Dubai is to allow private property owners of all nationalities in the Sheikh Zayed Road and Al Jaddaf areas to convert their ownership to freehold status, in a move aimed at boosting the city's position as a major hub for real estate investment.
A total of 457 plots are eligible for conversion to freehold – 128 on Sheikh Zayed Road, from the Trade Centre roundabout to the Dubai Canal, and 329 plots in Al Jaddaf, Dubai Land Department said on Sunday.
Under freehold ownership, an investor has a direct title of ownership of the property and the land on which it is built.
“The initiative is set to benefit landowners in these areas by enhancing the market value of their properties, particularly for those opting to convert their land to freehold ownership,” the department said. “It is also expected to increase the economic appeal of these locations, paving the way for real estate developments tailored to freehold investors and attracting a new wave of investment to Sheikh Zayed Road and Al Jaddaf.”
The move will drive “significant growth” in Dubai’s real estate sector, reinforcing Dubai’s position as a global economic hub and a “leading destination” for real estate investment, said Marwan Ahmed bin Ghalita, director general of the department.
Analysts say the announcement has wide-reaching implications for foreign investment in Dubai's real estate market.
“This news is huge because it could be the beginning of what I suppose will be the opening up of all areas to be bought by non-locals,” Mario Volpi, head of brokerage at Novvi Properties, told The National.
“Clearly, anyone that currently owns plots or real estate in these locations has effectively now got a boost as prices will obviously be increased over time after this announcement. Real estate is governed by market forces, so as long as there is demand, the prices will increase.”
The initiative will make Dubai “a magnet” for global investors, and is part of the government's plans to boost the overall economy, Mr Volpi added.
The move is expected to stimulate demand for property in Dubai, agreed Declan King, senior partner and group head of real estate at ValuStrat.
It is a “very progressive step” towards opening up prominent Dubai locations to real estate investment by all nationalities, Mr King told The National.
“This has the potential to allow both whole building and individual unit sales to all citizens, in areas that previously could only be owned by UAE and GCC nationals,” Mr King said.
“Opening-up of the area of Sheikh Zayed Road, between World Trade Centre roundabout and the Water Canal, is bound to attract strong buyer demand – especially in the current buoyant property market that Dubai is enjoying.”
The locations on Sheikh Zayed Road between the Trade Centre and Dubai Water Canal, as well as Al Jaddaf on the other side, have added significant new freehold land into the mix, said Matthew Green, head of research at CBRE Mena.
“While many of the plots along Sheikh Zayed Road are already developed out, remaining lands are now likely to attract increased investor interest, offering opportunities to leverage prime locations close to the financial centre and other major demand generators,” he told The National.
"While we await further clarity on the new ruling, including the related fees for freehold conversion, we believe this move will positively boost demand dynamics and ultimately help to stimulate further investments into the Dubai market, by effectively expanding the addressable market for foreign investors."
The total number of real estate transactions in Dubai reached 188,000 with a combined value of Dh625 billion ($170 billion) as of November. This represents a 38 per cent increase in volumes and a 23 per cent rise in values year-on-year basis, according to the government department's data.
The emirates last year also revealed the Dubai Real Estate Sector Strategy 2033, which aims to double the real estate sector’s contribution to Dubai’s GDP to approximately Dh73 billion and increase home ownership rates to 33 per cent in the next decade. It also aims to grow real estate transactions by 70 per cent and raise the market value to Dh1 trillion.
Process to convert ownership
Property owners can check their eligibility for the conversion through the “Dubai REST” app. They must submit an application to the department for land assessment and valuation to proceed with the conversion.
Common area fees and service charges will be determined as per Real Estate Regulatory Authority guidelines. After this, a conversion fee of 30 per cent of the property’s valuation (based on gross floor area) will be applicable.
Once the payment is processed, a map and freehold ownership title deed will be issued for the converted property.
Freehold v leasehold
Freehold ownership means buying a property in a designated area, which allows investors to own the property and the land it is built on forever.
On the other hand, leasehold ownership means that the investor owns the property, but not the land it is built upon, for a period of up to 99 years. After this period, everything goes back to the freeholder.
The Freehold Decree, a property law in Dubai enacted in 2002, allowed foreigners aged 21 and older to buy, sell, lease and rent properties in certain areas of Dubai under freehold ownership.
There are various benefits to freehold ownership, according to Engel and Volkers, a real estate services company.
“The property owner can make desired changes to the property, pass it on to an heir, and decide whether to sell, lease, or stay in the property,” the company said. Other benefits include a long-term residential visa in Dubai and a high return on investment.
“When it comes to freehold property areas in Dubai, studies estimate a 7-10 per cent return on property investment. If you have invested in a freehold property and wait for the right time, you can gain tremendous returns on your investment."
The Old Slave and the Mastiff
Patrick Chamoiseau
Translated from the French and Creole by Linda Coverdale
Company profile
Name: Steppi
Founders: Joe Franklin and Milos Savic
Launched: February 2020
Size: 10,000 users by the end of July and a goal of 200,000 users by the end of the year
Employees: Five
Based: Jumeirah Lakes Towers, Dubai
Financing stage: Two seed rounds – the first sourced from angel investors and the founders' personal savings
Second round raised Dh720,000 from silent investors in June this year
At Everton Appearances: 77; Goals: 17
At Manchester United Appearances: 559; Goals: 253
Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Russia's Muslim Heartlands
Dominic Rubin, Oxford
MOUNTAINHEAD REVIEW
Starring: Ramy Youssef, Steve Carell, Jason Schwartzman
Director: Jesse Armstrong
Rating: 3.5/5
Brief scores:
Kashima Antlers 0
River Plate 4
Zuculini 24', Martinez 73', 90 2', Borre 89' (pen)
The%20Woman%20King%20
%3Cp%3E%3Cstrong%3EDirector%3A%3C%2Fstrong%3E%20Gina%20Prince-Bythewood%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStars%3A%3C%2Fstrong%3E%20Viola%20Davis%2C%20Thuso%20Mbedu%2C%20Sheila%20Atim%2C%20Lashana%20Lynch%2C%20John%20Boyega%C2%A0%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%203%2F5%3C%2Fp%3E%0A
Asia Cup Qualifier
Final
UAE v Hong Kong
TV:
Live on OSN Cricket HD. Coverage starts at 5.30am
Frankenstein in Baghdad
Ahmed Saadawi
Penguin Press
MATCH INFO
Manchester United 2 (Heaton (og) 42', Lindelof 64')
Aston Villa 2 (Grealish 11', Mings 66')
Global state-owned investor ranking by size
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1.
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United States
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China
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3.
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UAE
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Japan
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5
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Norway
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Canada
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Singapore
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Australia
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Saudi Arabia
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South Korea
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At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
