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Dubai Issues Decree Introducing Incentives for Property Investment Funds

The decree aims to enhance Dubai’s status as a global real estate investment destination. WAM
The decree aims to enhance Dubai’s status as a global real estate investment destination. WAM
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Dubai Issues Decree Introducing Incentives for Property Investment Funds

The decree aims to enhance Dubai’s status as a global real estate investment destination. WAM
The decree aims to enhance Dubai’s status as a global real estate investment destination. WAM

UAE Vice President, Prime Minister and Ruler of Dubai Sheikh Mohammed bin Rashid Al Maktoum has issued a decree introducing incentives for property investment funds in Dubai, Emirates News Agency (WAM) has reported.

The decree aims to enhance Dubai’s status as a global real estate investment destination and attract global property investment funds to the emirate, WAM said.

The decree covers all real estate investment funds licensed and regulated by government authorities as well as private development zones and free zones, including the Dubai International Financial Centre (DIFC). It also covers all real estate in Dubai, including properties located in private development zones and free zones, excluding DIFC, the news agency added.

As per Decree No. (22) of 2022, a ‘Register of Property Investment Funds’ will be established at the Dubai Land Department.

The decree outlines the terms, conditions, and procedures for listing in the Register. Funds seeking to be listed in the Register should be licensed by competent government authorities including the Securities and Commodities Authority and the Dubai Financial Services Authority, DIFC’s independent regulator of financial services.

The value of real estate assets owned by the fund at the time of application for listing in the Register should be AED180 million or above. Funds should not be suspended from trading in Dubai’s financial markets at the time of application.

According to WAM, the decree also directs the establishment of a ‘Committee for Property Investment Funds,’ whose purpose is to identify areas and properties that funds are allowed to invest in either through full ownership or lease for a period not exceeding 99 years.

The value of properties that funds invest in should be AED50 million or above. The properties should be listed as commercial properties and comply with another decree from 2010. Funds are allowed to relinquish ownership of properties only after approval from the Committee.

Property investment funds listed in the Register are entitled to receive the incentives specified by the Decree.

Decree No. (22) of 2022 authorizes the Chairman of the Executive Council of Dubai to amend the incentives specified by the decree or add new ones. The Chairman of the Dubai International Financial Center is also authorized to amend incentives for property investment funds operating within DIFC’s jurisdiction.

The decree also directs the Dubai Land Department to appoint a valuation specialist accredited by the Dubai Real Estate Regulatory Agency (RERA) to determine the value of properties owned by property investment funds.

Apart from the resolutions issued by the Chairman of the Executive Council of Dubai in accordance with Decree No. (22), the Director General of the Dubai Land Department is authorized to issue other resolutions necessary to implement the provisions of the new Decree.

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High Demand, Lower Interest Rates Boost Growth in Saudi Arabia’s Real Estate Transactions

Riyadh accounts for about 60% of total real estate deals (Reuters)
Riyadh accounts for about 60% of total real estate deals (Reuters)
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High Demand, Lower Interest Rates Boost Growth in Saudi Arabia’s Real Estate Transactions

Riyadh accounts for about 60% of total real estate deals (Reuters)
Riyadh accounts for about 60% of total real estate deals (Reuters)

High demand for residential units in Saudi Arabia’s major cities, along with a recovery in the real estate market driven by lower interest rates, has boosted the total value of real estate transactions in the Kingdom to $50 billion (SAR 188 billion) during the first nine months of 2024. This marks a 35% increase compared to the same period last year, according to real estate experts who expect this growth to continue in the next quarter and in the coming years.

Data from the Saudi Ministry of Justice revealed that over 162,000 real estate transactions were recorded during this period, with the residential sector accounting for about 86% of the total. The commercial sector made up around 10% of the transactions. The Riyadh region led the way with approximately 60% of the total transactions, valued at $27 billion (SAR 101 billion), followed by the Makkah region with 19%, valued at $11.8 billion (SAR 44.3 billion).

Investor Confidence

In remarks to Asharq Al-Awsat, real estate expert and appraiser Eng. Ahmed Al-Faqih highlighted that the growth in real estate transactions reflects the strong confidence of investors and stakeholders in the resilience and attractiveness of the Saudi real estate market. He noted that this was particularly evident in Riyadh, which accounted for half of the total real estate activity over the past nine months, driven by the government’s launch of several large-scale projects in the capital.

Al-Faqih added that the real estate market’s growth is aligned with the broader investment activity in the country. This growth is supported by increased regulations, governance, and transparency, which have propelled Saudi Arabia to rank 12th globally in the Real Estate Transparency Index, placing it among the top 40 international markets in terms of transparency.

A report from global real estate consultancy Knight Frank noted that the total value of Saudi Arabia’s Vision 2030 projects launched in the past eight years has reached $1.3 trillion.

Supply and Demand

For his part, real estate expert Saqr Al-Zahrani told Asharq Al-Awsat that supply and demand are the primary drivers of the real estate market in Saudi Arabia. He anticipates that a gradual reduction in interest rates will stimulate real estate demand in the fourth quarter of 2024 by lowering financing costs, encouraging both investors and buyers to capitalize on the opportunity.

Al-Zahrani attributed the growth in real estate transactions in Riyadh to its position as a key destination for internal migration and investment opportunities, driven by infrastructure projects and a growing population, which continue to boost demand for both residential and commercial properties in Riyadh and nearby areas.

He also highlighted that regional conflicts and Saudi Arabia’s stable strategic position have increased the Kingdom’s appeal in the real estate market.

Looking ahead to the fourth quarter of 2024, Al-Zahrani expects continued growth in real estate transactions due to three key factors: the seasonal rise in demand in Makkah during Umrah and Hajj, the increase in residential and commercial projects in Riyadh alongside significant infrastructure investments, and the easing of financing restrictions with lower interest rates.

Al-Zahrani identified six factors that will drive long-term growth in Saudi Arabia’s real estate market: large infrastructure projects improving the quality of life, growing demand for housing due to population growth and internal migration, regulatory reforms facilitating property ownership and investment, increased foreign investment driven by political stability, diverse financing options such as investment funds and crowdfunding platforms, and Saudi Arabia’s stable political climate compared to neighboring countries, boosting investor confidence.