regain its value soon, but, the long-term scenario cannot be predicted, he said.

However, Al Asoomi said that Dubai, being an international real estate market, new investors would fill the void created by Indians, if they take their money home.

Meanwhile, the Head of Business Materials Group in Dubai, Mahendra Patel, said that Rupee will affect Indian investment in Dubai real estate market. Indians will now be more hesitant to invest, as they will face lot of obstacles, with the Indian government having placed tough restrictions to control money transfer from India. Therefore, investment in Dubai or any other market for that matter, would prove too costly.

Although Dubai is the most favourable destination for Indian investments, there will be changes as return of this business will not cover rupee value depreciation in the short-term, he added.

The Vice-Chairman at Sobha Real Estate, Ajay Rajendran, on the other hand, said that any change in the Dubai market will be very limited. With some investors getting more cautious now, there will only be marginal drop in property buyers. But, not all investors are based in India. They come from various destinations.

On the whole, not all believe that rupee decline will slow-down Indian transactions in Dubai realty market. The Head of Dubai Property Society (DPS), Ahmad Thani Al Matroushi, said that Indians will invest more in Dubai real estate market, in any case, as they have lesser alternatives in the Gulf region.

Further, there is always the added advantage for Dubai, as it is a tax-free market, and the investors will be still compensated well from the currency’s depreciation. Dubai realty market is a lucrative one with stability, diversity and high-return on investment, he pointed out.

Foreign investors contributed to 32 percent of total investments in Dubai, with 73 percent growth in comparison to same period last year, as per statistics by Dubail Land Department. The real estate market in the emirate drew Dh.53bn worth investments during first half of 2013, marking 49 percent year-on-year increase.

As per estimates by Land Department, Indian investors contributed to bulk of foreign investments in Dubai real estate market, with Indian transactions being worth Dh.8bn during first half of 2013, followed by investors from UK and Pakistan.

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