Currently, two major developers in Dubai have already implemented this program, and given that these two companies account for 30-40% of Dubai's real estate sales, the impact (of the regulation) on the Dubai real estate market is already significant. At the end of last week, the two developers informed their clients and partners of their decision to limit cash payments to Dh55,000, with the remainder having to be processed through banking channels.
Sources said they expect the authorities to fully implement this rule on the cash purchase cap soon. It is unlikely that only two developers will implement such regulations," said the chief executive of a leading private developer. It is clear that the Dubai real estate market is reducing all-cash sales in order to increase transparency in such transactions."
In Dubai, 20 percent of property transactions are completed through cash. If this new regulation is widely implemented, there will be a significant drop in this percentage.
Developers and brokers have been asked to comply with strict 'track and trace at source' rules on the origin of buyers.
UAE authorities are scrutinizing transactions under anti-money laundering regulations, and Atik Munshi, managing partner of Finexpertiza UAE, says: "The real estate [industry] can absorb a lot of money, and money launderers tend to use this as a way to legitimize their ill-gotten gains." To plug this loophole, regulators have not only laid down rules but also monitored such transactions through various means.
Whether purchasing a property from a broker/agent or directly from a developer, property buyers have to fulfill anti-money laundering requirements.
An industry insider said, "Home buyers need to be aware that any cash payment (either in a lump sum or in installments) that reaches Dh55,000 will be scrutinized as the developer/agent will report it to the Central Bank."
"If an individual buyer uses cash to buy a property through the route of a personal loan/gift from a friend or relative, then the buyer should also retain sufficient relevant documentation. The source of funds of the loan and giver must also be proved."
"Purchases through virtual assets (cryptocurrencies) must also go through this process to prove their legitimacy."
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