Rise in Dubai Property Investments by Small-Town Indians Triggers ED Scrutiny

A growing number of investors from India’s Tier 2 and Tier 3 cities are buying property in Dubai, shifting the investor base beyond major metropolitan areas. This trend has drawn the attention of India’s Enforcement Directorate (ED), which is investigating possible financial irregularities.

Why Are Indians Investing in Dubai?

Dubai has emerged as the preferred destination for Indian property buyers due to:

• High real estate prices in Indian metros like Delhi and Mumbai
• More affordable luxury properties
• Tax-friendly policies (no income tax, property tax, or capital gains tax)
• Higher rental yields (7-11% in Dubai vs. 3-5% in Indian cities)
• Long-term visa schemes (5 to 10 years) for investors

Many investors are diversifying their assets and seeking better returns abroad. The UAE’s investment-friendly policies, such as the Golden Visa, make Dubai an attractive option for both high-net-worth individuals and professionals.

Property Price & Rental Yield Comparison

Dubai’s real estate market offers better value for money compared to Indian cities.

• A 2,500 sq. ft. apartment in Dubai costs between ₹3.3–7.7 crore, whereas premium Mumbai locations can exceed ₹55,000 per sq. ft.
• Rental yields in Dubai (7-11%) outperform Indian cities, where returns typically range from 3-5%.

ED Scrutiny & Potential Impact

The ED, in collaboration with Indian financial agencies, is investigating real estate transactions in Dubai, focusing on potential illegal fund transfers. This has led to a slowdown in transactions, with a slight decline in Dubai’s property sales in late 2024.

While stricter scrutiny may deter buyers with unaccounted funds, genuine investors are expected to continue investing due to Dubai’s tax benefits, high rental yields, and residency advantages. Despite temporary slowdowns, Dubai remains a top destination for Indian property investors, especially those from smaller cities.