Mature and More Robust Today

The UAE’s real estate market is one of the most dynamic (and challenging) in the world at the moment. Over the past twenty years it has experienced the highest of highs and the toughest challenges, most recently in the form of the global pandemic that took its toll on all sectors. All that being said this journey has made the sector more mature and made it more robust. This transition has been underpinned by a consistently evolving regulatory environment that can be benchmarked against the most established and sophisticated property markets across the world.

We believe that the real estate sector in the UAE as a whole (and Dubai in particular) has risen admirably to the challenges of global political instability and COVID 19 and emerged as a highly attractive place to both live and invest.

2022 and beyond

In the UAE we see now in 2022 an investment environment transformed. Surveying the trajectory of the real estate sector from the second quarter of 2021, where events such as the Dubai Expo 2020 put a global spotlight on Dubai to the present we have seen a market improving in leaps and bounds.

The governments of the individual Emirates (and the Federal Government) have introduced multiple policy measures such as visa reforms helping develop consumer confidence among investors and end users. Other factors have had a positive impact on consumer confidence in the real estate market, including:

• better overall regulation nationwide;
• improved ease of doing business in the Emirates;
• resurgence in the energy and hospitality sectors;
• the governments promotion of a strong immigration/investment vision to compete with the best markets in the world.

What you need to be aware of

Whilst the macroeconomic climate and investment environment are now favorable to investors coming into the UAE real estate market there are still challenges.

By comparison with other similar markets it is still traditionally relatively rare to see the involvement in properly qualified legal professionals in transactions.  Further, levels of investor due diligence still lag behind those generally accepted as standard in other markets.  For most people the purchase or sale of a house is likely to be one of the most significant financial events in their entire lives.

As lawyers we are most often as not sought out to pick up the pieces of a deal gone wrong. Risks we regularly see are:

1. poorly drafted contracts:  Commonly unqualified individuals draft sale contracts leading to  documents with confusing contradictory terms and unclear payment obligations;
2. sitting tenants:  It is not unusual to buy real estate with sitting tenants. The law of tenancy can be confusing, and if a buyer is looking to take occupation sometime soon after the sale it is. necessary to be clear with the tenants on their rights and their obligations prior to the termination of their lease;
3. escrow arrangements:  The holding of cheques by brokers in escrow is very common but commonly the arrangements and duties of the parties in vague;
4. general risk management: without thorough objective advice it can be difficult to appreciate the consequences of issues arising as part of the transaction cycle; and
5. confusion over conveyancing procedures: Whilst the UAE is a regional leader in terms of investment in real estate, because of the sheer variety of investor profiles many are unfamiliar with the systems used in the UAE conveyancing process, its quirks and timelines.

Evolving and adapting

As we come to the end of quarter one 2022 we are pleased to see that the local real estate sector has continued to mature, gain international credibility and attract end-users that see longevity in their UAE based investment.  As the market continues on this positive trajectory investors should keep in mind the risks outlined above and ideally align themselves with the best conveyancing service firms to ensure a smooth transaction from selecting the property to receiving keys in hand.

If you are in the process of purchasing a property and need expert advice and assistance please contact the us at wakeel@tamimi.com