Dubai: The falling value of the Indian Rupee will affect the number of Indian investors in the Dubai realty market, according to experts.
Dr Mohammad Al Asoomi, a UAE-based economist, told Gulf News that he didn’t expect investors to take their money back to India, at least on the short term.
“The Indian investment in Dubai real estate market will experience a decline, but it won’t have a major impact on an opportunity-rich market like Dubai.”
He said Indian capital isn’t likely to go back to India to take advantage of the currency’s depreciation. Indians are among the top investors in Dubai’s real estate market, and that is expected to remain the case.
“In the short term investors will not take the risk and direct their investments to India as the rupee could regain its value soon,” he said. “But there is no clue what is going to happen in the long term.”
Al Asoomi said that because Dubai is an international real estate market, new investors would fill the gap left by any Indians taking their money home.
Investments
Foreign investors contributed up to 32 per cent of the total investments with an increase of 73 per cent from the same period last year, according to the latest statistics issued by Dubai’s Land Department. The emirate’s real estate market attracted investments worth Dh53 billion during the first half 2013, a 49 per cent year-on-year increase. Most analysts Gulf News spoke to were unwilling to speculate on how much the rupee’s fall could impact Dubai markets in the long term.
As per Land Department’s estimates, Indian investors have contributed to the bulk of foreign investments in Dubai’s real estate market. The Indian transactions were worth Dh8 billion during the first half of this year. Indians were closely followed by investors from the UK and Pakistan whose investments were worth Dh4 billion and Dh3 billion respectively.
Obstacles
Mahendra Patel, Head of Business Materials Group in Dubai, on the other hand, says rupee will affect Indian investment in the real estate market. Indians who are able to invest in Dubai realty market will not only be hesitant to go ahead but will be facing a lot of obstacles, he added. As Indian governments have put tough restrictions to control money transfer from India, investment in Dubai market or any other market will be not only difficult but too costly, Patel said.
“Despite the fact that Dubai is the most favourable and advantageous destination for Indian investments, there will be changes as the return of this business will not cover the rupee value depreciation in the short term,” he said.
Meanwhile, Ajay Rajendran, Vice Chairman at Sobha Real Estate, said any change will be very limited. “Some will be cautious at this stage and there will be marginal drop in property buyers. Not all investors are based in India, most of them come from different destinations,” he added.
Limited alternatives
However, not everyone believes the rupee’s drop will slow down Indian transactions in the Dubai realty market. Ahmad Thani Al Matroushi, Head of Dubai Property Society (DPS), for instance, said: “Indians will spend more to invest in the Dubai real estate market…they have very limited alternatives in the Gulf region.”
Far from the currency drop, serious Indian investors will not find better opportunity in the real estate sector than Dubai.
Al Matroushi added that the advantages of a free-tax market in Dubai will bring these investors good compensation from the currency’s depreciation. “Dubai’s real estate market is a lucrative one with stability, diversity and promise of high return on investment,” he said.
