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Deferred Property Sale in Dubai

05-03-2018 11:21 AM CET | Industry, Real Estate & Construction

Press release from: Property Blog Dubai

The Dubai Land Department as the Emirate`s governing body overseeing property transfers now also allows for registration and execution of so-called deferred sale agreements. Such agreements describe a particular ownership transfer of real estate assets where the ultimate transfer of title remains pending until all deferred considerations as per the contract have been settled.

Even though the method of a deferred sale is not tied to the entrepreneurial sphere, a deferred sale is usually the preferred course of action when institutional investors transfer ownership in commercially used, cashflow generating real estate assets. While the concept is non-specific with respect to the nature of the involved parties or the real estate assets to be transferred, the deferred sale method plays out its strengths especially in situations where complex commercial properties like malls, hotels or office buildings are alienated.

The advantages range from bridging liquidity or valuation gaps to optimising or deferring tax burdens (depending on the jurisdiction).
On the legal side, however, the aforementioned advantages come at the price of a somewhat increased complexity as the Sale and Purchase Agreement is to be complemented by a joint-venture type contract, defining the terms for board representation, dilution rights, buy-sell agreements and the like.

A deferred sale of properties is particularly useful for the alienation of property assets which are usually embedded into legal entities, the latter having numerous ongoing contracts with third parties (tenants, service providers, banks etc.).

To this extent, the transaction includes a whole business operation within which the property has the function of the central capital asset.
Hence, it is usually favourable to leave the operations side of the property business untouched, so that the deferred sale transaction involves the subsequent transfer of shares in the asset-holding entity.
Frequently, the duration of such transfers is several months to several years, depending on the parties` requirements and agreements.

The full article covers procedures and costs, financial, tax as well as other considerations and is accessible under the following link:

The author`s blog covers subjects related to Dubai`s property market and its trends and influences from an institutional investor`s perspective.
The author has been actively engaged in the Dubai property market since 2005 and advises institutional investors pertaining to their overall investment strategy, ongoing asset management as well as the initiation and execution of property transactions.
Christian Atzert
Business Center 4, Floor 8
Ras Al Khaimah Free Trade Zone
Tel: 00971-56-7786475

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