Purchase Trends in Dubai
The recent trend of Indians purchasing real estate globally, particularly in Dubai, has become a significant aspect of high-net-worth individuals' (HNIs) and ultra-high-net-worth individuals' (UHNIs) backup plans.
Indians are currently the largest group of property buyers in Dubai, according to the recently published Betterhomes Dubai Real Estate Market Report for FY23. This trend is not limited to Indians but includes UHNIs from various parts of the world and expats already residing in Dubai.
Reasons Behind the Trend
Several factors drive this increase in interest, including capital appreciation, high rental yields relative to India, availability of 100% freehold properties, tax-free investments, world-class infrastructure, currency appreciation, and the golden visa. Additionally, purchasing real estate in Dubai offers the prestige of owning property in a major global city.
The new class of wealthy Indian families aims to live in a borderless, globalized, and interconnected world. Their culture of remote work has increased their desire to buy high-priced properties in locations like Dubai and London, enabling them to pursue professional and personal goals while spending time abroad.
Generational Planning
As part of their generational planning, these families invest in alternative residency or citizenship. This strategy aims to provide their children with better educational opportunities, improved career prospects, enhanced quality of life, retirement planning, new business ventures, and visa-free travel to numerous countries due to their stronger passports.
Global Diversification
International diversification offers the benefits of geographic and currency diversification, reducing the portfolio's overall risk. Investors should consider options like REITs and InvITs for real estate investments, including funds that invest across multiple geographies and provide access to commercial, residential, land parcels, warehouses, and more.
Key Considerations
After determining the portion of their portfolio allocated to international real estate, investors should assess the demand and supply dynamics, profit potential, and interest rate trends. Understanding impact costs, exit costs, and tax laws is crucial for rental or resale purposes.
Investors should ensure their wealth management team has local partnerships in different markets. Collaborating with local partners can provide benefits in areas such as advisory, execution, monitoring, and resale. Local teams can also assist with renting out commercial spaces and handling legal and financial due diligence.
Conclusion
Purchasing property overseas is a strategic move, especially for those seeking a backup plan. The most popular countries among HNIs and UHNIs considering alternate residency or citizenship are the USA, Portugal, Canada, and the UK. Investors should work with wealth advisors who can simplify and expedite the investment process, helping them achieve their global mobility goals.