It has been a tremendous past couple of months for the UAE’s real estate sector – as investors bite into the Gulf nation’s bid to become a global hub for property investments.
Just in June this year, sales transactions hit a whopping $6.9 billion – reported to be the highest in the last 13 years, according to data from the Dubai Land Department (DLD).
With this growth momentum only expected to continue in the months to come, several real estate companies have welcomed the UAE government’s recent announcements to tighten real estate regulations – particularly when it comes to payments and investor background checks.
“It will boost the ratio of quality buyers and reduce the money risk factor for real estate agencies,” Ayman Youssef, vice president of the UAE unit of American real estate consultant Coldwell Banker, said.
“The real estate industry deals with high value transactions and investments and is susceptible to exploitation for money laundering purposes,” he told Arabian Business.
Youssef was particularly referring to the UAE’s most recent decision to oblige agents, brokers, and law firms to file reports on the purchase and sale transactions that involve cash payments equal to or above AED55,000 ($14,976) or virtual asset payments.
He said the new guidelines would allow the government to more effectively monitor any fraudulent or suspicious transactions within the sector.
In April this year, Dubai’s real estate regulator, the DLD, made transaction data publicly available on its website. The platform provides an almost real-time reporting of all property deals. Now the emirate has been recognized to have one of the most transparent property markets in the world – 31st globally, top 1 in the Middle East and North Africa.
Real estate brokers, firms urged to comply
Coldwell Banker UAE’s Youssef said the new reporting rules would affect newer real estate agencies more as they would have to “restructure their working procedures in order to adhere to and accommodate the latest guidelines.”
According to DLD’s website, there are nearly 13,000 registered brokers in Dubai, which could only grow as more people find the sector to be a lucrative job, on the back of growing investor sentiment.
The chief executive officer of Allsopp & Allsopp echoed Youssef’s remarks on what the new rules could do to the real estate scene.
“This adds more integrity to the market and breeds local and international confidence,” Lewis Allsopp said, adding the new security is easy to follow.
Allsopp said his firm, which first opened in 2008, has been working with consultants to incorporate new legislation into the company’s policies and practices.
“(We) have also hired an internal compliance officer who screens clients who buy and sell properties through Allsopp & Allsopp,” he added.
The same due diligence is seen in other major real estate developer like Arada in Sharjah.
“We look forward to working closely with the relevant authorities to ensure that our reporting requirements are fully in line with new and future regulations,” Ahmed Alkhoshaibi, group chief executive officer of the developer, told Arabian Business.
Money laundering and real estate
Of course the new guidelines play into the UAE’s bigger campaign to strengthen its anti-money laundering (AML) framework. In recent weeks, the country’s central bank has been sanctioning financial institutions that fail to comply to its increasingly strict policies.
The real estate sector, with its high volume transactions, could easily become a haven for launderers – especially as data suggests international buyers are partly driving the industry’s growth.
“Anti-money laundering legislations are in place in most countries around the world and it is excellent to see Dubai enhancing this further,” the Allsopp and Allsopp chief said, adding the “more regulation and integrity that can be put in place… the more is built and we will see a continuation of the maturity of the industry.”
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