Are Indians moving money out of Dubai? Experts weigh in as investors review UAE exposure

Nobody is rushing to leave the UAE. But they are also not investing either. “I am not seeing an exit from the UAE, but I am seeing greater caution,” says CA Ajay R. Vaswani, Founder of Aras and Company, who has many NRIs among his clients. Investors with businesses, families or other strong links to the UAE remain positive about the market. But those investing purely to make money are moving more slowly.

They are seeking clarity about the potential threat to their investments, or whether their businesses can continue to run normally. CA Sagar Soman, Consultant, NRI Taxation and Cross-Border Wealth Advisory, says families that already own property in the UAE are now asking a different question: do they need another property? The first property, he notes, was usually bought for a mix of reasons, that is diversification, residency, proximity to India, or simply because other families were doing it.

“The purchase was a group decision. The holding is a solitary one.” Now, families are asking how much of their total wealth should remain invested in the country. Indian money is not leaving the UAE, Soman says. But investors are making decisions after careful study of the market.

Investors want the freedom to change their minds

Vaswani says investors are now spreading their money across different investments instead of putting a large amount into one place. In real estate, investors are showing more interest in completed properties or properties that are already earning rent. They also prefer established areas, trusted developers and properties that can be sold easily.

Large off-plan projects, where buyers invest before a property is completed, are getting more attention before investors commit. Investors are also wary about putting too much money in one country, one type of investment or one bank.

Soman says the change is also about how long investors think they can safely keep their money in one place. “When five years feel predictable, investors optimise for return. When they do not, they optimise for reversibility,”

This means investors want more cash that they can access easily. They want to invest in stages instead of all at once. They also want to avoid putting too much of their wealth in one place. Many families know how much each of their properties and investments is worth. But very few have reviewed all their assets together.

The crisis has pushed them to finally look at their total UAE exposure and to confront an uncomfortable truth: owning a property isn’t the same as having cash in hand. There is also a problem that investors may not think about owning a property does not mean having cash in hand.

Soman explains that even if a property can be sold quickly, getting the money out of the country can take another set of steps. On remittances, he says 20 per cent is currently collected at source on LRS investment remittances above the Rs 10-lakh annual threshold. This money can be claimed back as a credit, so it is not an additional tax. But the investor still has to pay it upfront. “Real estate is an asset. It is not liquidity.”

The Golden Visa still matters

The UAE Golden Visa continues to attract Indian families. It gives them the chance to live in the UAE for a longer period, sponsor family members and have a second base outside India.

But Vaswani says the visa should not be the only reason to invest. The property or business must also make financial sense. He also points out that having a Golden Visa does not automatically make someone a UAE tax resident or an Indian non-resident. Where a person lives, how long they stay in a country and what documents they have can all matter when deciding their tax status.

Soman sees the Golden Visa as a way to keep options open. It can give a family a second home, help children have more choices and make it easier to move to the UAE later. But every new investment must still make sense on its own. “A Golden Visa can strengthen an investment decision. It should not create one.” There is also confusion around the word “residency”.

Soman says having a UAE residence card does not automatically change how Indian law sees a person. Immigration residency, Indian tax residency, FEMA residency and treaty residency are four different things. They can also use different time periods to decide a person’s status. Indian tax residency is checked for the April-to-March financial year. The India-UAE tax treaty uses 183 days in a calendar year.

So, the same person can be treated differently under different rules. “The real question is never “where am I resident,” but “resident for which law, and from what date.”

Why the UAE still attracts Indians

The UAE continues to have several advantages for Indian investors. Vaswani points to its closeness to India, good air connections, international banking system, large Indian business community and relatively favourable personal taxes. However, Indian residents still have to follow Indian tax rules.

They can still have to pay tax in India on their global income and report foreign assets as required. Money sent abroad under the Liberalised Remittance Scheme is limited to USD 250,000 a year and must follow FEMA rules.

The crisis has not removed the UAE’s advantages. However, it has made investors think more about spreading their money, planning for inheritance, avoiding too much debt and having a clear way to exit an investment. Soman says the UAE’s appeal was never only about taxes.

For many Indian families, it gives a way to build an international financial life while still staying close to India. The problem starts when people move their money abroad but continue to think only about Indian tax rules.

“Zero tax there does not mean zero tax here,” says Soman. If India taxes the income and no tax was paid in the UAE, there may be no foreign tax credit to reduce the Indian tax bill.

Soman also says financial information is now being shared between India and more than 100 countries, including the UAE. Since July, taxpayers can also see this information through the Annual Information Statement.

This does not mean India automatically gets details of every property someone owns in Dubai. But financial account information and the money moving around those assets can be shared. Soman also talks about the FAST-DS voluntary disclosure window, which is open until 31 December.

He says the rules make a difference between money that was deliberately hidden and a genuine foreign asset that was simply not reported when it should have been. He also points out that certain foreign assets have a Rs 20-lakh relief, but foreign immovable property does not get the same treatment.

Succession is another issue that families often think about too late. Owning property in the UAE can create questions about what happens to that property after the owner dies. An Indian will should not automatically be assumed to cover everything in the UAE. A nomination also does not necessarily settle inheritance. “The destination may be Dubai,” Soman sums up. “The financial life of the investor remains cross-border.”

What could actually make investors change their minds

Vaswani does not believe that one sudden geopolitical event will be enough to make most long-term investors leave. He is more worried about problems that continue for a long time. These could include problems with airports, ports, banks, payments or everyday business activity.

Investors will also watch property sales, rental demand, insurance costs and the number of people moving to the UAE. For wealthy investors, the biggest concern is not necessarily that property prices may fall. They want to know whether they can still access their money and continue running their businesses. Soman agrees. He says wealthy investors understand that property prices can rise and fall. A fall in prices alone may not make them leave. What can change their minds is difficulty in moving money, problems with banks, travel disruptions or more paperwork.

“Capital rarely flees,” he says. “It gets tired.” He makes a clear difference between two kinds of risk. Property risk means the property does not perform as expected. Jurisdiction risk starts when problems in a country make it difficult to own, use, access, move or sell your assets.

HNIs can accept changes in property prices. But they do not want to lose control of their money. Reconsidering the UAE does not necessarily mean leaving it. Families may simply reduce the amount of money they have there, create another option in another country and spread their wealth. The real question is not whether a family should choose the UAE or leave it. It is how much of its future should depend on one country.

Expats are preparing for more risk

Immigration lawyers Gnanamookan Senthurjothi and Veena Vijay Ananth, founders of The Visa Code, say they are seeing a change among expats. Some people have even asked whether they should accept a job in the UAE at a time of conflict.

“There’s real movement happening, not just people being nervous,” During the worst strikes in March, there were reports of people leaving Dubai in panic. Some even left their pets behind while trying to get out quickly. But the lawyers say another signal was more important that is more money was being sent back home. People were keeping their jobs in the UAE but moving some of their savings out of the country.

So far, this has not turned into a permanent mass exit. Instead, people have reacted whenever tensions increased and became calmer when the situation improved. Dubai’s air traffic also recovered within weeks even during the worst part of the conflict. The lawyers do not expect the UAE to close its doors to skilled workers. They point to the UAE’s plans to build more pipelines and port capacity so that it is less dependent on the Strait of Hormuz.

“A government spending that kind of money to de-risk its own infrastructure isn’t a government planning to close its doors to talent,” say attorneys. They believe the UAE will continue trying to attract skilled workers because maintaining an image of stability is important.

If the conflict continues for a long time, logistics, trade and tourism are likely to face problems first. Changes to immigration rules would probably come later. For people already living in the UAE, their advice is that register with your embassy, keep some money outside the UAE and do not assume that every ceasefire will last.

For people thinking about moving to the UAE, they say the decision should not be based only on headlines. Missiles have hit both Dubai and Abu Dhabi, but the UAE has continued to work as a major business centre. At the same time, the conflict is still active and the ceasefire has changed several times. People should therefore avoid making rigid plans based on a situation that can change quickly.

What the demand numbers show

The actual demand for the UAE does not completely match the fear seen in the headlines. Interest in the UAE Golden Visa has not fallen since regional tensions increased. In fact, people applying for it are coming better prepared. They are asking more questions about what would happen if the situation gets worse.

Investors are also making an important distinction: problems in the wider region do not automatically mean that UAE institutions are unsafe. During the worst weeks of the conflict, the property registration system, visa system and banking channels continued to work. This has helped keep investor confidence alive.

The Golden Visa remains the biggest reason many families are interested in the UAE. Families want long-term residency without having to wait for many years. Some investors are also exploring the UAE while continuing with a slower US immigration process. They are not necessarily choosing one country over the other.

Investors are still willing to put in the AED 2 million needed for the Golden Visa route and they now want their legal and financial plans to be checked carefully before they move the money. This shows that Indian investors are not running away from the UAE. They are simply becoming more careful about how much they invest, why they invest and how easily they can protect or move their money.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Please consult a qualified professional before making investment decisions.