Despite no legal restriction on the ownership of real estate assets in mainland Dubai by Dubai International Financial Centre ("DIFC") entities, in practice DIFC entities could only obtain title at the Dubai Land Department ("DLD") by obtaining approval on a case by case basis.
To facilitate the requirements of DIFC entities, the DIFC and DLD have now signed a memorandum of understanding ("MOU") allowing DIFC entities licensed by DIFC to take title to real estate in mainland Dubai.
The MOU prescribes the process the DIFC applicant must follow in order to complete the real estate title registration as well as the documents required and the fee that shall be paid to DLD in this regard.
Key MOU Provisions
- The DIFC Registrar of Companies ("DIFC ROC") shall be entitled to issue a No Objection Letter to the DLD confirming the DIFC establishment can own real estate.
- The DIFC ROC shall perform certain administrative functions for and on behalf of the DLD including collecting all background documents and overseeing changes in beneficial ownership.
- In accordance with DLD practice, changes in the shareholding of any company or other beneficial ownership shall require the DLD transfer fees to be paid at the full rate of 4% of the real estate value. Changes in ownership where the beneficial interests remain the same may only be subject to the gift rate of 0.125% of the real estate value.
- DLD transfer fees shall not apply to the transfer of interests in DIFC Real Estate Funds ("REFs") regulated by the DFSA or that are listed within 24 months from the date of establishment on Nasdaq Dubai.
- Special rules regarding fees apply to the issuance of new shares in DIFC REFs (whether or not regulated by the DFSA or Nasdaq Dubai).
- The MOU does not change the current laws regarding ownership of real estate by foreigners outside of the designated areas.
How Can We Help?
Our team of experts would be delighted to assist you particularly in relation to the following:
- When it may be appropriate to use a DIFC establishment to own real estate;
- Understanding the MOU and how it applies to your business;
- Registering a property with the DLD in the name of a DIFC establishment and the relevant DLD fees applicable;
- Advising on matters such as property registration, direct and indirect transfer of interests and issuance of new interests; and
- General guidance on the requirements of the DLD and ROC in connection to the MOU.