Dubai International Financial Centre Based Entities Allowed to Own Properties Registered with the Dubai Land Department
On 6 May 2017 the Dubai Land Department (DLD) and the Dubai International Financial Centre (DIFC) announced that they had entered into a Memorandum of Understanding (MoU) which allows DIFC entities to purchase property and register real estate title with the DLD.
Prior to the MoU, only onshore entities or companies registered in a limited number of Dubai free zones, such as Jebel Ali Free Zone (JAFZA) or the Dubai Multi Commodities Centre (DMCC), were expressly allowed to register title with the DLD. For all other types of Dubai free zone entities, including DIFC entities, registration of title could only occur with the specific consent of the DLD. These previous restrictions were the result of a policy issued by the DLD in 2011 to, amongst other things, avoid fee evasion by restricting registration of real estate to entities registered with free zones having formally agreed to share certain company information with the DLD.
The MoU gives some certainty to institutional and private investors who are contemplating structuring their Dubai real estate investments through companies, partnerships, foundations, Real Estate Investment Trusts (REITs) or real estate funds located in the DIFC which offer a robust legal and regulatory framework to investors. A client handbook detailing the implementation rules of the MoU is in the process of being finalized by the DIFC and we will report on this as soon as it is available.
It should be noted that DIFC entities buying property in Dubai will be subject to the same ownership restrictions as other DLD-approved entities, and will therefore only be able to buy property where allowed to do so pursuant to Law No. 7 of 2006 on real estate registration in the Emirate of Dubai and Regulation No.3 of 2006 on the designation of areas where non-UAE/GCC nationals or companies owned by them may own real estate in the Emirate of Dubai.
This publication/newsletter is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting a lawyer. Any views expressed herein are those of the author(s) and not necessarily those of the law firm's clients.