India's small town investors flock to Dubai property: Why it's worrying ED
New Delhi, Feb 27, 2025
Investors from cities such as Indore, Bhilai, Ranchi, Pune, Nasik and Lucknow are increasingly buying residential properties in Dubai, in what is being seen as a shift in the investor base
A growing number of investors from India's Tier 2 and Tier 3 cities are buying property in Dubai, shifting the profile of Indian buyers traditionally dominated by those from major metropolitan areas. The trend has drawn the attention of India's Enforcement Directorate (ED), which is now investigating suspicious real estate purchases, according to a report by the Economic Times.
Why is there a surge in interest in Dubai properties?
A survey by India Sotheby’s International Realty (ISIR) found that 22% of High-Net-Worth Individuals (HNIs) and ultra-HNIs in India are interested in international property, with Dubai overtaking London as the most preferred location.
Interest in global real estate has doubled among the super-rich, rising from 10-11% historically to 22% in 2025. However, the trend is no longer limited to India’s wealthiest.
Investors from cities such as Indore, Bhilai, Ranchi, Pune, Nasik and Lucknow are increasingly buying residential properties in Dubai, in what is being seen as a shift in the investor base.
But why?
Dubai’s property market has become attractive to Indian buyers for several reasons:
Soaring real estate prices in Indian metros like Delhi and Mumbai
Comparatively affordable luxury properties
Tax-friendly regulations
High rental yields
Long-term visa schemes for investors
“Many buyers from smaller cities are drawn to Dubai for diversification, security, and better returns compared to domestic options,” Adnan Siddiqui, partner at King Stubb & Kasiva, Advocates and Attorneys told Business Standard.
Morgan Owen, managing director for the Middle East & North Africa at ANAROCK Group, said Dubai’s affordability and government incentives are key drivers. “Dubai is presently one of the most affordable luxury destinations in the world in comparison to many of its counterparts including Hong Kong, Singapore etc. Hence, there has been an uptick in interest in the Dubai residential market by the wealthy including not just businessmen but also top professionals from the banking and financial services and even crypto millionaires.
“Several factors are responsible for this – besides lowered prices and its proximity to India, another reason why Indians are investing in Dubai is due to favouring government measures. The UAE is issuing long-term visas, five and 10 years, to entrepreneurs, professionals and investors, specialists in the medical, scientific, research and technical fields. This step was taken to spur business activity and create an investment environment in the country. Investors must spend a minimum of Dh 5 million to obtain a five-year visa, while the decade-long visa is for double that amount. While Indian HNIs are definitely one of the top investors in Dubai, however, a cross-section of other businessmen and professionals have also come forward to show interest due to relatively favourable prices,” Owen told Business Standard.
A home away from home
Many Indians too have sought to buy a second home there - a home away from their primary residence in India.
Dubai’s tax-free environment is also a significant draw. No income tax, property tax, or capital gains tax makes it an investor’s paradise compared to India, where taxes can eat into rental and resale profits. This fiscal advantage ensures more disposable income and better overall returns.
Dubai’s Golden Visa
Dubai’s investor-friendly policies, such as Golden Visas, advanced infrastructure, world-class safety, and strategic connectivity to global markets, add to its allure. The city’s stable currency pegged to the US dollar provides additional confidence for international investors. Moreover, Dubai’s diverse expat community fosters a global lifestyle unmatched by most cities.
The eligibility criteria for the Golden Visa are broad, encompassing skilled professionals, investors, and entrepreneurs. “The Golden Visa is not limited to the ultra-wealthy; it’s designed to attract a wide range of skilled professionals and investors,” said Manoj Dharmani, CEO of DUDigital Global.
Rental yield comparison: Dubai versus Indian cities
“Dubai gives amazing value,” said Sumit Pathak, CEO of Linus International FZCO, adding that its modern infrastructure and investment-friendly policies make it a compelling choice. He explained:
Indian metros show lower yields, with Delhi being an outlier at 7.80%, while others fall between 3-5%.
Mumbai and Pune offer some of the lowest yields, at 3.19% and 3.48%, respectively, despite high property prices.
Kolkata (4.73%), Bangalore (4.40%), and Ahmedabad (4.30%) provide moderate returns, though still below Dubai’s range.
Chennai (3.84%), Hyderabad (3.41%), and Pune (3.48%) remain on the lower end of the spectrum.
In comparison, Dubai’s rental yields range between 7% and 11%, offering far better returns for investors.
Sandeep Ahuja, global CEO of Atmosphere Living, said rising property prices in Indian cities were pushing more investors toward Dubai. “Approximately 50% of new project buyers are from India, with nearly 70% hailing from smaller towns,” he told Business Standard.
Property price comparison: Dubai vs Indian cities
While property prices in Indian cities have surged, Dubai offers more value for money alongside top-notch infrastructure. A 2,500 sq. ft. apartment in Dubai costs between Rs 3.3–7.7 crore, whereas prices in Mumbai’s premium areas can reach Rs 55,000/sq. ft.
"In Mumbai, property prices in prime areas like Bandra and Juhu range from Rs 35,000 to Rs 55,000 per square foot. In contrast, Dubai offers properties at approximately AED 1,000 per square foot (around Rs 22,500 per square foot) in upscale locations such as Sheikh Zayed Road. This indicates that, despite Dubai's world-class infrastructure, its property prices are generally more competitive than those in Mumbai's premium districts," said Ahuja.
Gurugram’s prices have risen to Rs 20,000+/sq. ft., with Hyderabad and Bengaluru slightly behind.
Enforcement Directorate steps in
According to the Economic Times, the ED is now investigating purchases by Indian buyers, using data from the Income Tax Department and the Reserve Bank of India. The agency is probing cases where funds may have been moved abroad illegally.
The scrutiny appears to be slowing property transactions by Indians in Dubai. Data from Square Yards showed that Dubai’s residential market saw a slight decline in transaction numbers during the October-December 2024 quarter, with further slowdown expected as the investigations continue.
What may be the repercussions of an ED investigation?
Experts anticipate a short-term dip in investments due to the ED’s scrutiny, but they believe Dubai will remain a top choice for Indian buyers.
“Stricter scrutiny and compliance requirements could deter those with unaccounted funds, but genuine investors will continue to explore Dubai’s market due to its tax-friendly regime, high rental yields, and residency benefits,” said Siddiqui.
Dubai’s registered home sales value for the October-December 2024 quarter stood at AED 65.23 billion (about Rs 1.55 trillion), up 44% from AED 45.45 billion in the same period in 2023. However, sales value declined 4% quarter-on-quarter, and the average registered home sales value fell by 7% year-on-year.
Despite the temporary slowdown, experts believe Dubai’s real estate market will continue to attract Indian investors, particularly those seeking better value and investment-friendly regulations.
[The Business Standard]
