Indian Investors from Tier 2 and Tier 3 Cities Eye Dubai’s Booming Property Market
A growing wave of investors from India’s Tier 2 and Tier 3 cities is fueling Dubai’s real estate market, marking a shift from the traditionally metro-based Indian buyer demographic. This surge has drawn the attention of India’s Enforcement Directorate (ED), which is now probing certain real estate transactions due to potential irregularities, as reported by the Economic Times.
What’s Driving the Interest in Dubai Properties?
A study conducted by India Sotheby’s International Realty (ISIR) revealed that 22% of India’s High-Net-Worth Individuals (HNIs) and ultra-HNIs are considering international property investments. Notably, Dubai has surpassed London as the most sought-after location for these buyers.
The appeal of global real estate investments among India’s elite has more than doubled, climbing from a historical 10-11% to 22% in 2025. However, this trend is no longer exclusive to the wealthiest individuals.
Buyers from cities such as Indore, Bhilai, Ranchi, Pune, Nasik, and Lucknow are increasingly investing in Dubai’s residential sector, highlighting a notable shift in the investor landscape.
Why Are Indian Investors Choosing Dubai?
Several factors contribute to Dubai’s attractiveness for Indian buyers:
-
Rising real estate prices in Indian metro cities like Mumbai and Delhi
-
Luxury properties at competitive rates
-
Tax-efficient regulations
-
High rental yields
-
Long-term visa programs for investors
According to Adnan Siddiqui, a partner at King Stubb & Kasiva, Advocates and Attorneys, many investors from smaller cities see Dubai as a lucrative opportunity for diversification, security, and superior returns compared to domestic investments.
Morgan Owen, Managing Director for the Middle East & North Africa at ANAROCK Group, highlighted Dubai’s affordability and government incentives as major draws. He noted, “Dubai remains one of the most affordable luxury real estate destinations globally, compared to cities like Hong Kong and Singapore. This has driven interest from affluent individuals, including top banking professionals and crypto millionaires.”
Investor-Friendly Government Policies
Dubai’s government has introduced favorable policies to encourage foreign investment. The UAE now offers long-term residency visas, including five- and ten-year permits for investors, entrepreneurs, and specialists in medical, research, and technical fields.
To qualify, investors must allocate at least AED 5 million for a five-year visa, while a ten-year visa requires double that amount. Owen emphasized that while Indian HNIs dominate this segment, interest is also growing among professionals and entrepreneurs due to Dubai’s relatively lower property prices.
A Second Home for Many Indians
Many Indian investors are looking beyond financial returns and considering Dubai as a secondary residence. The emirate’s zero tax policy—exempting investors from income tax, property tax, and capital gains tax—makes it an ideal destination. In contrast, taxation in India can significantly reduce rental and resale profits, making Dubai’s fiscal policies a major advantage.
The Golden Visa Appeal
Dubai’s investor-friendly environment extends beyond taxation. The city offers advanced infrastructure, world-class security, and strategic access to global markets. Additionally, its currency is pegged to the US dollar, ensuring stability and bolstering investor confidence.
The UAE’s Golden Visa program is a game-changer, with broad eligibility criteria that attract not just the ultra-rich but also skilled professionals and entrepreneurs. “The Golden Visa isn’t just for the elite—it’s designed to welcome a diverse range of skilled individuals and investors,” said Manoj Dharmani, CEO of DUDigital Global.
Dubai vs. Indian Cities: Rental Yield Comparison
Sumit Pathak, CEO of Linus International FZCO, described Dubai as an excellent investment destination due to its modern infrastructure and investor-friendly policies. He pointed out that Dubai’s rental yields significantly outperform those of Indian cities:
-
Delhi: 7.80% (highest among Indian metros)
-
Mumbai & Pune: 3.19% and 3.48%, respectively (lowest yields)
-
Kolkata, Bangalore, Ahmedabad: Yields ranging between 4.30% and 4.73%
-
Chennai, Hyderabad, Pune: 3.41% to 3.84%
-
Dubai: Rental yields range between 7% and 11%, making it a much more profitable option.
Sandeep Ahuja, Global CEO of Atmosphere Living, emphasized that high property prices in India are pushing more investors toward Dubai. “Nearly 50% of new property buyers in Dubai are from India, with about 70% originating from non-metro cities,” he noted.
Property Price Comparison: Dubai vs. Indian Cities
Indian real estate prices continue to rise, making Dubai an attractive alternative for premium housing. A 2,500 sq. ft. apartment in Dubai is priced between ₹3.3 crore and ₹7.7 crore, whereas Mumbai’s prime locations can exceed ₹55,000 per sq. ft.
“In Mumbai, premium areas like Bandra and Juhu have property rates between ₹35,000 and ₹55,000 per square foot. Meanwhile, Dubai offers luxury real estate at approximately AED 1,000 per square foot (₹22,500), even in prime areas like Sheikh Zayed Road. This makes Dubai’s market more competitive despite its world-class infrastructure,” said Ahuja.
Property rates in Gurugram have surpassed ₹20,000 per sq. ft., while Hyderabad and Bengaluru remain slightly lower.
Enforcement Directorate’s Investigation
The Economic Times reports that India’s Enforcement Directorate (ED) has launched an investigation into real estate transactions by Indian buyers in Dubai. The agency is analyzing data from the Income Tax Department and Reserve Bank of India to detect cases where funds may have been illegally transferred abroad.
As a result, Indian property purchases in Dubai have seen a temporary dip. According to Square Yards, Dubai’s residential market witnessed a slight decline in transactions during Q4 2024, and further slowdowns are expected as the probe continues.
Potential Impact of the ED Investigation
Industry experts foresee a short-term decline in Indian investments due to the scrutiny. However, Dubai is expected to maintain its appeal for Indian buyers seeking high returns, tax benefits, and residency opportunities.
“While increased scrutiny may deter those with unaccounted funds, legitimate investors will continue to view Dubai as a lucrative destination. The city’s high rental yields, tax-friendly policies, and residency programs make it a preferred choice,” said Siddiqui.
The Future of Indian Investments in Dubai
Dubai’s real estate market remains robust despite the temporary slowdown. The city recorded AED 65.23 billion (₹1.55 trillion) in registered home sales for Q4 2024—an impressive 44% increase from the same period in 2023. However, quarter-on-quarter sales fell 4%, and the average home sale price dipped 7% year-on-year.
Despite these fluctuations, experts believe that Dubai will continue to attract Indian investors, particularly those seeking high-value investments in a market with favorable regulations and promising returns.
