A Royal Decree from Dubai offers incentives to property funds investing substantial sums of money in the regional commercial real estate market.
The Decree mandates that these funds must invest at least Dh50 million in the properties in order to be eligible for the benefits. It was issued by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai. The buildings ought to be classified as “commercial,” in accordance with Decree No. (4) of 2010.
According to the Decree, the Dubai Land Department will create a “Register of Property Investment Funds,” which also specifies the criteria and steps for inclusion in the Register.
The Securities and Commodities Authority and the Dubai Financial Services Authority, the DIFC regulator, should both grant licenses to funds seeking to be listed in the Register.
When the fund applied to be listed in the Register, the value of its real estate holdings should have been Dh180 million or more. At the time of application, funds shouldn’t have their ability to trade on Dubai’s financial markets suspended.
Commercial property prospects
Dubai’s move on incentives coincides with a boom in deal-making for its commercial real estate, which comprises offices, warehouses, logistics, and industrial assets, among others. Businesses are in high demand thanks to e-commerce and the increased integration of supply chains. The need for offices has also increased recently.
What the Decree targets
Launch a committee
In accordance with the Decree, a “Committee for Property Investment Funds” should be established. Its goal will be to specify which locations and assets funds are permitted to purchase outright or lease for a time period of up to 99 years.
Decree No. (22) of 2022 gives the Chairman of The Executive Council of Dubai the authority to change or add to the incentives listed in the Decree. Additionally, the Chairman of the DIFC has the authority to change the incentives offered to real estate investment funds that are subject to DIFC regulation.
Valuation part
To assess the worth of the properties controlled by the funds, the Dubai Land Department must choose a valuation consultant who has been granted RERA accreditation.
