Property Investments in UAE and SA Exchange Control - What Do You Need To Know? Part 1

Dubai, and some other United Arab Emirates (UAE), such as Ras Al Khaimah, have emerged as popular destinations for property investment, attracting investors from around the globe, including South African exchange control and/or tax residents. The vibrant economy in the UAE, enticing lifestyle, attractive visa options, and more particularly the favourable property returns have made it an appealing option for South Africans looking to diversify their investment portfolios, increase their hard currency cash inflows and not to mention exploring international opportunities such as the UAE being a central business hub despite the property boom.

UAE property investments allow an investor to apply for a 2-, 5- or 10-year golden visa, depending on the net value invested. Investor visas may not always allow full employment in the UAE, yet it allows the investor to reside in the UAE and for most, the permission to be employed (obtaining an employment card) is a relatively easy process.

It is important to be aware of the exchange control regulations governing money movement in and out of South Africa. This series of articles explores the appeal of the UAE property market for South African investors while highlighting the need to understand the applicable rules and regulations and secure the best rates when transferring funds internationally. We will also touch on the tax consequences to be considered.

Before investing one has to make peace with Sharia Law, by ensuring you understand and accept the applicable rules. Albeit the current rulers have been relaxing several rules (i.e. allowing persons not legally married to cohabitate), some of the perceived restrictive rules (measured from a SA perspective) remain in place.

As a renowned, multi-award-winning real estate agency with vast property expertise, Meridian Realty offers exciting opportunities in the UAE property investment scene along with deep insights into associated regulations.

Dubai's Property Market Appeal

Dubai's thriving economic growth, favourable tax environment, variety of property options and resilient stable real estate market have attracted South African investors seeking international property investments. The city's strong economic growth, driven by its welcoming of many ex-pats and holidaymakers alike, and the strategic location served by two hub airports (Dubai and Abu Dhabi), provides a solid foundation for property investments. Dubai's property market is known for its modern infrastructure, high-quality construction standards, and innovative architectural designs, further enhancing its appeal to investors. Additionally, Dubai's tax-friendly policies can optimize the returns on investment for South African investors. The new corporate or business tax introduced as of 1 June 2023, specifically excludes profits from the provision of either short- or long-term rental market.

It is worth noting that while Dubai offers attractive investment opportunities, like any investment, it carries its share of risks. Market fluctuations, economic changes, and geopolitical factors can impact property values and rental yields. Therefore, conducting comprehensive market research, assessing risk factors, and consulting with experts are crucial before making any investment decisions.

Meridian Realty is at the forefront of the dynamic Dubai property market with a comprehensive portfolio of properties starting from AED 1.6 million. Offering a variety of residential and commercial spaces, our property options cater to a wide range of investment tastes. Meridian Realty does not only provide a vast selection of property options; we also excel in simplifying the purchase process and delivering insightful expertise about market dynamics. Through our deep-rooted knowledge of local and international regulatory structures, we ensure investors experience a seamless and assured property investment journey. Whether your interest lies in luxurious residential villas or prime business district office spaces, Meridian Realty stands as a dependable partner to guide you through the intricate landscape of UAE property investments.

In conclusion, Dubai's property market presents an exciting opportunity for South African investors seeking international real estate investments. Ensuring the investor appoints an informed and experienced team to manage their fund transfers, tax compliance, and their future property management, cannot be emphasised enough.

For expert advice on exchange control, structuring, cross-border taxes, and accounting, consider contacting Mathys Briers-Louw and Hugo van Zyl at twenty2@taxforum.co.za.

-Mathys Briers-Louw is an attorney, specialising in cross-border transactions, exchange control, international money transfers and fiduciary services.

-Hugo van Zyl CA(SA) and Chartered Tax Advisor is an industry leader in cross-border transactions, taxes, and exchange control.

Stay tuned for Part 2 of this series where we dive into the exchange control regulations in South Africa and how they apply to these international investments. This part is vital for ensuring smooth international transactions and keeping compliant with the law, so be sure not to miss it.

Ready to take the next step in your investment journey? Explore our premium range of properties listed in Dubai and let us guide you in making the best investment decision. Check out our portfolio here: https://www.meridianconnect.co.za/Page/Dubai.aspx

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This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your adviser for specific and detailed advice. Errors and omissions excepted (E&OE)