Wealthy Indians buying properties in Dubai, London, NY for better prices

It is open season for Affluent India seeking the priciest digs on earth. Mukesh Ambani, the country’s second-biggest billionaire, recently bought a villa in Dubai for $163 million (Rs 1,304 crore) in a record residential deal.

Ambani bought another property in Dubai for $80 million (Rs 640 crore) earlier this year, which is also among the year’s highest residential deals in that region.

He also bought a Rs 600 crore mansion in London last year.

Although not in the same scale and size, many wealthy Indians are buying properties abroad due to reasons ranging between lower prices and lower stamp duty to higher rents, say consultants and advisors who deal in such properties.

There is data, too, that gives an indication of the growing trend.

Outward remittances for purchase of immovable properties abroad have gone up 30.63 per cent in 2021-22, compared with 2019-2020. They went up from $86.43 million in 2019-20 to $112.9 million in 2021-22 under the Reserve Bank of India’s Liberalised Remittance Scheme. 

“Indians usually like to buy in gateway destinations, such as Dubai, London, New York, Toronto, and Sydney — places where they can get good capital appreciation and a stable rental yield,” says Akash Puri, director, international business, India Sotheby’s International Realty

Anuj Puri, chairman of Anarock Property Consultants, links wealthy Indians buying abroad to their purchasing power. “Housing rates in London, New York or central Singapore are comparable to ultra-luxury housing prices in South Mumbai or central Delhi (priced beyond Rs 15-25 crore). Of late, some residential projects in Dubai have come into more or less the same price range as those prevailing for upper- to mid-income projects in Pune, Bengaluru, and the suburbs of Mumbai and Navi Mumbai (priced above Rs 2-3 crore),” he adds.

Dubai, a hot favourite 

Dubai has been a hot favourite among wealthy Indians for a number of reasons, says Puri of Sotheby’s. 

They include the new Golden Visa rules where one can buy a property worth 2 million AED (United Arab Emirates Dirham) — equivalent to Rs 4.5 crore at an exchange rate of 22.52 — and get a residency visa for 10 years for the family. 

The visa duration is now extended to 10 years (from five years), allowing high networth individuals (HNIs) to take a long-term approach to building a life in Dubai. The revised law has allowed the merger of properties for securing the Golden Visa, making it easy for Indians to invest in multiple projects, stated reports.

Dubai also does not have capital gains tax.

“Low tax regime and easy flight to India make it an extremely attractive destination,” says Puri of Sotheby’s.

Dubai Real Estate transactions reached a total worth of AED 69.4 billion ($19 billion) in Q3 of CY2022.

“Ever since the pandemic, there has been an uptick in interest in the Dubai residential market by the wealthy Indians - not just business people but also the C suite from banking and financial services. Their predominant intention is to secure second homes there, apart from their primary homes in India," says Puri of Anarock.

Enquiries rose by at least 10-15 per cent in the first half of 2022, compared with the same period in 2021, he adds.

Dubai’s property market has seen quite a bit of turmoil in the past two/three years due to oversupply and less-than-stellar economic activity. These have made the Dubai property market affordable.

Lower price points have made luxury homes in Dubai very attractive, says Puri of Anarock.

According to Anarock estimates, Dubai could see around 5-7 per cent rise in property prices in 2022. Property prices in Dubai bottomed out in 2021 during the pandemic and remained their lowest-best. 

London dreams

In London, Indians are among the largest community of property owners.

“Some have been living in the UK for generations, others are ultra HNIs with a holiday home overseas and some are students and families travelling to the UK for education interested in buying a home in London,” says Puri of Sotheby’s.

Famous Indians who own properties in London include Lakshmi Niwas Mittal, the Hinduja Brothers, Mukesh Ambani, among others.

According to him, the London market also has a few attractions.

One, the average price of a property coming to market this month was up 0.9 per cent, to a new record of £371,158 (according to property website Rightmove).

Two, usually there is a 35 per cent shortfall in demand and supply, making it an attractive market for owners and investors, he says.

To boost sales, first-time buyers will not pay any stamp duty on the first £425,000 (up from £300,000, following the mini Budget) in London properties, says Puri of Sotheby’s.

Experts say the demand from Indian buyers remains impressive.

“We are seeing a strong demand from Indian investors looking to purchase properties in London and invest in the stable and long-term property market. Outside of London, most of our products are sold to UK residential buyers, who buy these properties and live in them,” said Stuart Leslie, international sales and marketing director for Barratt London, to a business daily recently.

And these Indian investors — living in the UK and India — are willing to shell out anywhere between £290,000 and £450,000 for a one-, two- or three-bedroom apartment in the capital city, London.

About 30 per cent of our overseas sales at Barratt London in the capital city are to pure investors (those who wish to use them as rental properties), said Leslie.

In New York, the average rents are $5,058 — highest-ever, says Puri of Sotheby’s, adding that mansion tax is only 1 per cent for properties between $1 million and $2 million.

In Miami, serviced apartments give up to 7 per cent net rental yields. The city has grabbed the interest of large finance firms and start-ups after the pandemic. 

“Several Wall Street bankers and fund managers have relocated to Miami. The city’s list of new corporate residents includes Blackstone, Starwood Capital, Goldman Sachs, Virtu Financial, and Elliott Management,” says Puri of Sotheby’s.

As the Indian community and business spread around the world, Shishir Baijal, chairman and managing director of Knight Frank India, believes that purchases of properties abroad are likely to go up steadily.

The gateway cities will be preferred for investments, followed by popular holiday destinations.

“We, however, do not expect a steep surge in these in the next 12-18 months, but can expect the momentum to remain stable,” he says.

Globally, currency changes have been volatile and have been a cause for concern, says Baijal, adding that the Indian currency has remained strong and the economic growth of the country has remained stable, allowing investors to look at long-term investment options like real estate. 

“Also most of the investments are in locations known as gateway cities, which are the first locations to recover, even if they slow down economically in the short term,” he adds.