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Dispelling the impression that the new rules could slow real estate activity, executives and property developers say the industry will continue to attract foreign investment and business as usual as far as real estate is concerned
According to Mordor Intelligence, the UAE residential real estate market, which has come to a standstill due to the Covid-19 pandemic, is expected to grow at a compound growth rate of over 8% in 2022-27. — file photo
Experts say the new reporting requirements for real estate transactions will not affect the supply of residential units in the UAE, but will provide further transparency to the real estate industry.
Dispelling the impression that the new rules could slow real estate activity, executives and property developers said the industry will continue to attract foreign investment and business as usual as far as real estate is concerned.
“I suspect this new rule will cause a slowdown in the real estate sector. From what I understand from the information I have shared, transactions over a certain amount need to be reported and they are not restricted. This means that Safe Developers CEO Shahzad Saxena said, The deals will be subject to additional scrutiny and buyers must declare “source of funds”.
Last week, the government announced new reporting requirements for certain real estate transactions to strengthen its regulatory framework for anti-money laundering and combating the financing of terrorism.
The Ministry of Economy (MoE) and the Ministry of Justice (MoJ), in partnership with the UAE Financial Intelligence Unit (FIU), have set new standards for real estate transactions, requiring law firms to report cash transactions worth AED 55,000 and above to the UAE’s FIU.
“We are very familiar with this type of scrutiny in the construction sector as it is standard operating procedure for banks when they do any cash transactions with construction companies. And we can clearly see that there is no shortage of construction or construction companies in Dubai,” Saxena said.
Safe Developers CEO Shahzad Saxena said Dubai was able to absorb these high levels of supply because buyers were able to see the rental demand here.
No impact on supply
According to Mordor Intelligence, the UAE residential real estate market, which has come to a standstill due to the Covid-19 pandemic, is expected to grow at a compound growth rate of over 8% in 2022-27.
The industry contributes about 5.5% to the UAE’s overall gross domestic product (GDP) annually, attracting more than AED 150 billion in investment in the first half of 2022.
“I am also very skeptical as to whether it will affect the supply of residential units. Having said that, I do see a shift in the types of units being supplied and in the near future I see developers focusing more on town-houses and middle-income development,” Saxena said.
Dubai was able to absorb these high levels of supply because buyers were able to see rental demand here, he said.
“This will only grow in the near future as Dubai positions itself as a safe haven away from all the instability around the world. The basic facts remain, people are moving to Dubai and doing business, they are recruiting people and all these people their The family needs a place to live,” he said.
Reduced risk factors
Zoom Property chief executive Ata Shobeiry said the new reporting requirements came at a time when the market was already taking off by leaps and bounds.
“Of course there will be an impact, but it will not affect the positioning of the Dubai property market. Investors in particular may wait until the situation is clear before putting money into the market. However, it will not have a huge impact on the supply of the residential market. In fact , buyers and investors will have more confidence as the risk of money laundering and fraud will be largely reduced,” he said.
Check for suspicious transactions
Ayman Youssef, vice president of Coldwell Banker, said the ultimate aim of these measures is to create awareness and prevent activities in the real estate industry from being used for money laundering and/or terrorist financing purposes, and to help national authorities report suspicious transactions.
“This will help position Dubai and the UAE as safe and transparent markets and increase the market’s attractiveness to institutional investors,” he said.
“Real estate agencies are obligated to implement these guidelines, which will help agents understand who they are dealing with, which is key to the success of the real estate business,” he said.
— muzaffarrizvi@khaleejtimes.com
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