Within the middle of 2021, the Dubai property market observed several key trends as per multiple reports and studies. The rise in the value of the UAE dirham against the Indian rupee and other global currencies naturally led to a mini drop in real estate demand earlier since properties in the country, especially Dubai, got marginally more expensive. However, the stabilization of the dirham values restored the demand to normal in recent times. In this article, let’s look at the status of the Dubai property market in 2021 and why more Indians are deciding to invest there.
Property in Dubai Gets A Resounding Boost Courtesy Indian Investors
The demand for property in Dubai received a major boost despite two coronavirus waves as more Indian investors chose properties in the Emirate as their second homes. Factors like the availability of instant Dubai residency status via realty investments, elevated international lifestyles, short flight distance from India, and relatively tax-friendly regulations in Dubai attracted them to the city. The real estate property sector in Dubai has witnessed a boom over the last 5-6 months owing to the inflows of cash from global investors. Indian investors have already put in approximately Rs. 12,000 crores or 6 billion Dirhams while the UK and Chinese investors have pumped in roughly 2.9 billion Dirhams and 1.4 billion, Dirhams respectively.
The investments are sizably higher from Indians this time, as per reports. Of course, there is a price to be paid for the perks. Luxury villas, hotel rooms, and apartments may cost investors anywhere between Rs. 2 and 20 crores or even more on average. Dubai is only a short flight away from India and has drawn several billionaires and high net-worth individuals in recent times. Approximately 1 million Dirhams or Rs. 2 crores is the minimum real estate investment required to get a Dubai residency visa.
This is hugely affordable in comparison to residency visa investment thresholds of Rs. 4.4 crore or 500,000 Euros for countries like Spain and Portugal in Europe.
Visa and Real Estate Property Investments in Dubai
The rise in figures has also been due to the Golden Visa program of the country, which is available for skilled talent and global investors, offering visas with durations up to 10 years. This is always open to specialists, doctors, inventors, scientists, and sporting/creative talents along with startups, businesspersons, and real estate investors in Dubai.
The Dubai property market has done exceedingly well throughout the COVID-19 pandemic. Looking at the Dubai Government’s excellent management of the COVID crisis, many more Indian investors have been eyeing properties in the city and planning to move permanently.
Investments from HNIs in India and NRIs staying in the UAE cumulatively touched a whopping 6 billion Dirhams in the last five months till June 2021. The number of people scanning the Dubai property segment went up exponentially from April this year.
More than 4,800 real estate transactions were seen this month, touching $3 billion, denoting the highest such value over the last four years as per reports.
A whopping 60% of overall realty transactions covered secondary or ready-to-move properties, while 40% comprised under-construction projects. Almost 1,934 under construction units were sold in April, worth approximately $841 million, and 2,898 ready-to-move units were sold alongside for the month, touching $2.15 billion in terms of overall values.
Resident Indians are also permitted to send up to Rs. 1.85 crore or $250,000 overseas in each financial year. Property investors will have eligibility for the 3-year residency visa in Dubai if they invest up to 1 million Dirhams in real estate while investing 5 million Dirhams will give them a residency visa for 5 years. The investor visa has children and spouse permits as well.
Areas Gaining Momentum for Properties in Dubai
Most sales transactions in the first half of the year were seen in areas like Dubai land, Mohammed bin Rashid City, Downtown Dubai, Jumeirah Lake Towers, Emirates Hills, Palm Jumeirah, and Arabian Ranches.
There are ready-to-move units in luxury condo projects with stunning views, and these are priced upwards of Rs. 3 crore and villas may cost up to Rs. 7 crores and more, especially for four-bedroom units.
The payment terms have also been simplified for investors. Buyers may have to pay 25-40% for under-construction units before handover, while the remaining can be paid through a 3-year payment plan or even more.
Rental yields are still attractive in Dubai, hovering between 4-6% on average for high-quality real estate assets. Indian investors are now considering properties in Dubai for the residency permit and several other benefits, according to experts.
Dubai Property Market Status in 2021
The Dubai property market has witnessed a strong upswing from January 2021. Every month has seen records being broken by way of sales figures. Indian home buyers have the liberty to choose from one or two-bedroom apartment units to villas and even pre-leased hotel rooms. The pre-leased hotel room may cost anywhere around Rs. 70 lakh-Rs. 3 crore on average. Dubai is witnessing considerable Indian interest, and demand surged throughout the pandemic, with many seeing the Emirate as a safe place to reside and work peacefully.
The reforms of the Government, i.e., higher LTV (loan to value) ratios, lower rates of interest and several visa programs, and the successful implementation of the vaccination program have led to the record highs touched by the realty market for the first quarter of 2021. In fact, leading developers like Sobha Realty have also come up with new launches. The company has launched its third phase for a personalized villa project that has already sold out. They have also unveiled a luxury apartment tower with 592 units at the brand-new Waterfront District as part of the Sobha Hartland flagship development covering a whopping 8 million square feet.
Multiple finance and banking professionals, as well as entrepreneurs, are showing interest in Dubai property investments. Attractive payment schemes with properly regulated rentals, with 8-9% annual yields, make it more feasible for Indians to invest here. Prices are also somewhat muted at present, with a higher supply of units in the Dubai realty market. With vaccination picking up, Indians in the UAE and other GCC countries are also going on a reverse route, i.e., investing in real estate in their home country.
At the same time, some new initiatives have also propelled higher interest and attention in the Dubai property sector. Add to that the fact that a million dollars will purchase a hefty 1,776 square feet or 165 square meters in Dubai, and this is 5 times higher than even New York or London as per studies. Dubai already has roughly 42,356 housing units valued at $1 million and comes second in this ranking only to London. The values of prime homes may also come down by another 2% this year after plunging by 6% in 2020, and this will generate even higher interest amongst global investors. Home prices may witness an overall rationalization of 2-3%, while single-family units or villas may witness prices increasing by 3-4% as per reports.
In 2020, the pandemic not only shook the global tourism industry but affected real estate as well. Properties in Dubai witnessed a spike in prices resulting in lowered demand. However, with the UAE opening for post-COVID tourism and dirham value stabilization along with the introduction of Golden and Green visas, potential real estate investors, including Indians, discovered the opportunity to make an easy move to Dubai.
With property priced far less than in Europe or the U.S., and the increased influx of people in the city for work and business, Dubai finds itself amidst heightened real estate investments. So, it would suffice to say that the Dubai real estate market in 2021 has begun to flourish again and even more than in the last decade.