Introduction of VAT Impact on Real Estate in UAE

If the UAE launched new TAX that it could hurt commercial real-estate landlords. who may clash to pass  Extra costs on to their tenants.

The UAE has been introduced a 5 percent Value Added Tax(VAT). A general expenditure tax which applies to the many of deal in goods and services – at the start of the year.

While the effect on the residential real-estate will be “minimal” but the more Impact on the Retail and hotel sectors, according to Craig Plumb, JLL’s Head of Research in MENA.

He said, "it's a negative, but not too big,". According to him, noting the 5 percent a rate is relatively low compared to international standards.plumb said that Given the recently soft nature of the UAE's market, landlords will clash to pass the VAT cost on to their tenants."

It's not possible for office and retail rents to rise by five percent, so that's that region owner will going to have to absorb some of that increase.

The real-estate market in UAE has very slow over last 2 year, with further is inferior expected in sales and fare-prices. The UAE Real Estate market has been by force to adjust to less increase as the "new normal" in 2018, said by Plumb, with all department of the market remaining in the inflection stage of their cycle.

Retail Ramifications

The value-added tax is likely to slow future increment by adding around two percent to Customer prices this year, so it's a biggest negative impact will see the retail the sector, according to Plumb.

This will likely curb the development of the further retail project.

He said,"There obviously is too much retail space being improved at the moment- which is great for you if you are a retailer, not so good if you are a center owner.