30 Dec 2022
Changes To the Real Estate Ownership Laws for Expats.
The market for Real Estate in Dubai has been experiencing an extremely high volume of transactions since the first half of 2022. Due to the amplified activity in the market, the Government in Dubai has seized the opportunity to further provide assurance to international investors by issuing a new law to incentivize real estate investments in the Emirate. Decree Number 22 of 2022 (the “Decree”) issued by the Ruler of Dubai introduces incentives for investment funds in the property (“Property Funds”) and to further supports the growth of property investment funds in the Emirate of Dubai. The Decree goes into effect on 22 July 2022 which is the date of its publication in the official gazette.
The new Decree into effect from 22 July 2022 applies to:
- all investment funds that are licensed and regulated by competent government authorities that also includes Property Funds licensed in the Dubai International Financial Centre (DIFC);
- any real property located in the Emirate of Dubai, including free zones and designated areas but excludes properties located in the Dubai International Financial Centre.
Earlier full real estate ownership rights were exclusive to Emiratis and GCC citizens only. Today citizens of any country are able to have 100% ownership of the real estate in the emirates after the new decree has passed (Decree Number 22 of 2022).
The vital development due to the new decree passed is that the registration instrument will enable registered UAE funds to purchase and own real estate assets in those areas in Dubai that earlier had restrictions on foreign ownership (pursuant to the establishment of the Property Investment Funds Law such areas are to be determined by a special committee). These funds will not be permitted to sell those real estate assets in the areas restricted for foreign ownership without the prior approval of the established special committee. The developments in the Dubai real estate market have had a positive outcome as it creates an exciting opportunity for institutional investors to benefit from incentives that are offered under the new Decree. The benefits offered under the new decree will deliver further impetus for the Dubai Real Estate market to flourish in numerous ways.
Key Developments under the Decree:
- Pursuant to the passing of the new Decree a “Register of Property Investment Funds” (The Register) will be maintained by the Dubai Land Department;
- The Property Funds that are listed in the Register will be entitled to benefits and privileges specified in the new Decree;
- In order to be eligible to be on the Register, the net value of the Property Funds should not be less than AED 180 million;
- The minimum investment value of target properties should not be less than AED 50 million;
- The Decree specifies the establishment of a “Committee for Property Investments Funds”. The main purpose of this Committee is to identify areas and types of properties in which the Property Funds would be permissible to invest in full ownership (in designated areas of Dubai) or in leasehold properties for a period that does not exceed 99 years (outside the designated areas);
- The Decree authorizes the Chairman of the Dubai Executive Council to amend the incentives or declare supplementary incentives for the Property Funds;
- The Decree similarly also authorizes the Chairman of DIFC to amend or increase the incentives for the Property Funds;
- The Dubai Land Department (DLD) will be responsible for the appointment of specialists in valuation that are duly qualified by the Real Estate Regulatory Agency (RERA) to determine the value of the properties that are owned by the Property Funds.
The Supreme Council Member and Ruler of Sharjah, His Highness Dr. Sheikh Sultan Bin Mohammed Al Qasimi, issued Law Number (2) of 2022 on the amendment of Law Number (5) of 2010 on the registration of real estate in the Emirate of Sharjah.
Accordingly, Article (4) of Law Number (5) of 2010 shall be replaced by the following:
The right to own real estate in the emirate is limited to citizens of the Cooperation Council for the Arab States of the Gulf and who are citizens of the UAE and the right of ownership may also be granted to other individuals according to the following:
- Ownership with the agreement of the Ruler;
- Transferring by inheritance by virtue of a legal notification;
- Assignment by the owner to one of his first-degree relatives in accordance with what is specified in the executive regulations of this law;
- Ownership in real estate development areas and projects has to be in accordance with the regulations set by the Council.
The law also stipulates that the text of Article (7) of Law Number (5) of 2010 would be replaced by the following:
A legal person who owns real estate in the emirate shall abide by the following, subject to the provisions of Article Number (4) of this Law:
- Notify the Real Estate Registration Department of any changes to the legal entity's ownership that will affect the number of partners' shares, the entity's legal structure, the transfer of ownership, or the trade name.
- Remediating the inconvenient circumstance in the event that a partner is added or his ownership is transferred to individuals who are not permitted to own real estate in the Emirate.
Hence, the new change in the law clarifies the conditions under which expatriates can acquire real estate in Sharjah. Previously non-residents could not own real estate in their own name, however, the new amendment clarifies the conditions under which non-residents can obtain land and buildings in their own name. This is possible based on an agreement with the Sharjah Authority wherein non-residents can also have real estate in their own name as customary property under the law. They can also transfer land to their own name even when transferring the property to the owner’s next of kin as is determined by the Executive Regulation. As prescribed by the Sharjah Council, expatriates can also acquire land in special real estate development areas and projects with the help of real estate lawyers. Furthermore, if there is a change in the ownership rights, shares and name of the landed property the same should be reported to the Real Estate Registration Department after the amendment.