Investment guide dubai real estate Direct From Developer LLC

Summary of Key Points Financials The Law Taxes Rental Yields Property Prices Government Initiatives Financing Purchasing Costs The Law Foreign Ownership Residency Method of Ownership Due Diligence Closing Pre-Construction Red Flags? Taxes Tax Summary VAT Summary of Key Points

Financials

Rental Yields Yields are relatively strong Gross yields 10% + No property taxes Affordable markets offer good yields: Jumeirah Village Circle, Dubai Silicon Oasis, International City, etc. Yields lower in: hotspots (e.g., Downtown Dubai, Palm Jumeirah, etc.) larger apartments/villas Rental Yields

Property Prices Recent Trend Buying Opportunity? 7.7% YOY decline in September 2018 (Reidin) and 22.3% decline from 2014 peaks (ValuStrat) Price performance varies by area (particularly areas with new supply) Buying Opportunity? Lower prices could mean buying opportunity Seller’s offering attractive sale terms and new government initiatives driving sales Investors trying to time market with off-plan purchases set for delivery in 2020 (or later) Property Prices

Government Initiatives New government initiatives to boost UAE property market 5-year residency visa for property investment of AED 5 million + 10-year residency visa for certain investors and professionals For investors: require AED 10 million investment (minimum 60% non-property investment) 5-year residency visa for entrepreneurs -- minimum investment of AED 500,000 100% foreign ownership for companies outside free zones Government Initiatives

Financing

purchasing costs Completed Preconstruction 4% registration fee to Dubai Land Department Registration fee to developer (approx. AED 1,500) Completed 4% transfer fee to Dubai Land Department (can be split between parties) 2% brokerage fees (if applicable) .25% mortgage registration fee (if applicable) AED 2,000 or AED 4,000 Registration Trustee Fee Nominal NOC fee purchasing costs

The LAW  

Foreign nationals can own property in certain designated areas, including: Palm Jumeirah Downtown Dubai Dubai Marina Business Bay Jumeirah Lakes Towers Jumeirah Village International City Foreign Ownership

Residency 2 Year Dubai Property Investor Visa 2-year renewable visa Can sponsor family Qualifying property must be AED 1 million +; and complete Minimum income requirement (AED 10,000 per month) 5 Year Retirement Visa (2019) 5-year renewable visa To qualify: 55 Years or older AED 2 million property; or AED 1 million savings or AED 20,000 monthly income 5 or 10-Year Investor Visa See slide 6 for details Residency

Individual capacity (minimal local tax and litigation concerns) Dubai free zone companies (e.g., Jebel Ali and DMCC) Foreign companies not permitted (e.g., Cayman, Virgin Islands, etc.) Method of ownership

Due Diligence Preconstruction Research the developer Research project (escrow account and relevant registrations) Investigate construction status and completion date Completed Inspect the property Investigate if seller has title to the property Due Diligence

Closing Closing conducted by a Registration Trustee Attend in person or legalized power of attorney in favor of another Payment against title deed Closing

Consumer protection (Pre-Construction) Consumer Protections Developers must create escrow accounts Sale proceeds deposited into escrow accounts Developers deposit 20% of project cost (or completes 20% of project) prior to sale Developer must get project approvals prior to sales Limits on variation of size of property Developers liable for structural defects (10 years) and minor defects (1 year) Consumer protection (Pre-Construction)

Dispute resolution Sound Judicial System Rental Dispute Settlement Center – settles landlord tenant disputes – including non-payment of rent Litigation/ Arbitration -- disputes arising out of sale and purchase agreements litigated in courts (Arabic) or arbitrated (parties agree language) Dispute resolution

Red Flags? Title Risk? Currency Risk? Expropriation Risk? Currency Controls? Political Risk? Judicial Risk? Regulatory Risk? Supply/Demand Risk? Red Flags?

TAXES

TAX Summary Transfer Tax 4% transfer tax on sale price No Local Tax Items No income tax No capital gains tax No estate tax No property tax Tax considerations of country of citizenship/residency (e.g., world wide tax jurisdictions) TAX Summary

Value added tax New VAT regime No VAT on residential rents No VAT on sale of new construction residential within 3 years of completion No VAT sale of completed residential real estate Value added tax

The information and opinions in this presentation are for informational purposes only and not for the purpose of providing legal, tax or brokerage advice. You should contact your own attorney, tax advisor or real estate broker to obtain advice with respect to any issues or questions. Disclaimer

Omar Sawaf is an attorney with more than 12 years of experience in the areas of real estate, corporate, dispute resolution and international law. He graduated from George Washington University Law School (Washington, D.C.) and has worked with Legal 500 law firms in Washington, D.C., Dubai, UAE and Hong Kong, SAR. He is also a licensed real estate broker and the founder of Direct From Developer LLC. He primarily assists international investors on cross-border real estate transactions. About the PResenter