As it becomes easier and increasingly affordable to own real estate within the Emirate of Dubai, Leevyn Isabel, Director examines why UAE Foundations are becoming the structure of choice for investors in UAE real estate.
The past two years have witnessed a major shift in UAE legislation; gradually opening its markets to foreign investors. Of these shifts in stance, there has been few more significant than the introduction of the first ever foundations regimes in the Middle East and North Africa region by both the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM), extending their structuring and succession planning offerings.
This new revelation enables UAE residents to include local real estate assets in their legacy planning, rather than just overseas assets. The move is a popular one; as the 2018 GCC Wealth Insight Report indicates, an increasing amount of HNWIs are keeping their assets closer to home allowing for the consolidation of substance in one jurisdiction where there is limited tax liability consequences.
Read our article: Family governance in the UAE - DIFC Foundations
Foundations for the future
UAE Foundations are the only asset protection/succession planning structures permitted to own real estate properties in the UAE, with the DIFC Foundation working for Dubai real estate and the ADGM Foundation working for Abu Dhabi real estate.
Previously clouded with probate problems, individuals can now hold onshore assets through a combination of DIFC/ADGM Foundations and their respective Prescribed Companies and SPVs. This follows a number of memorandums of understanding in place between onshore authorities and the ADGM and DIFC. They are also the only solution for succession planning for Muslims as they cannot put in place a Will and they cannot have foreign trust/foundations hold UAE real estate.
A real opportunity
Out of the top 43 cities worldwide, Dubai's prime property prices witnessed the fifth highest decline in 2018. As highlighted by the UBS Global Real Estate Bubble Index 2019, the market is saturated due to oversupply ahead of the Expo 2020, which has resulted in a swathe of state spending and foreign investment within the Emirate.
With the decline set to continue - a Reuters poll of market analysts at 11 investment firms and research institutions pointed to a sharp decline in prices this year (10%) and next (5%) - we are increasingly witnessing private clients from around the world look at the DIFC and ADGM Foundations to structure local real estate assets.
When investing in Dubai real estate, investors now have a choice between the DIFC's and ADGM's common law regulatory frameworks, which accompany a range of sophisticated structures such as SPVs, funds and foundations for structuring their real estate ownership.
Together, the relaxation of foreign investment and property laws, the decline in real estate prices and the introduction of 10 year residency visas for investors has created a favourable investment environment in both Dubai and the wider UAE. Naturally, as investors' confidence in the region increases, more people will purchase properties to live in or as an investment.
Helping you set up or relocate in the UAE
The UAE can be a complex and challenging environment in which to navigate investments. Ocorian can help structure and secure the investment and assist in the relocation, including full foundation establishment and administration services tailored to clients' specific needs.
With nearly 50 years of experience, Ocorian can also assist companies and individuals to relocate to Dubai. We help with all visa and business application procedures, and will deal with the relevant authorities on your behalf. Find out more about how Ocorian can help you with your plans in the UAE here.
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