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Dubai is now emerging as one of the global leaders in the real estate market and generating a higher return on investment (ROI) than other prestigious cities in the world
Local sponsors register professional business activities with Dubai Economy and Tourism (DET) as service agents. — file photo
With world-class infrastructure, technological development, business investment and trade opportunities, Dubai is a hotbed of foreign investment. Breathtaking skylines, top-notch infrastructure, prestigious architecture and magnificent shopping malls make Dubai an ideal destination for real estate investors.
Due to the above factors, Dubai is emerging as one of the global leaders in the real estate market, with a higher return on investment (ROI) than other famous cities in the world.
According to the August 2022 report, the real estate market recorded an average of AED1.4 billion in sales transactions in a single day.
The recent introduction of the Golden Visa scheme for investors and buyers of real estate worth AED 2 million to invest or purchase has added to the popularity of Dubai real estate. The 10-year residency permit has spurred real estate investment, making Dubai an ideal choice for buyers more than any other metropolis.
The real estate business in the UAE has undergone a sea change and has shifted its focus to long-term investment options, a sign of Dubai’s unprecedented growth rate.
Build your real estate brokerage business with 100% ownership
Under a legislative reform in the UAE, expats or foreigners can set up real estate brokerage companies with full ownership.
The rules, which come into effect in 2021, remove real estate brokerages from the “restricted category” and allow more foreign brokerage firms to conduct real estate operations in Dubai with 100% ownership.
Also, the government made the whole process more seamless. New businesses can apply for a license through the Department of Economy and Tourism (DET) and obtain approval from the Real Estate Regulatory Agency (RERA) through the Trakheesi system.
Trakheesi is managed by the Dubai Land Department (DLD) and aims to simplify the real estate industry and its services such as permits, e-cards and approvals. It integrates with DET to collect centralized data. Recently, the government made it mandatory for brokerage firms to register and obtain a unique Trakheesi number.
The role of local sponsors
Local sponsors register professional business activities with Dubai Economy and Tourism (DET) as service agents.
They facilitate the company’s documentation with government authorities and municipalities, but are not involved in the operation or management of the business. Also, the local promoter does not hold any equity in the business.
Anti-Money Laundering and CTF Regulations
The UAE has taken steps to prevent money laundering in real estate transactions. The government strictly enforces regulators to increase control and monitoring of the industry.
The fundamental law against money laundering in the UAE is Decree No. 20 of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Illegal Organizations.
According to anti-money laundering regulations, real estate agents are required to identify suspicious transactions and comply with the following requirements in the UAE:
> understand source of transfer funds
> Implement necessary Customer Due Diligence (CDD) is based on screening, analysis and previous professional status.
> Management necessary Measures such as internal governance, policies and monitoring to ensure machine learning risk mitigation.
Real estate brokerage firms must be registered with the Financial Intelligence Unit – goAML service portal. This is an anti-money laundering reporting platform launched by the UAE Central Bank to limit money laundering (ML), terrorist financing (TF) and other illegal activities.
real estate brokerage activities
Under real estate brokerage, two types of business activities are involved:
> buy and sell
> Lease
Most brokerage firms can carry out both activities under one license. However, companies can engage in related real estate activities with additional approval from the authorities.
Set up a real estate business
1. Registration
Once your business name is determined, you must submit the required business documents through the online portal to complete the registration process. At the same time, you must be certified by the Real Estate Regulatory Agency (RERA).
2. RERA Certification
To become a real estate agent, you must obtain real estate agent certification training from RERA.
You can earn certification by taking a four-day training course and passing a follow-up exam. The real estate agent employed by the company must be the holder of a broker card issued by RERA.
3. Information Technology License
You must submit RERA approval, tenancy contract, copy of passport and business name certificate to obtain the final real estate license from the authorities. Once you have submitted all required documents, the Department of Economy and Tourism (DET) will give you a proof of payment. After payment, DET will issue the license.
4. RERA Registration
You can now register your real estate company with RERA using the following documents:
· RERA application form
· Copy of DET business license
· Payment receipt
· RERA course certificate
· Lease Control/Ejari copy of the office
The governing body will then grant you a commercial license to operate.
Like any other mainland company, to hire and sponsor employees, the company must be registered with the Ministry of Labour (MOL) and the Directorate of Residence and Foreigners Affairs (DNRD).
5. Office space
According to the Ministry of Economy and Tourism, in order to obtain a real estate brokerage license, you must rent office space in a business centre or a completely separate office anywhere in Dubai.
Even if you build your own real estate business, you can outsource some operations, such as accounting services, to reduce costs and run your business efficiently. The cost of obtaining a real estate brokerage license depends on factors such as your business activities, company size and location. In addition to this, you will also need to pay a certification fee.
in conclusion
The real estate market generates about 5.5% of gross domestic product (GDP) annually, making it one of the most lucrative business setup options. This is an excellent investment for those interested in making a profit in the industry.
Pratik Rawal is the Managing Partner of Ascent Partners, a firm that provides bespoke business setup and advisory services to entrepreneurs looking to build their next venture in Dubai. The views expressed are his own and do not reflect the policy of the newspaper.
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