“The UAE’s real estate market is growing at the highest rate in the Middle East, Africa and Europe,” said a report released by Warren Buffett-owned Berkshire Hathaway investment firm. , Germany, Italy, Spain, Portugal and Greece, for 2021.
The report, the results of which were published in a number of media outlets in the Arab world, shows that 2021 presented record data in the real estate market in the United Arab Emirates. November of that year recorded the largest number of transactions – about 7,000 real estate transactions with a total value of about 18 Billion dirhams (about $ 5 billion).
In Dubai, more than 57,000 transactions were registered in 2021, an increase of more than 73% of the number of transactions registered in 2020, and more than 51% of the number of transactions registered in 2019.
In Dubai, the significant number of transactions recorded so far this year was in the month of Ramadan, which saw a significant increase in the number of transactions compared to the month of Ramadan last year. According to a local report based on Elroad’s report to Lakarat the appraiser, the financial volume of real estate transactions made in Dubai this Ramadan this year was 17.3 billion dirhams, compared to 9.8 billion in Ramadan 2021, and 2.6 billion in Ramadan 2020.
The company added that “medium to luxurious housing units are the most sought after among investors.” According to them, “we saw an increase in the number of transactions in second-hand properties made in the first quarter of 2022 that was three times higher, which resulted in a growth of sales by 250%.”
Hebrew sales sites, and social media marketing
“When the Avraham agreements were signed about a year and a half ago, there was a lively movement in the Emirati real estate market,” says Adv. Maron Khalifa, owner of Matching Global from Haifa, which deals with government relations, promotion and development of projects and initiatives in the UAE.
Since the signing, social networks have been flooded with advertisements in Hebrew for the purchase of real estate in Dubai at tempting prices – starting at NIS 400,000 per apartment – and local real estate sites have launched a Hebrew version for the Israeli investor such as Emirates Estate Center for sale throughout the UAE.
Advocate Khalifa explains that in some of them there were also attempts to deceive and provide partial information:
“During my visit to Dubai two weeks ago, it became clear that one of the large companies that market properties to Israelis, and is responsible for some of the publications on the networks, has run into legal problems and there is a lack of clarity about its ability to complete some projects.”
The issue of tax exemption is also complex: “The UAE is considered a tax haven,” says Khalifa, but the United Arab Emirates’ Ministry of Finance recently decided to impose a tax on corporate profits starting June 1, 2023.
“The corporation tax is set at a rate of 9% on profits in excess of the amount of 375,000 dirhams (approximately NIS 360,000).” According to Khalifa, “the decision will not apply to individuals and they will continue to enjoy a full income tax exemption for work, real estate or investments.
“In general, the tax system in the UAE is territorial, unlike the taxation system in the State of Israel which is personal. An Israeli who generates income outside the state will be liable to pay tax in Israel, on the other hand an Emirati citizen who generates income outside the UAE will not be liable to pay taxes.”
“Do not settle for pictures: go see the apartment”
What is your recommendation for the Israeli investor?
“The most important advice is to take a local lawyer who will check the deal, the developer who is selling you the property and the agreement,” says Khalifa. “In case it is a second hand apartment, it is necessary to check the registered ownership and if there are liens. I recommend to go there and see the apartment physically before buying because the pictures do not necessarily show the reality – Burj Khalifa is seen everywhere in Dubai and on clear days even outside Dubai. “So you will be tempted by the pictures.”
Regarding the demand for rent, Khalifa emphasizes that “it is worthwhile to find out from people who are independent of the project. It is not pleasant to buy an apartment and find that there are another 1,000 empty apartments in the neighborhood waiting for tenants.”
Khalifa also recommends making sure that you find a company that will manage your property and take care of finding tenants – and not an individual.
About a third of Dubai’s real estate market is held by foreign investors
The FATF, the international organization for the fight against money laundering and terrorist financing, recently added Dubai to the list of “gray” countries, a list of 22 countries. According to the Wall Street Journal, the organization has reprimanded the United Arab Emirates for not doing enough to stop money laundering and terrorist financing. According to the report, after the announcement, the United Arab Emirates issued a statement stating that it will work closely with the FATF to correct the areas in which improvement is needed.
Other media outlets have reported that since the outbreak of the war in Ukraine there has been concern that Russian oligarchs will transfer their capital to Dubai as a refuge from sanctions. According to the French Le Monde, more than 100 Russian MPs, as well as civil servants and businessmen close to President Vladimir Putin, hold assets in the Emirates. This is a phenomenon that may expand because of the neutrality that the UAE has taken in the context of the Russian invasion of Ukraine, and its refusal to participate in the sanctions imposed against Russian officials and capitalists.
The Le Monde newspaper added that the real estate held by foreign investors in Dubai is currently valued at no less than $ 146 billion, about a third (27%) of the city’s real estate market.
Earlier this month it was reported that three of the largest entrepreneurial companies in the country had started accepting payments in cryptocurrencies: Nahil, Damak (accepting Bitcoin and Atrium), Samana (Dodge Coin). Nahil is mostly government-owned. She herself bought shares in Hayvn – a digital currency platform.