Dubai’s real estate market is aggressively wooing Indian investors. Every weekend, expos are being held across cities like Delhi, Mumbai, Bengaluru, Kochi, Ahmedabad, and Chandigarh. Renowned developers such as DAMAC, Emaar, Nakheel, and Sobha are showcasing luxury projects and promising high rental yields, low interest loans, and even long-term visas.
But amid this sales frenzy, a critical truth is being missed: very few are educating buyers on the legal and financial implications of investing in Dubai from India.
In this article, we break down three major reasons why Indians should tread carefully—and legally—when investing in Dubai real estate. We also include expert insights from Karan Batra, Umesh Bhati (Bayside Corporations), and Manik Kinra (Pin Click), who have years of experience in cross-border investment advisory.
Indians Can Buy Property in Dubai—But Only in Freehold Zones
Indian citizens (resident and NRI alike) are allowed to purchase real estate in Dubai—but only in “freehold” areas. These are government-designated zones where foreign nationals are granted full ownership rights.
🏙️ Top Freehold Areas in Dubai:
- Palm Jumeirah
- Dubai Marina
- Downtown Dubai
- Jumeirah Village Circle
- Business Bay
According to Knight Frank, Indians are the second-largest group of high-net-worth individuals (HNWIs) buying property in Dubai, just behind Saudi nationals.
Umesh Bhati, Director of Operations at Bayside Corporations, explains:
“You can buy a premium apartment in Downtown Dubai for less than what you’d pay in Bandra or South Delhi. It’s not just affordable—Dubai offers better value for money and stronger rental returns compared to Tier-I Indian cities.”
Loans from Dubai Banks Can Violate RBI Laws
Karan Batra, who has helped Indian clients set up businesses and buy properties in Dubai for over 14 years, warns that one of the biggest mistakes Indian buyers make is assuming they can take a loan in Dubai and profit from rental arbitrage.
“People think they can take a mortgage at 4% interest and rent the property at 8%, making easy gains,” says Batra. “But under RBI regulations, Indian citizens cannot borrow abroad without prior permission. When you submit income proofs to a Dubai bank, that information is often shared with Indian authorities, which can land buyers in trouble under FEMA laws.”
🔐 Legal Workarounds:
- Pay 100% upfront from LRS-compliant funds.
- Choose a developer-backed payment plan that isn’t classified as a loan.
For Indian investors opting for upfront or phased payments, using services like Escrow from Verified.RealEstate adds an extra layer of financial safety. It helps ensure that funds are held securely and disbursed only after legal checks, making the transaction compliant with RBI and FEMA rules.
Selling a Property Cancels Your Golden Visa
Many Indian investors buy Dubai properties thinking they can get a Golden Visa and then sell the property later while retaining residency rights.
That’s not how it works.
“The Golden Visa is directly tied to property ownership,” says Batra. “Once you sell the asset, the visa gets cancelled automatically. It’s not a permanent residency like people assume—it’s conditional.”
So unless you intend to hold the property long-term, this visa should not be a primary motivator for investment.
Exaggerated Rental Yield Claims Mislead Investors
Advertising often claims 12–15% rental yields in Dubai, but Umesh Bhati, Director of Operations at Bayside Corporations, calls these numbers “marketing myths.”
“The average rental yield in Dubai for long-term tenants is around 7–8%. You can hit 10% only in short-term formats like Airbnb, but you must factor in furnishing, service fees, and vacancy periods.”
Manik Kinra, co-founder of Pin Click, echoes this caution: “Even for short-term rentals, once you add up running costs, net returns rarely exceed 9–10%. Don’t be blinded by glossy promises.”
FEMA & Tax Realities: What You Must Know
Under the Liberalised Remittance Scheme (LRS), Indian residents can remit up to $250,000 (~₹2.08 Cr) abroad per financial year. This covers property purchases too. But if an individual remits more than ₹7 lakh, a 20% TCS (Tax Collected at Source) applies, which is refundable via ITR.
👨👩👧👦 A family of four can remit $1 million (~₹8.3 Cr) collectively.
🏢 Corporates can remit funds too—but Dubai only allows UAE-registered companies to buy property, limiting the use of Indian companies for such investments. So one should partner with a registered realtor in UAE to get into the Dubai real estate market.
“Funds must be transferred only through authorized banks, and all income from these assets—including rent—must be reported in Indian tax returns,” says Kinra.
🏛️ Important Tax Implications:
- Income from Dubai properties (rent or sale) must be reported in India.
- Capital gains are tax-free in Dubai, but taxable in India unless reinvested per Section 54 of the Income Tax Act.
- From April 1, 2023, exemptions under Sections 54 and 54F are capped at ₹10 crore.
“The exemption only applies if proceeds are reinvested in a residential property in India,” says Manik Kinra. “You can’t claim this if you reinvest abroad.”
💡 Why Cross-Border Expertise Is Essential
Dubai real estate may offer glamour and strong returns, but it requires navigating:
UAE’s real estate and visa policies
RBI’s remittance limits
FEMA’s foreign asset regulations
Indian tax laws