Dubai Real Estate for Indians: Don't Buy in 2025 if this is your purpose

Summary

Karan Batra, an expert in Dubai real estate, explains why Indians should be cautious when buying properties in Dubai. He highlights three common mistakes: 1) Taking loans from Dubai banks, which violates RBI regulations, 2) Buying properties solely for a golden visa, not understanding it gets canceled upon property sale, and 3) Expecting unrealistic rental yields of 12-15%, when the average is much lower. Karan stresses the importance of working with a consultant who understands both Indian and Dubai regulations to ensure a legally sound investment.

Takeaways

• 😀 Dubai real estate expos are held every weekend across major cities in India, where developers from Dubai showcase their projects.
• 😀 Many Indians are interested in buying Dubai properties due to the perception of low interest rates (around 4%) and high rental yields (around 8%).
• 😀 Indian buyers often think they can profit by taking a loan at 4% and renting at 8%, but this is a misconception due to RBI regulations.
• 😀 The RBI prohibits Indians from taking loans outside India without prior approval, which can lead to trouble if not followed.
• 😀 When Indians share their income proof with Dubai banks to get a loan, this information is likely shared with the Indian government, triggering potential legal issues.
• 😀 The two legal solutions for Indian buyers are either making a 100% down payment or choosing a payment plan where not all funds are due upfront, which is not considered a loan under RBI norms.
• 😀 It's important to work with a consultant who understands both Indian and Dubai laws to ensure the transaction is legally compliant.
• 😀 Indian buyers seeking a golden visa by purchasing property may mistakenly believe that selling the property won't affect the visa, but the visa is tied to the property and will be cancelled if sold.
• 😀 Many people expect high rental yields of 12-15% in Dubai, but the average rental yield is around 7-8% for long-term rentals, with short-term rentals like Airbnb offering a maximum effective yield of 9-10%.
• 😀 Advertisements claiming 12-15% rental yields are misleading, as they do not account for the expenses involved in running short-term rentals like Airbnb.
• 😀 If you don't fall into the categories of misinformed investors, you are encouraged to book an appointment with the speaker for professional advice on buying property in Dubai.

Q & A

Why are many Indians attracted to buying real estate in Dubai?

Many Indians are drawn to Dubai real estate due to low interest rates (around 4%) and high rental yields (around 8%), which create the impression that taking a loan and renting out the property can lead to a profitable investment.

What is the major mistake Indians make when purchasing property in Dubai?

The biggest mistake Indians make is assuming they can easily buy property in Dubai with a loan, as per the 4% interest rate. However, RBI laws prohibit Indians from taking loans outside India without government permission, which can result in legal issues.

How do Indian authorities find out if someone has taken a loan from a Dubai bank?

When Indians take a loan from a Dubai bank, they are required to provide income proof and supporting documents. These details are often shared with the Indian government, which can lead to legal complications.

What are the two solutions to avoid legal trouble when purchasing property in Dubai?

The two solutions are: 1) Buy the property with 100% down payment. 2) Use a payment plan from the developer, where money is not required upfront, as it isn't considered a loan by RBI standards.

Why is it important to work with a consultant who understands both Indian and Dubai laws?

A consultant familiar with both the Indian and Dubai legal systems ensures that the property transaction is conducted legally, preventing potential issues with the RBI and Dubai regulations.

What is the misconception about the Dubai Golden Visa and property ownership?

Many investors think that by purchasing property in Dubai, they can secure a golden visa, and that selling the property will not affect their visa status. However, the golden visa is tied to the property. If the property is sold, the visa is canceled.

Can selling a property in Dubai affect an investor’s golden visa status?

Yes, selling the property in Dubai results in the cancellation of the golden visa. The visa remains valid only as long as the investor holds the property.

What is the actual average rental yield in Dubai's real estate market?

The average rental yield in Dubai is around 7-8% for long-term rentals, contrary to the misleading advertisements claiming 12-15% returns.

What rental yields can investors expect in short-term rentals or Airbnb setups?

In short-term rental setups like Airbnb, the rental yield may reach 12-15%. However, after accounting for expenses related to managing the property, the net effective yield typically works out to around 9-10%.

What should potential investors do before purchasing property in Dubai?

Investors should ensure they understand the legal implications, work with a consultant who understands the regulations, and avoid falling for unrealistic promises of high rental yields. Additionally, they should confirm the investment is compliant with RBI laws to avoid legal risks.