Indian investors driving surge in Dubai’s foreign investment

Investments on Rise

• Dubai attracted $1.6 bn in FDI from Indian investors between 2020 and H1 2023
• Indian FDI nearly doubled to $541 mn in 2022
• Indian investors made purchases exceeding $4 bn in Dubai's residential market

Mumbai: Dubai witnessed significant investments (FDI) from Indian investors, amounting to $1.6 billion between 2020 and H1 2023. Dubai's strategic location along with tax-friendly policies acts as a key incentive for Indian investors and business owners who are looking to expand into new markets.

Indian investments (FDI) in Dubai nearly doubled from 2020 to 2022, reaching $541 mn in 2022. Moreover, the first six months of 2023 accounted for 62 per cent of investments (FDI) in the whole previous year. Indian investors made significant purchases, exceeding $4 bn, in Dubai's residential market in 2022.As COVID-19 receded, Indian investors consistently increased their investments in Dubai, showcasing a notable uptrend since 2020. The investment amount nearly doubled from 2020 to 2022, reflecting positive momentum. This optimistic trajectory is expected to continue and align with Dubai's economic agenda outlined in D33.

In the first six months of 2023, India was among the top countries investing in Dubai with a cumulative investment of $335 million. In terms of project numbers, India has outnumbered Canada and Latvia with investments in a total of 123 projects, as stated by leading international property consultant Vestian, providing occupier-focused solutions across commercial, residential, industrial, retail, and hospitality sectors. This information was cited from data released by the Dubai Land Department.

Speaking to Bizz Buzz, Akash Puri, Director of International Business at India Sotheby’s International Realty, stated, “Business expansion, stable capital appreciation, currency diversification, efficient taxation, and attractive rental yield, coupled with the aspirational quality of life and residency via investment in real estate, prompt wealthy Indians to diversify their property holdings abroad.”

Recent reports indicate that Indians surpassed the British to become the leading investors in Dubai's real estate by the third quarter of 2023. Indians emerged as the top homebuyers in Dubai, investing over Rs 35,000 crore in the emirate last year.

Puri said, “Hence, Dubai remains the most favored destination for Indian investments in overseas real estate. Key factors contributing to this preference include the ease of doing business, robust infrastructure, tax benefits, and the opportunity to obtain residency visas by purchasing an AED 2 million property. The convenience of short flying times from India to Dubai further enhances its appeal.”

While other gateway destinations such as London, New York, Miami, Toronto, and Sydney remain popular choices, investors anticipate significant capital appreciation and stable rental yields in these cities.

The cost of acquisition and management also play a crucial role in decision-making. For example, New York imposes a mere 1 percent mansion tax for properties up to $2 million, distinguishing it from other destinations with higher stamp duties.

UAE aims to double Dubai's GDP by 2033 and position itself as a global economic hub, Indian investors are leveraging upon opportunities presented by the Emirate's dynamic real estate market and investor-friendly policies.

Shrinivas Rao, CEO of Vestian, highlighted, “The ongoing positive trajectory is a testament to the mutually beneficial relationship between India and UAE, further cemented by the signing of the Comprehensive Economic Partnership Agreement (CEPA) in 2022, contributing to the ambitious economic goals outlined by the UAE government.” As per the Dubai FDI monitor, substantial investments from India have been directed towards the IT services and business services sectors. By the conclusion of the second quarter of 2023, Indian investors had invested $10.5 million, primarily in greenfield projects.

Rao further emphasized Dubai's prominence as a top investment destination for Indian individuals and businesses, offering a favorable alternative to significant tax obligations in their home country. The recent announcement of a transnational rail and shipping route connecting the India-Middle East-Europe corridor during the G20 summit is expected to enhance connectivity between the UAE and India, fostering economic development.