Can You Buy Real Estate In Dubai While Living In India? Know About Rental Yield And More

Indian citizens, including those living in India, are allowed to buy property in Dubai. However, there's one major condition, i.e that the people who are not Dubai's citizens can only buy in designated "freehold" areas. These are zones where non-residents are granted full ownership rights. Popular freehold locations included Palm Jumeirah, Downtown Dubai, and Dubai Marina.

Indians were reported to be the second-largest group of high-net-worth individuals (HNWIs) buying prime property in the Emirate, just behind Saudi nationals, as per a recent report from real estate consultancy Knight Frank. Experts, while speaking with Outlook Money, expressed that this demand is driven by better value for money when compared to the Indian real estate market of Tier I cities and higher rental yields.

The average Indian buyer in the category spent around $44.6 million, which is roughly Rs 3,700 crore. By comparison, Saudi investors spend slightly more, $45.7 million (about Rs 3,790 crore), while UK buyers spend significantly less at $30 million (around Rs 2,490 crore), as per the Knight Frank report.

Why Are Indians Buying Properties in Dubai? 

The tax-free nature is one of the major benefits of investing in Dubai real estate. Dubai does not charge personal income tax, capital gains tax, or property income tax, which favours Indian investors with more post-tax returns from rental or resale income.

Compared to major metro cities of India, Dubai offers significantly higher rental yields. Unlike some other countries, the UAE does not require buyers to be residents. However, investors who purchase properties worth AED 750,000 or more (about $204,000 or Rs 1.7 crore) can apply for a two-year residency visa. Those who spend at least AED 2 million (around $545,000 or Rs 4.5 crore) can also become eligible for a ten-year Golden Visa.

"According to 2024 Industry data, typical gross rental yields in Dubai are between 6 per cent and 8 per cent, with new areas such as Jumeirah Village Circle and Dubai South even reaching 9 per cent. On the contrary, India's leading cities like Mumbai, Delhi NCR, and Bengaluru provide yields between 2.5 per cent and 4.5 per cent, based on the area and type of property," said Vishal Raheja, Founder & MD, InvestoXpert, a real estate investment consultancy.

Sandeep Ahuja, Global CEO of Atmosphere Living, says, "Dubai offers various visa schemes, one of which is the Golden Visa, which permits long-term residency to property investors. The absence of property taxes and capital gains taxes makes direct investment in Dubai's real estate market appealing and attracts investors."

"The value of money also goes further in Dubai; for the price of a mid-range apartment in Mumbai or Bangalore, investors can own a luxury property in areas like Dubai Marina or Downtown Dubai, complete with world-class amenities," reasoned Abhishek Raj, Founder & CEO of Jenika Ventures.

Echoing with Raheja's sentiment, Umesh Bhati, Director of Operations, Bayside Corporations, you can get a premium property in a prime Dubai location for less than what you'd pay in Bandra or South Delhi. Of course, Indian buyers should still be mindful of tax rules back home and currency considerations, but overall, Dubai is ticking all the right boxes for those looking to grow their wealth globally."

According to Knight Frank, property values in Dubai surged by 19.1 per cent in 2024. Villa prices, in particular, jumped by nearly 20 per cent in just 12 months, reaching AED 2,088 per square foot, a 107 per cent rise compared to 2020. These gains indicated the popularity of villas, beach homes, and luxury-branded residences that cater to lifestyle buyers.

FEMA Regulations For Real Estate Investments In Dubai

Back home, Indian regulations are governed by the Reserve Bank of India (RBI) under the Foreign Exchange Management Act (FEMA). Under this law, Indian residents can invest up to $250,000 (approximately Rs 2.08 crore) per financial year abroad, including in real estate, using the Liberalised Remittance Scheme (LRS). This cap is per individual, so a family of four could theoretically remit up to $1 million (Rs 8.3 crore) in one year toward a property purchase.

Funds must come from a legitimate and verifiable source, such as savings or business income, and must be transferred through authorised banks. Importantly, buyers must maintain full records of transactions and ensure that all deals comply with both Indian and UAE laws.

Any income earned from these overseas properties, like rent, must be declared in the individual's Indian tax returns. Similarly, when a property is sold, the sale proceeds can be brought back to India only through FEMA-compliant banking channels.

The gains made in real estate sales are tax-free in Dubai. However, Indians are required to report any income made through their investments in Dubai. An Indian taxpayer can only benefit from the exemption under Section 54 if they reinvest their long-term capital gains (LTCG) back in India for buying their first or second residential property. Manik Kinra, Pin Click, a real estate consultancy, said, "Capital gains on selling a Dubai property are taxable in India. However, exemptions under Section 54 of the Income Tax Act apply if the proceeds are reinvested in a residential property in India. From 1st April 2023, the exemption amount under Sections 54 and 54F is capped at Rs 10 crore."

Return on Real Estate Investments In Dubai

The return on money is dependent on two parameters - capital gains & rental yield.

Kinra added, "Dubai saw a very volatile period from a business perspective between 2010 and pre-COVID, which led to property prices being almost stagnant and in some developments even going down. However, since 2021, the prices have gone up significantly between 15 per cent to 60 per cent. The increase in prices is also due to government initiatives and political decisions outside of the UAE. Especially the Russia-Ukraine war, which led to a significant uptick in the investments from that belt, with some luxury products seeing upwards of 50 per cent price increase in the last 3-5 years.

Knight Frank notes that the areas most favoured by global investors include Dubai Marina, Dubai Hills Estate, and Emirates Hills. Among the wealthiest buyers, especially those with assets over $50 million (Rs 4,150 crore), Dubai Marina leads in popularity, followed closely by Dubai Hills Estate and Emirates Hills.

Ankit Kansal, Managing Director of 360 Realtors, a real estate consultancy, drew a comparison between the housing market of India's Tier I cities and Dubai. Kansal told Outlook Money, "In upmarket localities in Dubai Marina or Palm Jumeirah can start from Rs 2-3 crore. In places such as Karama, which is a middle-income neighbourhood, it might be a little lower. In the downtown areas of Dubai, a 2-bedroom will probably start from Rs 15-16 crore. Similarly, in India, the price of a 2 BHK can vary from a modest 50 lacs to 5-6 crores or even higher."

Rising interest in off-plan projects, branded residences, and digital transactions for global asset ownership has also contributed to the demand. For Indians looking to globalise their portfolios, Dubai offers unmatched returns, ease of doing business, and a lifestyle advantage few markets can rival, explained Robin Pahuja, Co-founder & Managing Director of ElitePro Infra.

How Can You Buy Real Estate In Dubai?

The process of buying property in Dubai is fairly straightforward, but it requires attention to legal and financial details. Indian buyers typically begin by selecting a property within a freehold area. A registered real estate agent and legal advisor can help navigate the process and verify the property's documentation, including ownership records and approvals.

Once a property is selected, both parties sign a Memorandum of Understanding (MoU), which outlines the terms of sale. At this stage, the buyer typically pays a 10 per cent deposit.

Buyers can pay the full amount in cash or opt for a mortgage. Dubai banks offer financing to foreigners, usually covering 50 to 75 per cent of the property value. The purchase is finalised through the Dubai Land Department, which issues the title deed and charges a 4 per cent transfer fee.