Real estate prices in the UAE are rising at the rate of 16-19 percent annually, yet the demand remains strong, fueled by robust diplomatic ties and burgeoning interest in the emirates.
Indian investments in overseas real estate, particularly in European countries and Dubai, are witnessing a significant surge, buoyed by immigration programmes such as the Golden Visa, and attractive rental yields exceeding 7 percent, experts said.
According to RBI data, Indians remitted Rs 240.2 crore in December 2023 for purchasing immovable properties abroad, marking a notable increase from Rs 206.8 crore in the corresponding period the previous year. The fiscal year 2022-23 witnessed remittances totaling Rs 2,714 crore, a 38 percent surge from Rs 1,961 crore recorded a year earlier. Immovable property, in the context of real estate markets, encompasses residential properties, warehouses, manufacturing units, and factories.
Among European nations, Greece, Cyprus, Malta, and Spain are witnessing heightened real estate demand for immigration purposes. Meanwhile, the Middle East, particularly the UAE and Qatar, continue to attract investors with promising returns.
"Typically, the application process for Golden Visa programs takes about 3-4 months, with investors anticipating citizenship within 5-7 years," explains Ritesh Mehta, Senior Director, Jones Lang LaSalle.
A Golden Visa offers residency or citizenship in a foreign country, which typically requires a minimum investment in real estate, government bonds, or other approved vehicles.
Dubai leads in rental yields
During the first half of 2023, India emerged as one of the top investors in Dubai with cumulative investments of $335 million across 123 projects, per data from the Dubai Land Department as cited by international property consultant Vestian.
Vijay Sawlani, a Dubai-based consultant at Property Junction, indicates that the average investment ticket size in Dubai ranges between Rs 4-4.5 crore, depending on the location and property size. Rental yields typically range from 7-9 percent, with prime locations like Downtown or Business Bay boasting short-term rental returns as high as 11-13 percent.
While Dubai offers Golden Visa options for 5 or 10 years, the minimum property value should not be less than 2 million dirhams, or about Rs 4.5 crore.
"In prime Mumbai areas like Andheri, property prices range between Rs 38,000-45,000 per square foot (psf), whereas in Dubai's newer emirates like Sharjah, Ras Al Khaimah, and Abu Dhabi, prices range from Rs 25,000-35,000 psf, which is more affordable," adds Sawlani.
Currently, rental yields in regions like Sharjah and Abu Dhabi range from 6-8 percent, while Dubai has the highest yields, at 9-10 percent.
Permanent residency in Europe
Several European countries, including Greece, Cyprus, Malta, and Spain, tie permanent residencies with investments ranging between Rs 4-8 crore. Rental yields in such places average about 4-5 percent, says Mehta.
Anil Rego, Founder and Fund Manager at Right Horizons, a wealth advisory firm, highlighted Grenada’s growing demand due to the Caribbean nation's close ties with the US, which enhances the stability of foreign investments in that country.
Investments in European countries often signify a desire for a lifestyle change due to the attractive quality of life, and decent rental returns amid moderate inflation and evolving economies.
Entry level investments in Europe vary, starting from Rs 2.5 crore in rural areas, to Rs 8 crore in metropolitan cities. Greece, in particular, offers one of the cheapest residency programs, with popular destinations including Athens, Thessaloniki, Mykonos, and Santorini.
Other countries like the US and UK require higher ticket sizes, ranging from Rs 8 to 20 crore, with lower rental yields of 3.5-4 percent, and primarily attract high net worth individuals (HNIs).
Exit strategy
While overseas realty investments offer lucrative returns, experts stress the importance of an exit strategy. Market dynamics and geopolitical events can increase risk factors, emphasising the need for careful consideration before investing. Some Golden Visa programmes have a lock-in period, limiting the ability to sell investments easily.
Factors such as real estate prices, investment objectives, and recurring costs like taxation and maintenance, must be carefully evaluated before investing, say experts.
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