NRIs weigh high yields in UAE vs India’s long-term value for property investment
Last updated: August 09, 2025
Dubai: For Non-Resident Indians (NRIs) living in the UAE, the choice between investing in the UAE’s booming real estate market or buying property back home in India is becoming more nuanced than ever.
While emotional ties pull many toward Indian cities, the economics of rental yield, taxation, and financing are pushing more investors toward the UAE.
UAE gains ground among investors
UAE’s appeal to NRIs isn’t just about luxury skyscrapers or beachside living—it’s about financial clarity. With rental yields between 5% and 11%, tax-free income, and a globally attractive market, the country provides what many Indian metros can’t: positive cash flow from day one.
For instance, a property in Dubai worth Dh2.15 million (₹5 crore) can fetch Dh170,000–200,000 (₹40–50 lakh) annually in rent. That’s a yield of 6–7%, while loan interest rates hover around 5%, creating a cash-generating asset. In India, a similarly priced property often offers just 2–4% yields and loans above 9–10%, resulting in a net cash outflow.
Add to that the absence of property taxes, capital gains tax, and wealth/inheritance tax in the UAE, and the long-term wealth case becomes stronger.
India’s market: Slowing growth
Indian metros are still strong in terms of long-term appreciation—Mumbai and Delhi saw up to 30% annual price jumps in 2024 alone. However, demand from local buyers is slowing, and the window for NRI entry is reopening.
But the financial structure in India can be limiting. Higher EMIs, lower rental returns, and added burdens like property tax, society charges, and maintenance reduce investment efficiency. Construction delays, unclear land titles, and slow dispute resolution add further friction.
As an India-based financial auditor points out, “One person’s entire income keeps going into EMIs,” turning a dream home into a long-term liability.
Who should invest where?
So, who should invest where? If your priority is rental income and consistent cash flow, UAE clearly outperforms. With rental yields ranging between 5% and 11% and loan interest rates around 5%, most investments generate positive monthly returns—a scenario difficult to achieve in India’s major cities, where rental yields average just 2% to 4%, while loan interest rates hover between 9% and 11%.
UAE also eliminates common tax burdens: there’s no capital gains tax, no recurring property tax, and no inheritance or wealth tax—only a one-time 4% registration fee. In contrast, investors in India must factor in various taxes, including income from rent, property tax, and potential capital gains, which can erode net returns over time.
In terms of capital appreciation, for instance, Dubai currently shows faster short- to medium-term growth, while Indian metros may offer better long-term upside, especially in up-and-coming Tier-2 cities. Liquidity is another factor—Dubai’s property market is highly liquid, allowing for easier buying and selling, while Indian real estate is typically less fluid, with slower transaction cycles.
Ultimately, the choice depends on your goals: for stronger near-term returns, tax efficiency, and ease of exit, UAE is a compelling option. For cultural connection, future use, or patient long-term appreciation, India remains relevant—particularly if you’re open to navigating its regulatory landscape.
Final thought: What’s right for you?
If your goal is pure investment, UAE is hard to beat in 2025. The market is transparent, liquid, and cash-flow positive from day one. For NRIs, especially those earning in dirhams, the advantages are significant.
However, if your focus is long-term capital gains, retirement use, or staying connected to Indian real estate for family or cultural reasons, Indian cities—especially Tier-1 and upcoming Tier-2—still offer real opportunities.
With remote work expanding and more digital tools to manage properties internationally, the case for UAE real estate among the UAE’s Indian middle class is stronger than ever.
