On Tuesday, Dubai introduced a new law to promote real estate investment funds in the emirates. The new law targets the Dubai property market issued by the Vice President and Ruler of Dubai, Sheikh Mohammed bin Rashid.
The new law is for the region to continue and propel its positions to be the global destination for real estate investment”. As recently as June, the Dubai property market reached a record high for sales transactions in 13 years. The new law targets granting privileges to real estate investment funds and incentivizing new development zones in the region, such as Dubai International Financial Center.
The law calls for establishing a registry at the Dubai Land Department called the Real Estate Investment Funds Register.
According to the law, funds can be registered as long as the real estate assets’ value does not fall below Dh180 million ($49 million). At the time of application, they cannot have their trading privileges on the Dubai Financial Market suspended.
How Will The New Real Estate Law Affect Investors
The new real estate law in Dubai provides further transparency to investors in Dubai. However, the new law may not significantly impact retail investors. Retail investors prefer smaller margins and fractional ownership over foreign investors.
First and foremost, understanding real estate investment funds is similar to investing in REITs, according to Investopedia..com.
It is set out to encourage foreign investors to seek investment in various new development projects as the law offers specific access to annual incomes. Moreover, the recent real estate funds can be managed actively by yourself or passively by fund managers in Dubai.
It pertains to real estate investment funds authorized and supervised to work in the emirate, including those in exclusive development and free zones like the Dubai International Financial Center.
In addition to attracting foreign real estate funds to conduct their investment activities in Dubai, it lays out incentives to encourage the funds to participate in various real estate projects in the emirate.
Since the beginning of the year, the Dubai property market has quickly recovered as the world’s top destination for real estate investments. Moreover, with the new law, Dubai is also attracting foreign investments to the capital market.
The Dubai property market is vital to its booming economy. On the other hand, capital investment is also essential for its GDP. The new law is set to encourage interested investors for a quicker decision-making process to own a fraction of properties for sale in Dubai or as a leasehold property for 99 years.
The timing for the new law is an opportunity as the property sector in the region rebounded quickly, with more first-time investors and buyers coming to the area.
The demand for property sale in Dubai has increased, leading to price increases in the real estate sector.
Dubai apartment and villa prices increased by 9% in June stated to CBRE reports.
However, the value of Dubai property is still underperforming because of the ongoing Russia-Ukraine war and the effect of COVID-19.
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