Throughout 2016 we saw a pattern of declining rental prices in the Dubai residential real estate market. As we exit Q1 2017, however, it seems the decline has halted, with a report from JLL showing little change in this first part of the year.
This means we can begin to expect a recovery, although the timing of this is not yet clear. JLL’s Q1 Dubai Real Estate Market Overview suggests that any recovery is unlikely to be before Q4 of 2017, due to the inevitable dependence on an uncertain global economy.
Despite this, Dubai remains popular as both a residential and commercial opportunity for Indian investors. The Dubai Land Department (DLD) recently released information that shows property transactions among Indian investors of AED12 billion. This clearly signals that the sector in Dubai has growth potential for the future.
Indian expat community vital to Dubai
Indian investment is also key in commercial real estate in Dubai, which is unsurprising given Indian small and large business owners, as well as those holding major positions in large companies, form the largest ex pat community.
There are many indications of the bond between Dubai and India in specific areas, including Karama and Bur Dubai as well as major attractions like the Bollywood theme park. Of course, the imminent proximity of India to Dubai is a major reason behind the increase in Indian investment in the UAE but there are other factors at play.
Property prices comparatively more competitive
As India is a vast country with an ever-increasing population, property prices are kept inflated due to simple supply and demand. This means major cities in India are simply more expensive than Dubai when it comes to buying property.
Amenities and facilities are also not as impressive as in Dubai, even if a high price has been paid. Property mortgage interest rates in Dubai are also around half of those in India, all of which means Indian investors who are mid to high earners, have a great opportunity to become home owners in the UAE.
High rental yields in Dubai
Indian investors are also finding Dubai offers higher rental yields than many other major cities, making it ideal to gain a second income from rents. Off plan property investment is also an attractive option as there are many projects within the heart of the city, while in India most new developments are taking place far outside the city centres.
Dubai is also still undergoing remarkable growth in terms of opportunities, investment, tourism and business sectors, despite the slower economy. There is likely to be no slowdown in the influx of people and the continuing growth of the tourism sector, all of which makes an attractive package for investors looking for medium and long term residential and commercial property investments.
With 28,000 residential units under construction in Dubai, all with a delivery deadline of the end of 2017, it’s unlikely that the increase in Indian investment will slow down.
Samir Salya
Samir Salya is the Chairman of Reign Holdings and is involved in real estate and construction within the UAE and UK. Samir holds over 20 years of experience in executive management, business expansion, performance improvement, sales and marketing.