The Value Added Tax or VAT will be introduced from January 2018 in the United Arab Emirates. Several market experts feel that this landmark move will prompt several global institutional investors to foray into the real estate market in Dubai. Experts believe that real estate transactions will now be even more transparent and hence institutional players will get an added incentive in the form of the newly introduced VAT regime. VAT at 5% will be introduced as a law from the 1st of January, 2018 and this will be applicable for all services and products in UAE unless there is an exemption or zero rating by a federal regulation.
Dubai real estate markets will prosper due to increased investor interest, courtesy the highly transparent system for investments. Experts also indicate that VAT has implications on almost every UAE industry including real estate and when this is fused with the open source data emphasis of the Government, global investors should find Dubai real estate even more appealing. Global fund managers are already indicating their interest in Dubai real estate with the introduction of VAT which will positively affect the whole market. The Dubai Land Department or DLD has already released its total figures where 217 nationalities pumped in AED151 billion into the realty market between January, 2016 and June, 2017. This may go up even further from the beginning of 2018 itself with more insurance companies, sovereign wealth funds, pension funds and regional asset managers looking to pump in money towards the Dubai real estate market.
The new regulations will go a long way towards increasing the ethical quotient of the real estate market in the UAE, something that will certainly draw more institutional investors from across the world. There are some concerns related to developers having to bear higher costs due to VAT along with concerns of landlords and brokerages along with buyers. However, the rental or sales prices will not be impacted directly as per experts. Around 36, 000 units were sold in the first nine months of this year as per reports and the cumulative value stands at approximately AED48.7 billion while AED12.7 billion was shelled out for 5, 014 villas or buildings as per studies.