Dubai introduced a new law on Tuesday, aimed at promoting the growth of real estate investment funds in the emirate.
The law, issued by Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, grants certain privileges to real estate investment funds, as part of efforts to strengthen the emirate's position as a "global destination for real estate investment" and to provide incentives to attract more funds into the emirate, the Dubai Media Office said in a statement.
It applies to real estate investment funds licensed and regulated to operate in the emirate, including those in special development zones and free zones, such as the Dubai International Financial Centre.
The law sets out incentives to encourage the funds to invest in various real estate projects in the emirate, as well as to attract international real estate funds to carry out their investment activities in Dubai, the statement said.
The law provides for the establishment of a register, called the Real Estate Investment Funds Register, at the Dubai Land Department.
Funds are eligible to be included in the register under the law provided that the value of the real estate assets they own is not less than Dh180 million ($49m) and these funds should not be under suspension from trading on the Dubai Financial Market at the time of application, the statement said.
They must also be licensed by regulators such as the Securities and Commodities Authority or the Dubai Financial Services Authority in the DIFC.
Those that meet the criteria for registration are eligible for various benefits under the new law.
The law also directs the establishment of a ‘Committee for Property Investment Funds,’ the purpose of which 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, according to the statement.
The market value of the property to be owned by the funds should not be less than Dh50m, and such property should have an investment return, in accordance with the criteria set by the Dubai Land Department.
To ensure transparency in valuation of assets owned by real estate investment funds, the new law has also mandated the Land Department to appoint an independent appraiser approved by the Real Estate Regulatory Agency.
The new law comes as the Dubai property market continues to rebound with prices and transaction volumes, particularly in the residential sector, continuing to rise in recent months.
Average residential property prices increased 10 per cent in the year to June, with apartment prices nearly 9 per cent higher on average and villa prices increasing 19 per cent, a recent CBRE report said.