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UAE comes off the FATF greylist: How will this reshape the real estate market?

The UAE’s removal from FATF greylist enhances financial integrity and solidifies the real estate market

UAE comes off the FATF greylist: How will this reshape the real estate market?

The Financial Action Task Force (FATF) has removed the United Arab Emirates (UAE) from its “grey” watchlist. As the intergovernmental organisation and watchdog established to fight money laundering and the financing of terrorism, FATF’s greylist pertains to countries that have deficiencies in anti-money laundering and counter-terrorism financing systems but are committed to actively addressing them. This major accomplishment represents a crucial step for the UAE, solidifying its status as a prominent financial hub protecting financial integrity and providing a safe and open place to do business.

The Gulf country, a magnet for millionaires, bankers and hedge funds, was placed under closer scrutiny in 2022 when the FATF highlighted the risk of money laundering and terrorist financing involving banks, precious metals and stones as well as property. Hence, the news that the UAE is no longer on the FATF greylist will greatly benefit Dubai, especially its real estate market in 2024 as it is expected to drive growth in both residential and commercial sectors, with key business drivers positively impacting the market over the coming months.

Increased institutional confidence and investment

The removal of Dubai from the FATF greylist assures institutional investors, such as pension funds, insurance companies, and sovereign wealth funds, that Dubai offers a secure and compliant investment environment aligned with global standards. This development is particularly significant for institutional investors who were previously unable to consider Dubai-based investments due to the strict due diligence requirements imposed by the FATF greylist.

Speed of business

With Dubai’s removal from the greylist, investors of all levels will find it easier and faster to conduct due diligence on Dubai-based entities and assets. The reduction in due diligence burden simplifies compliance procedures, making Dubai real estate more attractive to institutional investors who previously found the market difficult to navigate.

Sales over $10 million continue to drive Dubai’s luxury market forward
Lewis Allsopp, Chairman at Allsopp & Allsopp Group

Access to larger capital investment pools

Institutional investors often manage large pools of capital previously restricted from investing in greylisted countries. With Dubai no longer on the list, these funds can now consider Dubai a potential investment opportunity, injecting international capital into the market at previously unseen levels towards real estate projects!

Diverse real estate investment opportunities for large-scale investors

In Dubai, institutional investors will now have many real estate investment opportunities. They can now invest in high-value residential properties, such as luxury villas and penthouses, which offer attractive capital appreciation and rental returns. Alternatively, they can opt for longer-term income-generating assets, such as commercial office buildings, logistics facilities, or hotels, that provide stable cash flows over time. Additionally, they may be interested in infrastructure projects linked to major Dubai masterplan events or initiatives, which can create long-term value and appreciation potential.

Real estate price appreciation

With a shortage of new luxury residential and grade A commercial real estate projects coming to the market before 2026, increased investment into existing inventory may push prices to an all-time high. I foresee a situation where international institutional funds will begin to compete for the most attractive real estate assets across the city, with longer-term investment strategies in mind.

Dubai-based property developers may look to change strategies (with broader access to capital investment), speeding up the delivery of off-plan projects across the city to address investor demand.

Market diversification drives stability across the UAE’s property market

With more institutional investors entering the Dubai real estate market, the existing investor base will expand, resulting in greater diversification and depth. This will enhance global confidence in the Dubai property market by providing further protection from socio-economic forces, benefiting everyone in the long run.