The years 2019 – 2020 saw the real estate market being impacted across the world due to the negative impact of Covid-19. Similar effects were seen on the UAE commercial real estate market as well, impacting both the commercial real estate acquisitions and tenancy transfers. Following the pandemic, there was an immediate decrease in the demand for retail office spaces, as well as residential real estate. However, moving into the following years, we have seen a strong reversal of this trend.
In UAE, only UAE nationals, GCC nationals or companies/ entries owned by such nationals can acquire real estate property in any given part. When it comes to expats, the property can be acquired only in designated areas in a given emirate. For instance, in Dubai, the designated areas include, amongst others, Business Bay, Burj Khalifa, Palm Jumeirah, Emirates Hill, Jumeriah Islands, Dubai Marina etc. In recent years, the UAE government have opened up the real estate market for expats to a larger extend allowing for more investments. The concept of both a five-year and a ten-year residency visa has been introduced, which can be acquired through real estate investments.
The conditions for acquiring a ten-year residency visa in the UAE through real estate investments include:
- Having a total investment of not less than AED 10 million overall in the UAE through various means such as investment funds, establishing a company, partnering with a company etc.), on condition that the investment in sectors other than real estate is not less than 60 per cent of the total investment.
- Further conditions apply, such as: i) the investment must not be on loan; ii) the investment should be retained for at least a minimum period of three years, and iii) financial solvency must exist towards the invested sum.
The conditions for acquiring a five-year residency visa in the UAE through real estate investments include:
- the gross value of the invested property should not be less than AED 5 million.
- the investment must not be on loan;
- the invested property must have been retained for at least three years.
The emirate of Dubai allows for further options for real estate property investors in acquiring a residence visa and tax domicile through real estate property investments:
- Investors who enter into real estate investments in residential property worth Aed 1 million or above can acquire a residency visa in Dubai.
- The following conditions also apply: i) Mortgage should not exceed 50 % of the property value is under the mortgage; ii) If the property is jointly owned, each investor is required to hold a share of Aed 1 Million each iii) The investment has to be made in residential property alone, and iv) The investment has to be in a freehold property.
New changes include:
- New DIFC leasing Law: Introduction of DIFC Leasing Law No. 1 of 2020, a new leasing law in the Dubai International Financial Centre that will positively impact the real estate market in the free zone.
- Deferred sale and purchase contract: The recent trend seen is the applicability of deferred sales contracts in the real estate market. Wherein, developers are open to payment of the purchase value in instalments under an agreed sales contract whilst the purchaser is allowed to occupy the property from the start. Such contract should be registered with the land department and, upon completion of the payment terms, be converted into full title deeds in favor of the purchaser.
Due to the distinctive and special characteristics of the UAE property laws, it is crucial that property laws and procedures should be rightfully understood in depth especially taking into account the local rules and practices of each emirate. Due diligence is key to ensure that regulatory compliance as required under the law is met by the developer, especially towards 'escrow accounts' and 'Oqood System' registration that further ensures the protection of your investment.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
