The joke in Dubai these days goes something like this. Q: What's the national bird of Dubai? A: The crane. Dubai is a city perenially under construction, where a sea of skyscrapers surrounds the world's tallest building, and man-made islands shaped as continents beckon "exclusive" buyers. In this hush-hush world of real estate paradise, discretion overtakes all else: no names, please. Be it a marketing strategy, or sheer prudence, Dubai's realty market is the new El Dorado for India's well-heeled, who're buying residential and commercial space like it's going out of fashion. Next to London, it's the hottest realty destination for Indians.
Dubai realty watchers say that anyone worth their weight in Bollywood has houses here. There are no official numbers, of course. But the market estimates that, in 2007, Indians spent over Rs 4,000 crore in Dubai's concrete jungle. And that's despite a 20-25 per cent annual increase in property prices. Says Aditi Vijayakar, director, residential, Cushman & Wakefield, India: "The trend of Indian residents investing in property abroad is a recent one. We now hear that some purchasers have identified the pure investment potential of owning property in Dubai and invest in order to earn a favourable rental income."
The primary reason, say experts, is the tax incentive Dubai offers Indian buyers. As of now, there are no taxes on foreigners acquiring property in Dubai. To add to the investors' gains, income from rental and capital gains of immovable property in Dubai is not taxable in India. Also, in 2003, the Dubai government changed the laws enabling foreigners to buy freehold property on a 99-year lease, with a right to sell, lease or rent. Dubai developers have also aggressively offered incentives for property buyers, from discounts to holiday packages to cars.
To lure property buyers, the Dubai government has also introduced a system of granting resident visas to property owners. Says Sunder Lal, senior advisor, real estate, Sahara India Ltd: "You can get a resident visa if you own a property in Dubai as against the system of sponsor visas required to visit that country." In September 2007, another booster was added to this property buying spree when the RBI doubled the amount Indians could invest abroad annually from $1,00,000 to $2,00,000 (Rs 80 lakh). The appreciating rupee made it even better.
Above all, despite its spiralling prices, property in Dubai is cheaper than buying a flat in, say, Delhi or Mumbai. Says Carl Vaz, director, India representative office, department of tourism & commerce marketing, government of Dubai: "A growing number of wealthy Indians has envisaged interest in owning holiday homes in Dubai as property rates are more attractive than investment in holidays homes within India." Adds Lal: "Land price at Dubai Marina is around Rs 18,000 per sq ft. Prices in similar Mumbai localities would easily be around Rs 60-70,000 per sq ft." You can get a 1,299 sq ft apartment in Dubai Ocean Front for around Rs 2.6 crore, but a similar unit in Mumbai would be priced in multiples of that amount.
Add to this a growing number of companies that buy property to provide accommodation for employees. Says Vaz: "Dubai has in recent years attracted significant investment from India into its free zones. Most companies invest in freehold property for senior staff and directors. So, projects like Dubai Marina, Emirates Hills and others have seen larger level of interest from Indian investors."
But most of all, a large number of buyers look at Dubai as an investment, thanks to the rising realty prices and the demand-supply mismatch. Led by top names like Nakheel and Emaar, about $30 billion worth of construction is currently under way. For now, demand continues to outstrip supply. Prices too have been rising. But that hasn't stalled Dubai's new gold rush.