Rupee's Fall Alters Property Investment Trends

The Weakening Rupee and Inflation's Impact on Indian and Pakistani Property Investments in Dubai

The United Arab Emirates, particularly Dubai, has long been one of the most popular destinations for international property investors. The city's modern infrastructure, tax-free environment, dynamic economy, and rapidly developing real estate market attract investors from numerous countries. Recently, however, significant shifts have occurred in investor dynamics, primarily due to currency fluctuations and economic challenges.

According to a recent study published by Stamn Real Estate Development, British, American, and Kuwaiti investors currently possess the strongest purchasing power in the UAE real estate market. In contrast, Indian and Pakistani investors, who were previously among the largest buyers in Dubai, have found themselves in considerably weaker positions, partly due to the depreciation of the rupee and partly due to high inflation.

Exchange Rate Effects: The Rupee's Plunge

The Indian rupee has hit a historic low against the UAE dirham, reaching an exchange rate of 24 according to the study. This means Indian investors have to pay increasingly more for the same property they previously could have acquired for less money. According to the Index, this has pushed India down to 18th place in the international purchasing power rankings.

A similar situation exists in Pakistan, where the local currency has recently stabilized, but the country's high inflation has significantly reduced enthusiasm and opportunities for property purchases. Thus, Pakistani investors have fallen to 22nd place, according to the Index.

Strengthening of the British Pound and Euro Creates New Opportunities

The study highlights the significant strengthening of the British pound in 2025. The pound-dirham exchange rate was 4.47 in January but surpassed the 5-mark by September, reaching a nearly 14-year high. This currency movement provides a major advantage for British investors, whose purchasing power has increased, thereby allowing easier access to premium Dubai properties.

The euro has also strengthened, rising from 3.76 in January to 4.35 against the UAE dirham by September. This development has provided better conditions for German, French, and Dutch investors and has contributed to these countries being among the top ten in purchasing power.

Lifestyle Changes and Strategic Investments

The study examined not just financial parameters, but also what types of investors are emerging in the UAE real estate market. Observations indicate that an increasing number of foreign families purchase properties not only for investment purposes but also for living, working, and settling. The Dubai Islands project, for instance, is especially popular among European buyers, who see it as the 'next Palm Jumeirah.'

Meanwhile, in the up-and-coming district of Jumeirah Garden City, buyers from Russia and CIS countries are seeking affordable, family-friendly apartments. The study notes that these buyers are often well-informed, strategically-minded investors planning for the long term in the region.

Role of the Indian and Pakistani Diaspora

Despite the rupee's weakness and Pakistani inflation diminishing purchasing power, the economic significance of the Indian and Pakistani diaspora in the UAE should not be overlooked. Citizens from these two countries together account for more than half of the UAE's population, and many have worked here for years or even decades. Indians and Pakistanis in the UAE remain significant players in the property market, especially since their income is in dirhams, making them less directly affected by currency fluctuations.

High-income, wealthy Indian investors have also remained active, as many have diversified their portfolios and continue to view the UAE as a stable investment destination, particularly due to rapidly developing real estate projects.

Purchasing Power Reflected in Figures

The Foreign Buyer Power Index took various factors into consideration when ranking countries: currency movements, relative affordability (compared to the conditions in the respective country), average incomes, wealth distribution, and capital mobility.

The top ten countries with the strongest purchasing power are:

1. United Kingdom

2. United States

3. Kuwait

4. Saudi Arabia

5. Qatar

6. France

7. Germany

8. Netherlands

9. Canada

10. Australia

These countries currently have more favorable exchange rates and stronger economic backgrounds, enabling them to enter the Dubai property market more competitively.

Summary

The continuous changes in the global economic environment have a significant impact on international real estate markets, and Dubai is no exception. Currency movements, the stability of the domestic economic environment, inflation, and investment enthusiasm all influence which countries' citizens can buy in the UAE from a favorable position. While Indian and Pakistani buyers' positions have weakened, British, American, and European investors are becoming increasingly strong players in the local market. However, Dubai remains a global investment hub where a diverse buyer base, ambitious urban developments, and stability attract capital, irrespective of currency fluctuations.

(Source of the article is based on Stamn Real Estate Development.)