How is the interest in Dubai market for Indian buyers and what kind of buyers are coming in right now?
Well, traditionally Indians have been the highest buyers in Dubai’s real estate market and it has continued to be so in the last few years. But recently, since January, we have begun to see a big spike, essentially due to demonetization. People have now got their money cleaned and deposited in the banks post clearing the tax dues and other payments. So now this money is there to be invested. We have seen more uplift, more transactions happening. The first 15 days in January, published figures according to RERA Dubai, recorded a sale of AED 15 billion. When compared to last year, there is a spike of about 3% to 4% from Indian customers for Sobha Group.
Do you also see the Dubai property market gaining because there has been a slowdown in India for the past one and a half years?
Yes, it is. Dubai is a beacon for 3.5 billion people living around it. There is the Indian sub-continent, GCC – Gulf countries who all invest in the Dubai market. None of the other markets seem like they are catching up with Dubai. Dubai is one of the safest cities with all the necessary infrastructure as well.
What kind of properties are Indian investors investing?
First of all there is a perception that Dubai properties are expensive, which is not! Actually Dubai is one of the cheaper properties but they are all at the luxury end. They are cheaper than most of the world cities. We are today at number 22 in terms of affordability. So we are way below than what you buy in Mumbai, Delhi or Bengaluru. For example, the Sobha Hartland project in Dubai is cheaper (on the luxury end) than what you buy in Bengaluru for the equivalent space and size. Mumbai is anyway out of the picture (considering the rates are way higher than Bengaluru). People can buy properties from Rs 60-70 lakh all the way to Rs 70-80 crore.
How much does it convert to when you say it is cheaper?
For example, a studio here in Dubai is 535 sq. ft. which is the carpet area, you can buy that for around Rs 1.2 – 1.4 crore. What would you get in carpet area in Bengaluru, Delhi or Mumbai? (tangibly). If you compare cities like Mumbai or Pune or Ahmedabad, or most of the top 10 cities in India with Dubai, Dubai is cheaper. People who have a history in investing in Dubai, know this. That is why Indians are one of the highest investors in real estate in Dubai.
What kind of return can one expect from their investment in Dubai Property market?
I think people who are learning about Dubai (market), are investing in Dubai. There are people in India who have invested in three properties outside India. We can either look at the traditional options or you can look at this. For example, if you rent your property, you get an 8% -10% rental. Let’s say you take a 50% mortgage from the bank at 4% interest rate for a period of 10 or 20 years and rent out the property for 10%, so you are paying your mortgage amount and still making 6% profit in dollars.
Where are most of the Indian buyers from?
I cannot really put a peg on that. We are doing roadshows in places like Amritsar, Chandigarh, Baroda, Ahmedabad, Thrissur, Cochin, etc. with a mixture of big cities like Mumbai, Delhi and Bengaluru of course. The more the people are educated about benefits of investments in Dubai, the more we will see it happening. The money is available for investment.
What is the average investment you (Sobha Group) are seeing?
There are three types of products people are buying from us. One is apartments – which can range from studios to 1, 2, 3 or 4 bedroom duplexes, penthouses. Then we have town houses which is the second product. Next we have is super luxury villas – 5 and 6 bedrooms. We are the only development in the heart of Dubai located at the Dubai Canal. So we offer a community living where in there are villas, apartments, town houses, schools, etc. on an 8 million sq. ft. area which is not too big or too small.
How big are you in terms of total million Sq. ft. under construction?
We have three projects in UAE. Two of our projects are in Mohammed Bin Rashid City in the center of town. The other one is Meydan Sobha where we are 50% partners. It is again a community next to Sobha Hartland. So Meydan Sobha District One is a collaboration and Sobha Hartland is a stand-alone project of ours in Dubai. We also have a project called Sobha Firdous. It is a mangrove island and we are working with the government there to develop the island. It will be developed into a destination island.
How do you see the Indian RERA coming up? What is your thought about that? We are yet to get into it and a lot of states have not agreed to it, the policies and the framework.
RERA was always there in Dubai but after the crisis, RERA became stronger and we learnt a lot from it. So, overall RERA should be good for India as it will bring back the trust in the property market. The two main issues the buyers are worried about are: If the flats are ever going to be delivered regardless of the quality. And the second is if they will be delivered on time as promised. RERA will help to get the title deed process organized and in the purchase of land where people are unsure of how many times the land has been purchased. The litigation takes a lot of time. The infusion of RERA will influence positive sentiment and trust. You know the title deed is registered on a computer (system) and not in someone’s file somewhere. So that will definitely help in more money flowing into India.