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Provident Dubai real estate experts discussed the implementation of VAT and its six months impact on the market, finding it trouble-free. Read more for practical insights and advice on what Dubai areas lead in property deals now.
Six months after the 5 per cent value-added tax (VAT) was implemented in the UAE, it has proved to have a limited impact on real estate values based on average market prices in the second quarter, Asteco experts claim. Villa and apartment sales prices went down by an average 4 per cent over the quarter, while apartment and villa rents decreased by 3 per cent and 2 per cent respectively, according to Asteco’s Q2 market report.
VAT’s impact on real estate is attributed to various factors, but analysts agree that consideraby stable market rates have much helped to tame concerns about VAT’s influence on property deals.
“I think the immediate impact of VAT was always expected to be limited and it’s proven to be so,” said John Stevens, managing director of Asteco. “We had VAT implemented at 5 per cent here in the UAE, obviously that’s one of the lowest rates in the world.”
Another leading expert in the field, Mario Volpi emphasized that for the first six months of the year, VAT has been fairly well received. But if landlords would try to offset the VAT losses by putting the prices up at the background of a rising market, they could obviously lose their competitive position, and their tenants/buyers.
Besides, VAT may impact some property owners and businesses more than others. Homeowners, for instance, would be paying VAT on maintenance and operational costs, while tenants will have nothing to do with that, except as otherwise provided in their tenancy contract.
However, all the consequences of the new tax scheme in Dubai property market could be best assessed later this year, experts say.
“Our record shows that peak time for new leases and renewals are May to November, so realistically you would be looking towards the fourth quarter to see if there’s a noticeable shift,” said Stevens.
And, lastly, in terms of this VAT situation, what Dubai areas and communities are the most popular to lease or buy property in?
- Areas that are up-and-coming due to infrastructure improvements, such as , will be a hotspot for families and individuals, says Mario Volpi.
- The good thing about the area is also its improved connectivity (like having one or two new Metro stations) and accessibility through new roads and road links.
- Communities located in close proximity to the World Expo site, which can offer great family villas, town houses, and apartments for sale and rent at affordable price. Of these, there are, of course, and some parts of .
A is available at our site to give you more information on what is zero-rated VAT and how to return VAT expense paid by commercial real estate units’ owners.
About , read in other materials on the subject.
On issues concerning investment in Dubai real estate in light of VAT imlementation please contact us at:
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