A Dubai Royal Decree provides incentives to property funds that invest large sums of money in the regional commercial real estate market.
To be eligible for the benefits, these funds must invest at least Dh50 million in the properties, according to the Decree. His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, issued it. According to Decree No. (4) of 2010, the buildings should be classified as “commercial.”
The Decree states that the Dubai Land Department will establish a “Register of Property Investment Funds,” as well as the criteria and steps for inclusion in the Register.
The Securities and Commodities Authority and the DIFC regulator, the Dubai Financial Services Authority, should both grant licenses to funds seeking to be listed on the Register.
The fund’s real estate holdings should have been worth Dh180 million or more when it applied to be listed in the Register. Funds’ ability to trade on Dubai’s financial markets should not be suspended at the time of application.
Prospects for commercial real estate
Dubai’s move on incentives coincides with a surge in deal-making for its commercial real estate, which includes, among other things, offices, warehouses, logistics, and industrial assets. Businesses are in high demand as a result of e-commerce and increased supply chain integration. The demand for offices has recently increased as well.
What the Decree aims to achieve
Form a committee
A “Committee for Property Investment Funds” should be formed in accordance with the Decree. Its goal will be to specify which locations and assets funds are allowed to buy outright or lease for up to 99 years.
Decree No. (22) of 2022 empowers the Chairman of Dubai’s Executive Council to change or add to the incentives listed in the Decree. Furthermore, the Chairman of the DIFC has the authority to change the incentives offered to real estate investment funds regulated by the DIFC.
Part of the valuation
The Dubai Land Department must select a valuation consultant who has received RERA accreditation to assess the value of the properties controlled by the funds.