Overview

• A new decree has come into force that grants incentives to eligible real estate investment funds that hold or acquire real estate situated within the Emirate of Dubai (outside the Dubai International Financial Centre (DIFC)).¹
• The new decree is aimed at funds licensed in the Emirate of Dubai (including by the Securities Commodities Authority and Dubai Financial Services Authority) that meet certain requirements (including minimum asset value).
• The new decree delivers three key advantages for eligible funds in terms of cost, flexibility and simplicity. It also provides for a new register to be established at the Dubai Land Department (DLD) to record the details of eligible funds.

Key points

• Reduced costs: Eligible funds will benefit from reduced property transfer fees. The fee rate for registering freehold title and usufruct interests is 2% of the property's market value (compared to the standard rate of 4%).²
• Flexibility: Eligible funds can hold real estate assets situated in those areas of the Emirate designated for foreign ownership (sometimes called "freehold areas") and also within certain areas previously reserved for ownership by UAE nationals.
• Simplicity: The dealing of interests by investors in an eligible fund will not attract property registration fees (notwithstanding such dealings potentially effecting a change in ultimate beneficial ownership of the underlying real estate assets).
• Registration conditions: The key conditions for registering a fund with the DLD include: (a) real estate assets with a value of at least AED180 million (when submitting the application); and (b) a valid licence issued by the relevant licensing authority.
• Registration fees: The fees for registering an eligible fund on the register maintained by the DLD are AED10,000.
• Ownership restrictions: A special committee will determine those areas and properties, outside the freehold areas, where eligible funds (whose investors may include non-UAE nationals) may acquire freehold, usufruct and long lease interests.
• Other incentives: The new decree allows for changes to the available incentives. It authorises the Chairman of the Executive Council to make such changes and also the Governor of the DIFC to determine the incentives for eligible funds operating within the boundaries of the DIFC.

Future practice

• Future investments by eligible funds should include an assessment of any incentives which may be realised pursuant to the new decree.
• Real estate investment funds should also take steps to ensure that they stay up to date with any changes to the available incentives.

1. Decree No. (22) of 2022, Introducing Incentives for Real Estate Investment Funds in Dubai.↩
2. Schedule of Fees, Executive Council Resolution No. (30) of 2013 Approving Fees of the Land Department.↩