Dubai's 70 Billion Bet On India: When And Why?

Dubai's economy has been booming over the past few years, with a gross domestic product of 429 billion AED ($116.779 billion) in 2023. The city has seen a surge in foreign investors, with Indians pumping in 6 billion dirhams (approximately Rs 12,100 crore) in the last five months, followed by the UK and China. The government of Dubai has also been taking initiatives to attract more foreign investors, such as opening an office of Invest India in Dubai. The city's property market witnessed more than 4,800 sales transactions worth $3 billion in April 2021, the highest in the last four years.

Dubai's economy is driven by tourism, real estate, and the transport sector. The city is also a hub for service industries such as IT and finance, with the new Dubai International Financial Centre. The information and communications technology sector accounted for 4.1% of Dubai's real GDP in 2018.

Dubai's trade with India has been growing over the years, with the UAE being India's third-largest trading partner for the year 2021-22. The Comprehensive Economic Partnership Agreement (CEPA) signed in 2022 is expected to increase bilateral trade to $100 billion within five years. The UAE's investment in India is estimated to be around $20-21 billion, with Abu Dhabi Investment Authority committing to invest $75 billion in India's infrastructure sector.

Dubai's real estate market attracts Indian investors

Dubai's real estate market has attracted a lot of Indian investors in recent years. Indians have become the largest group of investors in Dubai's property market, surpassing Britons and Russians.

• Dubai's tax-friendly policies and strategic location are major factors attracting Indian investors.
• The UAE's Golden Visa programme, which allows foreign nationals to live, work or study in the country and enjoy several benefits, is another incentive.
• Dubai's strong economic growth and diverse economy, with industries like tourism, real estate, trade and logistics driving its expansion, make it an attractive investment destination.
• Dubai's property prices are relatively low compared to other major cities like London or New York, making it an appealing option for middle-class Indian investors.
• The city's high-quality infrastructure, including state-of-the-art medical facilities, airports and public transport, provides confidence to investors.
• The availability of immediate residency status through real estate investment is another pull factor for Indians.
• The UAE's Golden Visa programme, which is available for international investors and top talent, provides visas for up to 10 years.
• The pandemic has also played a role, with Dubai's effective handling of the COVID-19 situation attracting investors.
• The city's proximity to India makes it a convenient option for wealthy Indians looking for a second home.
• Dubai's rental market is solid, with rental rates remaining stable over the past few years, offering good returns for investors.
• The UAE's recent reforms, such as multiple visa programmes, low-interest rates and increased loan-to-value ratios, have boosted the property market.
• The successful vaccine rollout in the UAE has also contributed to the positive market sentiment.
• Dubai's well-regulated rental market offers attractive yields of 8-9% per annum.
• The city's luxurious apartments, villas and hotel rooms offer a range of options for investors, with prices starting at around Rs 2 crore.
• The terms of payment are simple, with buyers able to pay in instalments, making it a more affordable option.
• Dubai's reputation as a safe haven to live and work has been a draw for investors during the pandemic.
• The presence of attractive payment schemes and regulated rental yields makes Dubai an appealing investment choice for Indians.

Dubai's tax-friendly laws and residency status through real estate investment

Dubai's tax laws are generally considered to be favourable to investors. The United Arab Emirates (UAE), of which Dubai is a part, has historically been a low-tax jurisdiction. While the federal government levies a 5% value-added tax, corporate income tax, and excise taxes, Dubai ended the practice of charging taxes on alcohol in January 2023. The UAE does not levy income tax on individuals.

Dubai has long been a significant regional and international trade hub, with a focus on tourism and luxury. In recent years, it has also become a magnet for those who want to extend their stay, thanks to its stunning urban architecture, unique leisure activities, and business-friendly regulations.

Dubai offers a variety of residency visas for investors, including short-term visas (less than five years) and long-term visas (more than five years). The minimum amount to be invested in a property to obtain a residency visa is 1 million dirhams (approximately Rs 2 crore). This is more affordable than investing in real estate in Portugal or Spain to obtain residency visas in those countries.

The real estate investor visa includes permits for the investor's spouse and children. The terms of payment are also simple, with buyers able to pay a percentage before handover and the remainder over a post-handover payment plan. Rental yields are attractive, varying from 4% to 6% for quality assets.

Dubai's tax-friendly laws and the availability of immediate residency status through real estate investment have made it a popular destination for investors from around the world, including India. During the COVID-19 pandemic, wealthy Indians picked up second homes in Dubai, investing around 6 billion dirhams (approximately Rs 12,100 crore) in the city's real estate market.

The UAE's Golden Visa programme

Eligibility

The categories of eligibility for the UAE golden visa have been expanded and include:

• Investors in public investments
• Real estate investors
• Entrepreneurs and startup owners
• Outstanding specialised talents
• Skilled professionals
• Students with exceptional academic excellence
• Humanitarian pioneers
• Frontline heroes

Benefits

The Golden Visa offers benefits such as:

• A long-term, renewable residence visa valid for 5 or 10 years
• No need for a sponsor
• The ability to stay outside the UAE for more than six months without losing residence status
• The ability to sponsor family members, including spouses and children of any age
• The ability to sponsor an unlimited number of domestic helpers
• Access to education and healthcare
• Visas for the whole family
• An easy path to a residence visa
• An opportunity to get UAE citizenship

India-UAE trade relations

India and the UAE have shared trade links for centuries. The trade, which was dominated by traditional items such as dates, pearls, and fish, underwent a sharp change after the discovery of oil in the UAE. With the emergence of the UAE as a unified entity in 1971, exports from India started growing gradually over the years. The real impetus, however, started after Dubai positioned itself as a regional trading hub by the early 1990s, and about the same time, the economic liberalization process started in India.

The growing India-UAE economic and commercial relations contribute to the stability and strength of a rapidly diversifying and deepening bilateral relationship between the two countries. Both sides are striving to further strengthen these ties for mutual benefit. India-UAE trade, valued at US$180 million per annum in the 1970s, is today around US$73 billion, making the UAE India's third-largest trading partner for the year 2021-22 after the US and China. Moreover, the UAE is the second-largest export destination for India (after the US) with an amount of over US$28 billion for the year 2021-22. For the UAE, India is the second-largest trading partner for the year 2021 with an amount of around US$45 billion (non-oil trade).

The Comprehensive Economic Partnership Agreement (CEPA) was signed on February 18, 2022, during the Virtual Summit between Prime Minister Narendra Modi and President Sheikh Mohamed bin Zayed al Nahyan. The agreement entered into force on May 1, 2022, and is expected to increase bilateral trade in goods to US$100 billion within five years and trade in services to US$15 billion.

India's exports to the UAE are well-diversified, with a large basket. India's major export items to the UAE include precious metals, stones, gems and jewelry, minerals and refined petroleum products, food items (cereals, sugar, fruits and vegetables, tea, meat, and seafood), textiles (garments, apparel, synthetic fiber, cotton, and yarn), and engineering and machinery products and chemicals. India's major import items from the UAE are petroleum and petroleum products, precious metals, stones, gems and jewelry, minerals, chemicals, wood, and wood products. India imported 21,664.42 MMT (US$12,304.83 million) of crude oil from the UAE in 2021-22.

The UAE's investment in India is estimated to be around US$20-21 billion, of which US$15.18 billion is in the form of FDI, while the remaining is portfolio investment. The UAE is the 7th biggest investor in India in terms of FDI. Abu Dhabi Investment Authority is the principle sovereign wealth fund of the UAE and one of the world's largest. ADIA has committed to investing US$75 billion in India's infrastructure sector. In 2020, the Government of India announced several measures to facilitate and further ease investments by ADIA and other sovereign funds from the UAE. The UAE entities are expected to invest up to US$7 billion in India's food sector in the next three years, in the development of an India-UAE food corridor, the development of cold storage, warehousing, food processing, fisheries, and poultry, with the objective of tripling the value of UAE’s food imports from India in five years.

Though no official figures are available, investments by Indian companies in the UAE would be in excess of US$85 billion. Many Indian companies have set up manufacturing units either as joint ventures or in Special Economic Zones for cement, building materials, textiles, engineering products, consumer electronics, etc. Many Indian companies have invested in the tourism, hospitality, catering, health, retail, and education sectors of the UAE (i.e., Taj Group, Bits Pilani, Zee Entertainment, Ashok Leyland, Mahindra, Dabur, etc.). Major Indian companies such as L&T, ESSAR, Punj Lloyd, Engineers India Ltd., and TCIL have been able to obtain a significant number of contracts in the UAE. Several prominent private and public sector Indian companies and banks are also operating in the UAE.

India's Jammu and Kashmir gets its first foreign investment from Dubai's Emaar Group

Indias Jammu and Kashmir gets its first foreign investment from Dubais Emaar Group

India's Jammu and Kashmir region has received its first foreign investment from Dubai-based Emaar Group. The $60 million investment will be used to build a shopping and office complex in Srinagar, the capital of the Muslim-majority Himalayan region. This development is significant as it marks the first foreign investment in the region and is expected to boost the local economy and create thousands of jobs.

Emaar Group's Investment in Jammu and Kashmir

The Emaar Group, Dubai's largest listed developer, is set to build a 5 billion rupee ($60.5 million) shopping and office complex in Srinagar, Jammu and Kashmir. The complex will include a shopping mall and a multi-purpose commercial tower. This announcement comes after the region's government revealed that Jammu and Kashmir had received a record investment of 15 billion rupees ($181 million) in the 2022-23 fiscal year.

Impact of the Investment

The investment by Emaar Group is expected to have a positive impact on the region. Emaar Properties CEO Amit Jain stated that the investment would have a "ripple effect" and inspire others to follow suit. The project is anticipated to generate 7,000 to 8,000 jobs and boost the local economy, with top administrator Manoj Sinha highlighting that it has infused confidence in foreign investors.

Political Context

The investment comes amidst a backdrop of political tensions in the region, with a three-decade insurgency and competing claims over the territory by India and Pakistan. India accuses Muslim Pakistan of supporting the insurgency, which Pakistan denies. In August 2019, the Indian government split the state of Jammu and Kashmir into two federally administered territories, aiming to tighten its grip on the region and integrate it more closely with the rest of the country.

Emaar Group and the Burj Khalifa

Emaar, the builder of the world's tallest tower, the Burj Khalifa, has a minority stake owned by the Dubai government through its sovereign wealth fund. The group has a reputation for developing iconic structures, and its investment in Jammu and Kashmir is a significant step toward the region's stabilisation and economic development.

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