Whether an Indian Company buy Residential and Commercial property in Dubai UAE?

Question by Customer -
Whether an Indian Company or UAE Branch of an Indian Company buy Residential or Commercial property in Dubai UAE?

We have recently opened a Branch of one of the Indian Listed Companies in Dubai freezone. Now we are looking to buy the commercial and residential property in UAE. 

So we want to understand if there will be any restrictions or compliances required to be done for purchasing the commercial property in UAE from Indian FEMA Perspective as well as from Dubai UAE Perspective.

Answer to the Query -
From Dubai UAE Laws Perspective -
Yes, Indian companies can buy the Residential and commercial properties in Dubai UAE by opening the Branch or Subsidiary company in Dubai UAE. Indian Companies cannot directly buy properties in UAE. First of all, they need to create a company in Dubai UAE either as a Branch or a 100% subsidiary of Indian Company. Once the company is created in Dubai, then they can buy property in Dubai UAE through their Dubai UAE Entity.

From Indian FEMA Laws Persepctive -
There is a limit specified in the Directives issued by RBI. Indian Companies can buy Properties outside India upto a Maximum Threshold Limit as given under the Directives below -

(i) At the time of setting up of the office, AD Category – I banks may allow remittances towards initial expenses up to fifteen per cent of the average annual sales/income or turnover during the last two financial years or up to twenty-five per cent of the net worth, whichever is higher.

(ii) For recurring expenses, remittances up to ten per cent of the average annual sales/income or turnover during the last two financial years may be sent for the purpose of normal business operations of the office (trading/non-trading)/branch or representative office outside India subject to the following terms and conditions:

a) The overseas branch/office has been set up or representative is posted overseas for conducting normal business activities of the Indian entity;

b) The overseas branch/office/representative shall not enter into any contract or agreement in contravention of the Act, Rules or Regulations made there under;

c) The overseas office (trading / non-trading) / branch / representative should not create any financial liabilities, contingent or otherwise, for the head office in India and also not invest surplus funds abroad without prior approval of the Reserve Bank. Any funds rendered surplus should be repatriated to India.

(iii) The details of bank accounts opened in the overseas country should be promptly reported to the AD Bank.

(iv) AD Category – I banks may also allow remittances by a company incorporated in India having overseas offices, within the above limits for initial and recurring expenses, to acquire immovable property outside India for its business and for residential purpose of its staff.

(v) The overseas office / branch of software exporter company/firm may repatriate to India 100 per cent of the contract value of each ‘off-site’ contract.

(vi) In case of companies taking up ‘on site’ contracts, they should repatriate the profits of such ‘on site’ contracts after the completion of the said contracts.

(vii) An audited yearly statement showing receipts under ‘off-site’ and ‘on-site’ contracts undertaken by the overseas office, expenses and repatriation thereon may be sent to the AD Category – I banks.

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