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Wednesday, 13 July 2011 04:01

There are no federal laws in the United Arab Emirates governing foreign ownership of real estate property assets including Real Estate Investment Trusts in The United Arab Emirates. Each emirate makes its own policies. In 2006, the Dubai International Financial Centre (which is a sort of free zone within Dubai) passed an Investment Trust Law and its Collective Investment Law No. 1, and an Investment Trust and REITs Rules Instrument. This got the ball rolling for Real Estate Investment Trusts in The United Arab Emirates (which includes Dubai). One reason that establishing them has been slow is that there apparently are few taxes there, so the usual incentive of allowing a REIT to not pay taxes if they pay out at least ninety percent in dividends does not apply. The United Arab Emirates requires that Real Estate Investment Trusts pay out at least 80% of net income to investors. Also REITs there can invest only in single ownership buildings, and in the UAE most residences are owned per unit. This means that office and retail properties will be the main opportunity for REITs. To be complaint with Sharia law, a REIT must avoid interest, including investing in conventional banks and insurance companies. They must also avoid forbidden areas such as tobacco, alcohol, non-halal foods like pork, gambling and adult entertainment, and must have an Islamic Board attached to approve or disapprove all selections based on religion. There is a lot of extra red tape involved but there are a lot of Middle East investors who wish to make investments in high quality real estate in their region, without the hassles of direct involvement, and yet who want to make sure they're following Sharia law.


Last Updated on Wednesday, 13 July 2011 04:18