Dubai real estate’s India connection
Leading developers and brokerages in Dubai are being involved in a series of international marketing initiatives in response to increasing demand from Indian investors. Some have established sales offices in key cities and have conducted road shows or joined property exhibitions across India.
Nakheel, for instance, has participated in real estate events and investor road shows in India over the last couple of years. “We continue to explore further investor events in India,” says Aqil Kazim, chief commercial officer of Nakheel.
Indian investors already account for more than 11 per cent of Nakheel’s customers, accounting for more 4,500 villas, apartments and land plots with a combined value of more than Dh9 billion. “The fact that Indians remain the top buyers of Dubai real estate suggests that the currency demonetization in India has had no significant impact on property investment here,” says Kazim, taking note or recent regulations in India. “One in 10 of our investors come from India. They have purchased a wide range of our developments, including investments on the world-famous Palm Jumeirah, where they have spent over Dh1 billion alone.
Deyaar has also made an aggressive push into the Indian market with its participation in events such as the Dubai Property Show in Mumbai and road shows in New Delhi and Mumbai.
Last year, Indians were involved in property transactions collectively worth Dh12 billion in the emirate, which is more than 13 per cent of the Dh91 billion total real estate investments, according to data from the Dubai Land Department (DLD). Indians ranked highest in both volume and value among foreign investors with 6,263 buyers transacting in Dubai property in the last year.
The Dubai Property Show held in Mumbai saw over 30 developers including Emaar Properties, Dubai Properties, Nakheel, Damac Properties, Orion Real Estate, Seven Tides International, naming a few, who exhibited their projects before the Indian audiences.
Danube Properties, known for building affordable projects in Dubai, has opened sales offices in Mumbai, Cochin, Hyderabad and Delhi. According to the developer, over 75 per cent of its customers are Indians in the UAE and India. “The UAE and India have been associated with each other for decades now, and as the two countries move to take their bond to the next level, I am confident that a number of Indians will invest in Dubai and vice versa,” says Rizwan Sajan, founder and chairman of Danube Group.
Boutique real estate developer Gemini Property, which is planning to participate in property shows in Mumbai and open a sales office in Mumbai, has been getting leads from a wide mix of customers. “The sales enquiries show both Indian end users and investors interested in residential, luxury and commercials properties,” says Sailesh Jatania, CEO of Gemini Property Developers.
According to data from the Organisation for Economic Cooperation and Development (OECD), around 2.8 million Indians migrated to the UAE between 1995 and 2015, making it the top destination for Indians in the world. “The middle to upper-middle class from Bangalore, Mumbai and New Delhi invest in UAE, preferably in Dubai because property has become pricier in India,” says Jatania. “The UAE is one of the first choice for this type of investors. With Dh3 million getting you a mere 96 sq m of a small apartment in Mumbai, the same amount fetches a cool 145 sq m of property in Dubai.”
In London, the same amount could only buy a 21 sq m for a unit of comparable quality. Apart from the size of the property, the investment returns are equally attractive for any investor,” says Asanga Silva, deputy general manager of Sumansa Exhibitions, which organises the Dubai Property Show in Mumbai.
“Apartments in Dubai offer rental yields in the range of 7-12 per cent, whereas it is 3.5 per cent in London, 2.82 per cent in Hong Kong and 2.83 per cent in Singapore,” says Silva, adding that Indians have pumped in a total of $18.3 billion into Dubai realty since 2011.
“Dubai real estate also offers better amenities at a lower price. If we see the average ticket size for prime locations in Dubai, including Dubai Marina, Business Bay, Downtown Dubai and others, it is approximately between $545,000 [Dh2 million] and $1.1 million. The same ticket size in a prime location in India would cost around 5-10 crore rupees [Dh5.7 million].”
As Indian interest in Dubai property continues to grow, Silva holding property shows in India is making sense for many developers.
“We have done two successful editions of Dubai Property Show in Mumbai with a great feedback from investors as well as developers,” says Silva. “Now, as a next phase, we are planning to take the show to Delhi. Besides this, we think that tier-two cities like Bangalore, Ahmedabad and Hyderabad offer some significant potential that must be explored.
“We are keen on organising road shows for master and sub-developers in these cities to showcase the potential of Dubai’s lucrative real estate.”
Indian buyers invest in Dubai from different parts of the world, says Mansi Saxena, marketing director of SPF Realty. “Our experience has very much been in line with the DLD figures. There is a right mix of purchasers of Indian origin, whether it is Indians from India or Africa or the UK or Indians living in Dubai. Most of the buyers who are outside of Dubai fall into the investor category, while the Dubai residents are usually end users or multiple property investors.”
Saxena digital campaigns have helped create new leads, but on-ground presence through road shows or experiential events has helped seal the deal. “The on-ground presence provides the much needed human touch, trust and credibility for a high-ticket investment category,” says Saxena. “India remains a key target market for us and this year we will focus on tie-ups with key regional players in the country, penetration in other cities and expanding on-ground presence overall.”
Saxena says the burgeoning Indian diaspora is making Dubai an even more attractive destination for Indians. In additions, attractive rental returns, high capital returns, straightforward transactions, property-based visas and the growth of Dubai as an investment hub, especially with the upcoming World Expo 2020, also make Dubai an easy choice for Indians, she says.
“The demonetization move had a tremendous shock value when it was announced, and clearly some panic was felt across the Indian diaspora,” says Saxena “However, six months since the move, normalcy has returned. Demonetization had a short-term effect on the real estate sector in India and that created more demand for investment in Dubai in that period.”
India is organically growing more rich people. It is home to 101 billionaires, the world’s fourth highest number of billionaires, according to a new list released by Forbes magazine. The country is home to 264,000 millionaires, with Mumbai housing 46,000, followed by Delhi with 23,000 and Bengaluru 7,700, according to the New World Wealth report.
“Indians are getting richer every day with the low-income group now going into the middle class, and the middle class pushing into the rich,” says Sanjay Chimnani, managing director of Raine & Horne. “Dubai has attracted several of these newly rich people who are looking for an attractive destination for a holiday or second home or investment property outside India.”
“A lot of these buyers are looking at property from an investment point of view in Dubai, as the city offers the best rental returns. The recent introduction of the holiday home segment is further attracting such buyers wanting to take the dual advantage of holiday home: they can use it for six to eight weeks in a year and the remaining period it’s an income-generating asset for them.”
Typically, only a small percentage of Indians invest outside the country, “but since our population is so huge, it becomes significant”, says Chimnani. “The Indians forming a large part of Dubai’s expat population, proximity, the presence of family and friends, ease of purchasing property and Dubai’s investment haven status all add to people’s interest towards investing in the emirate.”
Furthermore, Chimnani says the relations between the UAE and India have always been healthy and strong. “Indian Prime Minister Narendra Modi’s visit to the UAE and the Crown Prince of Abu Dhabi, Shaikh Mohammad Bin Zayed’s trip to India have seen incredibly favourable press coverage, which has put UAE in the spotlight for Indians,” he says. “They look at the UAE more positively for investments, business and travel. On the other hand, for India, it has attracted larger investments into the major infrastructure project.”
For Indian residents in Dubai, especially those recently settled in the emirate, this has given them more confidence to make a longer-term commitment here. “Since real estate is an emotional decision, all these factors positively influence the buying decision, converting more tenants towards being property owners,” says Chimnani.