His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai Image Credit: Gulf News Archives

Dubai: Dubai has issued a Royal Decree offering incentives for property funds committing sizeable funds into the local commercial real estate sector.

The Decree - issued by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai - requires these funds to invest Dh50 million or above on the properties to qualify for the incentives. The properties should be listed as ‘commercial' and comply with Decree No. (4) of 2010.

A ‘Register of Property Investment Funds’ will be established at the Dubai Land Department under the Decree, which also lists 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, the DIFC regulator.

The value of real estate assets owned by the fund at the time of application for listing in the Register should be Dh180 million or above. Funds should not be suspended from trading in Dubai’s financial markets at the time of application.

Commercial property prospects

Dubai’s move on incentives comes just as its commercial real estate - which includes offices, warehouses, logistics and industrial assets, etc. - are seeing revived deal-making. Ecommerce and bringing supply chains closer has translated into significant demand among businesses. Demand for offices too has perked up in the recent past.

What the Decree targets

Launch a committee

The Decree directs the setting up of a ‘Committee for Property Investment Funds’. Its purpose will be 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’.

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

Valuation part

The Dubai Land Department is to appoint a valuation specialist accredited by RERA to determine the value of properties owned by the funds.