1. Investment guide dubai real estate
Direct From Developer LLC

2. Summary of Key Points Financials The Law Taxes Rental Yields
Property Prices
Government Initiatives
Financing
Purchasing Costs
The Law
Foreign Ownership
Residency
Method of Ownership
Due Diligence
Closing
Pre-Construction
Red Flags?
Taxes
Tax Summary
VAT
Summary of Key Points

3. Financials

4. Rental Yields Yields are relatively strong
Gross yields 10% + No property taxes
Affordable markets offer good yields: Jumeirah Village Circle, Dubai Silicon Oasis, International City, etc.
Yields lower in:
hotspots (e.g., Downtown Dubai, Palm Jumeirah, etc.)
larger apartments/villas
Rental Yields

5. Property Prices Recent Trend Buying Opportunity?
7.7% YOY decline in September 2018 (Reidin) and 22.3% decline from 2014 peaks (ValuStrat)
Price performance varies by area (particularly areas with new supply)
Buying Opportunity?
Lower prices could mean buying opportunity
Seller’s offering attractive sale terms and new government initiatives driving sales
Investors trying to time market with off-plan purchases set for delivery in 2020 (or later)
Property Prices

6. Government Initiatives
New government initiatives to boost UAE property market
5-year residency visa for property investment of AED 5 million +
10-year residency visa for certain investors and professionals
For investors: require AED 10 million investment (minimum 60% non-property investment)
5-year residency visa for entrepreneurs -- minimum investment of AED 500,000
100% foreign ownership for companies outside free zones
Government Initiatives

7. Financing

8. purchasing costs Completed Preconstruction
4% registration fee to Dubai Land Department
Registration fee to developer (approx. AED 1,500)
Completed
4% transfer fee to Dubai Land Department (can be split between parties)
2% brokerage fees (if applicable)
.25% mortgage registration fee (if applicable)
AED 2,000 or AED 4,000 Registration Trustee Fee
Nominal NOC fee
purchasing costs

9. The LAW

10. Foreign nationals can own property in certain designated areas, including:
Palm Jumeirah
Downtown Dubai
Dubai Marina
Business Bay
Jumeirah Lakes Towers
Jumeirah Village
International City
Foreign Ownership

11. Residency 2 Year Dubai Property Investor Visa 2-year renewable visa
Can sponsor family
Qualifying property must be AED 1 million +; and complete
Minimum income requirement (AED 10,000 per month)
5 Year Retirement Visa (2019)
5-year renewable visa
To qualify:
55 Years or older
AED 2 million property; or
AED 1 million savings or AED 20,000 monthly income
5 or 10-Year Investor Visa
See slide 6 for details
Residency

12. Individual capacity (minimal local tax and litigation concerns)
Dubai free zone companies (e.g., Jebel Ali and DMCC)
Foreign companies not permitted (e.g., Cayman, Virgin Islands, etc.)
Method of ownership

13. Due Diligence Preconstruction Research the developer
Research project (escrow account and relevant registrations)
Investigate construction status and completion date
Completed
Inspect the property
Investigate if seller has title to the property
Due Diligence

14. Closing Closing conducted by a Registration Trustee
Attend in person or legalized power of attorney in favor of another
Payment against title deed
Closing

15. Consumer protection (Pre-Construction)
Consumer Protections
Developers must create escrow accounts
Sale proceeds deposited into escrow accounts
Developers deposit 20% of project cost (or completes 20% of project) prior to sale
Developer must get project approvals prior to sales
Limits on variation of size of property
Developers liable for structural defects (10 years) and minor defects (1 year)
Consumer protection (Pre-Construction)

16. Dispute resolution Sound Judicial System
Rental Dispute Settlement Center – settles landlord tenant disputes – including non-payment of rent
Litigation/ Arbitration -- disputes arising out of sale and purchase agreements litigated in courts (Arabic) or arbitrated (parties agree language)
Dispute resolution

17. Red Flags? Title Risk? Currency Risk? Expropriation Risk?
Currency Controls?
Political Risk?
Judicial Risk?
Regulatory Risk?
Supply/Demand Risk?
Red Flags?

18. TAXES

19. TAX Summary Transfer Tax 4% transfer tax on sale price
No Local Tax Items
No income tax
No capital gains tax
No estate tax
No property tax
Tax considerations of country of citizenship/residency (e.g., world wide tax jurisdictions)
TAX Summary

20. Value added tax New VAT regime No VAT on residential rents
No VAT on sale of new construction residential within 3 years of completion
No VAT sale of completed residential real estate
Value added tax

21. The information and opinions in this presentation are for informational purposes only and not for the purpose of providing legal, tax or brokerage advice.
You should contact your own attorney, tax advisor or real estate broker to obtain advice with respect to any issues or questions.
Disclaimer

22. Omar Sawaf is an attorney with more than 12 years of experience in the areas of real estate, corporate, dispute resolution and international law.
He graduated from George Washington University Law School (Washington, D.C.) and has worked with Legal 500 law firms in Washington, D.C., Dubai, UAE and Hong Kong, SAR.
He is also a licensed real estate broker and the founder of Direct From Developer LLC. He primarily assists international investors on cross-border real estate transactions.
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