Category: News and Media

UAE, Dubai

The UAE is the most preferred choice for real estate investors and Dubai in UAE is the most thriving location with numerous advantages. Dubai is among the real estate investment best cities because of its higher rents and profitability in addition to its low tax rate. The UAE’s citizens’ superior purchasing power drives the real estate industry. Consequently, it is a wonderful moment to purchase real estate in Dubai. Both the economy and the people are growing, helping Dubai’s real estate market.

In the first quarter of 2023, the Dubai real estate recorded its all time high transaction. During this period a total 36,946 deals were registered (43.2% higher compared to the 2022). If we talk about the Year-on-Year increase for April 2023 then it was approx 16.2%  The year-on-year increase for April alone was 16.2 percent. So, there is almost half a year left for 2024 and the future is bright for real estate investors. 

Foreign Ownership Laws in Dubai

As per Article 3 of Regulation No. 3 of 2006 determining areas for ownership by foreigners of property in the Emirate go Dubai (pages 129 – 132) indicates the land plots designated as freehold properties. In UAE and particularly in Dubai Foreign Ownership is permitted in freehold areas & communities. This means that any foreigner or expat can buy property here but only within the boundaries of these freehold  areas.

Tax Liability in Dubai

The most recent update regarding this matter has been provided through the unveiling of Cabinet Decision No. 56 of 2023, pertaining to Federal Decree-Law No 47 of 2022. According to this announcement, foreign companies and non-resident juridical persons are now required to pay a 9% tax on all income derived from real estate and other immovable properties within the country. This tax applies to properties held for investment purposes or utilised for business activities.

https://www.hcorealestates.com/ 

As one of the most sought-after global destinations for real estate investment and development, Dubai has witnessed a significant surge in its property market in recent years. However, with this growth and attractiveness comes the risk of money laundering and terrorist financing. To safeguard its reputation and maintain its position as a thriving financial hub, Dubai has taken proactive measures to combat these financial crimes through robust Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) regulations. In this blog post, we will explore the importance of AML/CFT measures in Dubai’s real estate sector and their impact on promoting transparency, integrity, and sustainability in the industry.

1. Preserving Dubai’s Reputation

Dubai’s reputation as a leading global business and financial center is a significant driving force behind its real estate market’s success. Instances of money laundering or terrorist financing associated with the property sector could severely damage the city’s image and deter foreign investors. By implementing strong AML/CFT measures, Dubai aims to demonstrate its commitment to upholding international standards and maintaining a clean and transparent property market.

2. Complying with International Standards

In an interconnected world, complying with international AML/CFT standards has become essential. Dubai, being a member of the Financial Action Task Force (FATF), is obligated to adopt and enforce stringent AML/CFT regulations. By doing so, the city aligns itself with the global fight against financial crimes, fostering greater trust among international investors and businesses.

3. Identifying Beneficial Ownership

One of the crucial aspects of AML/CFT measures is the identification of beneficial ownership. This entails knowing the actual individuals behind a legal entity involved in a property transaction. By unveiling the true beneficiaries, authorities can prevent the misuse of shell companies and trusts to conceal illicit funds, making it harder for criminals to exploit the real estate market for money laundering purposes.

4. Enhanced Due Diligence and Reporting

AML/CFT regulations require real estate agents, developers, and financial institutions to perform enhanced due diligence on high-risk customers and transactions. This process involves conducting thorough background checks and documenting the sources of funds used in property transactions. Furthermore, reporting suspicious activities to the appropriate authorities is essential in detecting and preventing potential money laundering and terrorist financing activities.

5. Curbing Speculative Bubbles

Dubai’s real estate market has witnessed periods of rapid price increases, leading to concerns about the formation of speculative bubbles. Money laundering can exacerbate this issue by injecting illicit funds into the market. Implementing AML/CFT measures can help curb speculative behaviors driven by illicit money, ensuring a more stable and sustainable property market.

6. Strengthening Investor Confidence

Investors, both local and international, seek stable and secure environments for their investments. By prioritizing AML/CFT compliance, Dubai can instill confidence in investors, reassuring them that their assets are protected from illicit activities. Strengthening investor confidence can contribute to a steady flow of capital into the real estate sector, promoting long-term growth and development.

 

As Dubai’s real estate market continues to attract global interest, the importance of robust AML/CFT measures cannot be overstated. By preserving its reputation, complying with international standards, identifying beneficial ownership, enhancing due diligence, and curbing speculative activities, Dubai can build a resilient and transparent property market that will remain a top choice for investors worldwide. As the authorities continue to evolve their AML/CFT strategies, the real estate sector will contribute to Dubai’s economic prosperity while safeguarding its financial system from the threats of money laundering and terrorist financing.

The real estate sector plays a crucial role in the economic growth and development of Dubai. As the emirate continues to attract local and international investors, it becomes increasingly important to ensure the integrity of its property market. Recognizing the potential risks of money laundering and terrorist financing, Dubai has taken significant measures to combat these threats through robust Anti-Money Laundering (AML) and Counter Financing of Terrorism (CFT) regulations. In this blog, we will explore the importance of AML/CFT in the real estate sector in Dubai and the initiatives implemented to safeguard the industry.

Understanding AML/CFT

AML refers to the legal and regulatory framework designed to detect and prevent the conversion of illicitly obtained funds into legitimate assets. CFT aims to disrupt the financial support provided to terrorist organizations or activities. Both AML and CFT measures are vital for maintaining the integrity and stability of the financial system and protecting it from criminal activities.

AML/CFT in the Real Estate Sector

Dubai’s real estate sector is a key target for money laundering due to its high-value transactions and the potential for anonymity. To counter this, Dubai has implemented a comprehensive AML/CFT framework specific to the real estate industry. The regulatory authorities, including the Dubai Land Department (DLD) and the Real Estate Regulatory Agency (RERA), actively collaborate to enforce and monitor compliance with these regulations.

Key Initiatives and Regulations

1. Enhanced Customer Due Diligence (EDD): The real estate industry in Dubai is required to conduct thorough due diligence on customers, including buyers, sellers, and intermediaries. This includes verifying their identities, and source of funds, and assessing the risk associated with the transaction.
2. Know Your Customer (KYC): The KYC process requires real estate professionals to gather comprehensive information about their customers, including beneficial ownership details, to ensure transparency and prevent misuse of the property market for illicit purposes.
3. Reporting Suspicious Transactions: Real estate professionals have an obligation to report any suspicious transactions or activities that raise concerns regarding money laundering or terrorist financing. This timely reporting enables authorities to investigate and take necessary action.
4. AML/CFT Compliance Officers: Designated compliance officers within real estate companies are responsible for overseeing and implementing AML/CFT measures. They ensure adherence to regulations, provide training to staff, and foster a culture of compliance within the organization.
5. Cooperation with International Bodies: Dubai actively collaborates with international organizations and financial intelligence units to share information, exchange best practices, and stay updated on global AML/CFT developments. This cooperation strengthens the effectiveness of Dubai’s AML/CFT regime and contributes to the global fight against financial crimes.

Benefits and Future Outlook

The AML/CFT measures implemented in Dubai’s real estate sector bring several benefits. They enhance the transparency of property transactions, increase investor confidence, and safeguard the industry’s reputation. By mitigating the risks of money laundering and terrorist financing, Dubai aims to attract reputable investors and maintain a secure and trusted property market.

Looking ahead, Dubai continues to strengthen its AML/CFT framework through ongoing monitoring, evaluation, and periodic updates to align with international standards. Authorities remain committed to adapting to emerging risks and employing innovative technologies to enhance effectiveness and efficiency in combating financial crimes.

Dubai’s inauguration of the fifth phase of the Mohammed bin Rashid Al Maktoum Solar Park marks a significant milestone in the city’s commitment to renewable energy and sustainability. Here are some key points about the project:

1. Largest single-site solar park: The Mohammed bin Rashid Al Maktoum Solar Park aims to become the largest single-site solar park in the world with a planned capacity of 5,000 megawatts (MW) by 2030.
2. Capacity and clean energy generation: The fifth phase of the project has a capacity of 900 MW and is expected to provide clean energy to approximately 270,000 residences in Dubai. It will contribute to reducing carbon emissions by 1.18 million tonnes annually.
3. Implementation model and partnership: The project follows the Independent Power Producer (IPP) model, with Dubai Electricity and Water Authority (DEWA) holding a 60% stake and a consortium led by ACWA Power and Gulf Investment Corporation owning 40% through Shuaa Energy 3.
4. Lowest bid and record-breaking cost: DEWA achieved a world record by receiving the lowest bid of $1.6953 cents per kilowatt hour (kWh) for the fifth phase, showcasing the competitiveness and cost-efficiency of the project.
5. Previous phases and project company: ACWA Power has previously worked on the second and fourth phases of the solar park, highlighting its involvement in Dubai’s renewable energy initiatives. DEWA and ACWA Power formed a project company called Noor Energy 1 for the design, construction, and operation of the 950MW fourth phase.
6. AI-based cleaning system: The fifth phase of the solar park is one of the first projects in the Middle East to incorporate Artificial Intelligence (AI) in an advanced robotic cleaning system for the operation and maintenance of photovoltaic panels.
7. Impact and future goals: The Mohammed bin Rashid Al Maktoum Solar Park, with a total investment of AED 50 billion, aims to reduce 6.5 million tonnes of carbon emissions annually upon completion. Dubai has set ambitious targets of generating 25% of its energy from renewable sources by 2030 and 100% by 2050 in alignment with the UAE’s broader vision.

The project underscores Dubai’s commitment to renewable energy, sustainability, and reducing carbon emissions, contributing to the city’s efforts to achieve its long-term environmental goals.

This applies to both immovable property that is held or used in a business and immovable property that is held for investment purposes

The UAE Ministry of Finance (MoF)has announced the issuance of a cabinet decision on a non-resident person’s Nexus in the UAE for the purposes of corporate tax.

Foreign companies and other non-resident juridical persons will be subject to UAE corporate tax on income derived from real estate and other immovable property located in the UAE and will be required to register in the UAE for corporate tax purposes, the MoF said in a statement.

This applies to both immovable property that is held or used in a business and immovable property that is held for investment purposes in the UAE, it said.

Younis Haji Al Khoori, Undersecretary of the MoF, said: “The Corporate Tax treatment of income derived from UAE real estate and other immovable property by foreign juridical persons is in line with international best practice which stipulates that income derived from immovable property is taxable in the country in which such property is located.”

Real estate investment income earned from UAE immovable property owned by foreign or UAE resident individuals, either directly or through a trust, foundation or other vehicle that is treated as fiscally transparent for UAE corporate tax purposes, would generally not be subject to corporate tax provided it is not a licensed business activity, the statement noted.

Real Estate Investment Trusts (REITs) and other Qualifying Investment Funds can avail an exemption from corporate tax on income derived from the investment in UAE immovable property, provided that the relevant conditions are met, it said.

The UAE started a 9% corporate tax on Thursday, with relief for SMEs and likely exemptions for export-focused free zone activities.

Dubai Land Department (DLD), through the Real Estate Regulatory Agency (RERA), issued a circular confirming the implementation of the new electronic service, Madmoun. Accessible through the Trakheesi System, this service is represented by a quick response code (QR Code) issued for any real estate advertisement permit, as part of DLD’s ongoing efforts to modernize and develop real estate governance procedures and enhance investor confidence.

Effective 24 April, all real estate companies are expected to feature the QR code on their print and audiovisual advertisements. The code enables customers to quickly and easily verify the advertisement’s authenticity and validity, ensuring that it has been approved by RERA. Additionally, customers can access DLD’s website to view the complete advertisement information, including details about the advertising company, the property’s condition, and specifications. The link can be secured to prevent any modification to the data.

His Excellency Eng. Marwan bin Ghalita, CEO of RERA at DLD said: “The service aligns with DLD’s strategy to make Dubai ‘The World leader in Real Estate Investments’ by harnessing technology to develop real estate products according to the directives of the wise leadership. It also supports DLD’s mandate of achieving the goals of the Dubai Economic Agenda ‘D33,’ which was launched by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, to generate new economic value from digital transformation towards achieving His Highness’ vision of consolidating Dubai’s position as a global capital of the digital economy and a key player in the global digital system.”

 

Bin Ghalita added: “We are constantly keen on enhancing and ensuring transparency in the real estate sector. We will continue to empower the real estate community with proactive and streamlined real estate services and integrated data, based upon a pioneering digital infrastructure and qualified human cadres. This will help achieve sustainability in the development and growth of the real estate sector, keeping pace with best-international practices and standards and positioning Dubai as a pioneering model in this field”.

DLD Customers can scan the QR code on each real estate advertisement to get a glimpse of the property’s authorized details and establish if it has been sold or rented.

Real estate companies can activate the QR code through the Trakheesi system. RERA confirms that real estate companies must adhere to this service to prevent them from being subject to any violation resulting.

As part of its mission to enhance awareness and confidence within the real estate community, DLD strongly advises all customers and investors to only engage with real estate advertisements that feature the QR Code to ensure the protection of their rights and prevent their exposure to any fraudulent or unreliable transactions.

The UAE golden visa is a special residency visa that allows holders to remain in any of the Emirates as residents for up to ten years.

With this type of visa, golden residents are entitled to a number of benefits and perks that aren’t currently available to holders of the standard UAE residency visa.

UAE golden visas are issued to residents who have made outstanding contributions to the country, are highly skilled in certain fields, or work in key industries, investors and even entrepreneurs wishing to set up and work in the Emirates. High-achieving university graduates and high school students are also eligible to receive the UAE golden visa for themselves and their families.

Let’s take a look at some of the benefits of holding a UAE golden visa.

Extended residency rights

Introduced in 2019, the UAE golden visa offers holders extended residency in the country. Those who have been awarded one can avail of residency for themselves and their dependents for up to ten years, while a standard residency visa requires renewal every two to three years.

This means that residency renewal is not required for up to ten years.

Self-sponsored work or stay

UAE golden visa holders can remain living, working and studying in the country for the entirety of their visa, with or without gaining local or other employment. The holder can work for themselves, or another company (local or otherwise) without the need for individual sponsorship. Unlike the standard residency visa, the UAE golden visa permits holders to remain in the country long-term without employment.

Ability to sponsor dependents and unlimited domestic helpers

The UAE golden visa allows for the individual holder to sponsor their family members, including spouse and children (regardless of dependents’ age). Should the main holder of the UAE golden visa pass away during the term of the ten-year visa, their family members are allowed to remain on said UAE golden visa residency until the time of natural conclusion of the visa.

Holders of this visa type may also employ and support an unlimited number of domestic helpers. The UAE golden visa does not limit the number of employed and sponsored support.

Extended time outside the UAE

It’s possible for UAE golden visa holders to spend extended periods of time outside the UAE without impacting their eligibility or the validity of the visa. On the standard residents’ visa, your visa would be nullified upon spending more than six months outside the jurisdiction.

Exclusive health-care packages

In late July it was announced that UAE golden visa holders would be eligible for special health care and health insurance packages. These exclusive health insurance plans will start from just under Dhs2400. The plans will cover claims of up to Dhs20,000,000. Three levels of cover will be available; Core Silver, Enhanced Gold and Premier. Available to any UAE golden visa holders and their dependents who currently do not have an existing health insurance plan, these health insurance plans will be subject to annual renewal.

Dubai Police Esaad privilege card

In a statement made in late July, it was announced that UAE golden visa holders would now be eligible to avail of the Esaad privilege card issued by the Dubai Police.

The Esaad Card was established in 2017 by Dubai Police to offer holders discounts in shops, education, health, housing, restaurants, theme parks, hotels and more. There are exclusive discounts across 7,237 brands and businesses in the UAE and 92 countries worldwide.

This card entitles holders and UAE golden visa residents to special privileges including up to 40 percent off school fees at the American School of Creative Science, 50 percent off stays at Kempinski Palm Jumeirah, 70 percent off At The Top in the Burj Khalifa, discounts on Fly Dubai flights and many more. Holders will also be able to get up to 30 per cent off study programmes at the Institute for Management Technology. For a full list of discounts available, holders can visit the Esaad website or download the app.

The Rental Disputes Center (RDC), the judicial arm of Dubai Land Department, launched a set of new e- services for the management of the Execution of Judgments Department to continuously develop executive procedures and measure performances through innovative tools and contemporary smart systems, that contribute to improving and enhancing work mechanisms, which positively reflects on the convenience and happiness of customers and reduces the time for completion and closing of files.

The new e-services include linking RDC’s e-system to Dubai Police’s system, electronic enquiries, performing automatic disbursements, appointing experts via the electronic system, updating data automatically, and requesting instalments.

Sultan Lootah, Director of Department Senior – Execution of Judgments Department at RDC, said: “At the department, we are keen to keep pace with the directives of the Dubai government towards digital transformation through a series of innovative e-services that enabled the Execution Department to achieve success. The process of transitioning from traditional work to smart and e-systems enhanced the speed and ease of procedures and eliminated paper transactions.”

Lootah added: “The RDC’s advanced electronic infrastructure helped us accelerate efficient and effective development, which was reflected in the resolution of rental disputes according to a smart and innovative judicial system, characterized by speed and accuracy and sustainability in the provision of services. With advanced services, most of the implementation procedures will be electronic/smart, enhancing the performance of our human cadres, whose role will be limited to supervision and follow-up of the system to ensure effective workflow.”

Link to Dubai Police system and e-inquiry

Regarding the service of linking RDC’s system to Dubai Police’s system, the previous mechanism related to circulars issued against individuals, including seizures and fetch and travel bans, was dispensed with. It was initiated through the center and shared with the investigation officer at Dubai Police, which required a long time due to its manual implementation. With the launch of the new connection service, decisions or circulars can now be issued electronically and linked directly to Dubai Police’s system.

As for the smart query service, the process of enquiring about the property of people against whom decisions are executed electronically was linked and integrated with the relevant government agencies, which include Dubai Land Department (DLD), the Roads and Transport Authority (RTA), Dubai Economy and Tourism Department (DET), and banks represented by the Central Bank. This comes in response to the fact that the service is required to address all government entities and banks in the country, which takes a lot of time and effort.

Automatic exchange and appointment of an expert

The automatic disbursement service is now taking place quickly and in a short time. When the amount is deposited, the system automatically transfers it to the account of the requester instead of the previous procedures that required an employee to see the amount deposited by the person in the Rental Disputes Center system rental, followed by the execution requester submitting a request for disbursement, which, again, requires an employee to manually verify the bank account data when each instalment is due. This automatic update of data also allows the electronic system to send a message to the requester to update their data in the event that the transfer was initiated after the account had been closed or changed. This would allow for the cancellation of the transfer and for the person concerned to update their account information on the system.

In turn, when there are holdings that are difficult to assess by transferring files directly to the electronic system, a relevant expert will be automatically appointed through the list of available experts, which shortened the process from three weeks to one day. Following the procedures, the execution officer would write an eviction report, submit a request, and present the holdings to the execution judge to obtain a decision to transfer the file to the competent expert in this regard.

Automatic data update and instalment request

As for the instalment request service, it made it possible for the e-system to make scheduling and payment plans, in addition to implementing the judge’s decision electronically, as the system automatically implements the decision of the execution judge to schedule the payment plan without human intervention, also allowing for the possibility of more than one payment plan according to the ruling issued, with the ability to update requests and partial payment of amounts and payments through the electronic channels available through the site. This procedure replaced the system that required, after the issuance of the decision, that an employee develop a payment plan and schedule the debt.

Thus, the Rental Disputes Center in Dubai continues to enhance its smart procedures and services to provide a judicial ecosystem competent to consider disputes and adopt a fast and simplified mechanism to achieve stability for the real estate rental sector and ultimately support sustainable development in the real estate sector and Dubai generally.