According to the Dubai Media Office, all real estate investment funds regulated and licenced by the respective authorities, including the Dubai International Financial Center (DIFC) and the Securities and Commodities Authority, must comply with Decree No. 22 of 2022, which was announced in July 2022. Accordingly, the Dubai Land Department (the DLD) has established a new register, which affords registered funds particular privileges to facilitate their investments within the emirate.

Key among these reforms is the ability of registered UAE funds to acquire and hold real estate assets in Dubai districts where foreign ownership is restricted. Without the prior approval of the special committee, the fund will not be able to sell any property assets located in zones that prohibit foreign ownership.

Investment Criteria for Registering

• The fund must be authorized to operate by the appropriate regulatory body.
• When applying for registration, the fund must have property assets worth at least AED 180M. (USD 49M).
• The fund cannot have had its shares temporarily halted from trading in Dubai’s financial markets when the registration application was submitted.
• The Dubai Department of Economy and Tourism requires an AED 10,000 (about USD 2,700) registration fee (DED).
• Once the application is submitted, the DLD will use a Real Estate Regulatory Agency-approved valuation expert to confirm that the fund satisfies the requirements (RERA). This extra measure makes the process more open and accessible to all parties involved.

Land Acquisition in Non-Foreign Ownership Zones

The following factors will be taken into account by the committee when evaluating properties located in non-freehold areas:

• In the range of AED 50M, the property’s market worth is certain (USD 13.6M).
• Property investment returns must meet DLD minimums.
• In the event of a grant, the property will be distributed in accordance with the terms of Decree No. (25) of 2022.
• The DLD may also take into account any factors it deems relevant.

Contributions of Real Estate as Capital Stock

The founders of a real estate investment fund are permitted to register their property as a “contribution in kind” to the fund’s capital during the fund’s formation. As part of the property registration process, the DLD will note that the registered owner is a newly formed REIT.

The DLD will make the necessary changes to the certificate, designating the property owner as a fund, after the fund establishment is complete and the competent authorities provide the licence. To transfer ownership of all properties owned by the founder to the real estate investment fund, a fee of AED 50K (USD 13.6K) will be charged instead of the customary 4% fee. The DLD will then issue a deed to the property in the fund’s name.

Law Governing Property Investment Funds

Without a doubt, the new decree will bring a slew of real estate funds to Dubai, which will lead to the creation of new jobs and the improvement of underutilized spaces, as well as the introduction of a new market for individual investors, thanks to the availability of homes for sale in formerly non-freehold zones.

Why should you seek St.Claire Real Estate’s help?

To ensure a smooth and successful application process, St.Claire Real Estate, an award-winning real estate agency, is happy to offer legal advice to anyone considering forming a real estate investment fund. In addition, our brokers may advise you on which properties would be the best additions to your portfolio. We will handle all aspects of the acquisition on your behalf, including contacting and negotiating with a seller, completing all necessary documentation, registering ownership, and paying any associated costs.