If you’re considering purchasing property in Dubai as an ex-pat or foreign investor, it’s imperative to understand the various types of ownership available. Before selecting a property, it’s crucial to know the difference between leasehold and freehold ownership for foreigners in Dubai. By doing so, individuals can make an informed purchase decision.
Property Investors in Dubai
As a potential investor in Dubai’s real estate market, it’s imperative to familiarize yourself with the various property types available for acquisition. Even a basic understanding of these differences can greatly help determine which type of property aligns effectively with your investment goals.
This article explores Dubai’s property ownership laws and the advantages and disadvantages of each type of ownership. It will also explore popular locations to find leasehold and freehold properties in the city.
Types of Properties Available for Purchase by Non-Citizens: Leasehold and Freehold
Foreigners and expatriates can purchase properties in specific locations in Dubai. They can acquire leasehold or freehold properties.
Acquiring a leasehold property will provide you with rights to the property for a predetermined duration, of up to 99 years. Nevertheless, if you do not purchase the land on which the property stands, ownership will continue to belong to the freeholder.
Pros and cons of leasehold property buying
- At the conclusion of the lease term, the tenant has the option to extend the agreement and continue their residency in the property.
- Limited liability for repairs is faced by leaseholders when owning a leasehold property in Dubai. The responsibility to make repairs, particularly those affecting the property’s structure, rests predominantly on the freehold owner.
- Leasehold properties generally have a lower average sales price than freehold properties.
- It is imperative for buyers to remember that obtaining written approval from the freehold owner is necessary for any alterations, renovations, or remodeling done to the property. This is about leasehold ownership in Dubai.
- It is possible that subleasing or pet ownership may be restricted for leaseholders.
If you opt for a freehold purchase of a property, you can own both the property and the land it stands on. This allows you to sell, lease, or use the property for residential or commercial purposes. For ex-pats and foreign investors seeking commercial properties in Dubai, it may be worth exploring freehold areas such as Palm Jumeirah, Downtown Dubai, Dubai Hills Estate, and Dubai Marina.
Pros and cons of freehold property buying
- The property owner will have complete authority and jurisdiction over the property without the need to seek consent from authorities for minor modifications or upgrades. Permission or approval from the property developer is usually required for any exterior changes.
- As the property owner, you can sell or rent out the property as you deem fit.
- In the event of the owner’s death, the property may be inherited by heirs regardless of a will.
- Non-residents of the UAE are also eligible to purchase freehold properties.
- Those who own properties valued at more than AED 1 million will be granted renewable UAE residence visas for themselves and their families.
- Being the proprietor of a freehold property, you shall bear full liability and responsibility for structural repairs and maintenance of the property.
- Non-citizens and expatriates have limited choices as they can only purchase properties in specific freehold zones within Dubai.
Where can I purchase freehold properties in Dubai?
Freehold ownership offers a variety of properties, providing plenty of options for buyers and investors. Dubai’s freehold areas encompass a range of developments, from apartment towers to villa and townhouse communities. Choosing between freehold and leasehold depends on your future plans and requirements. Freehold property is particularly popular with foreign buyers and investors.
There is a range of options available in many of Dubai’s notable neighborhoods, including Business Bay, Downtown Dubai, JBR, Tilal Al Ghaf, and The Springs. Even historically non-freehold areas, like the Jumeirah, now offer freehold projects such as City Walk and La Mer, further increasing choices for foreign nationals. Conversely, Dubai has non-freehold areas that only permit Emiratis and GCC nationals to buy property freehold.
The Right Property Type for Investors
Leasehold & Freehold
Understanding the legal rights and responsibilities of freehold and leasehold properties is crucial when choosing between the two. The main difference between these types of ownership is the degree of control. Freehold owners have more authority over their property and the land, allowing them to modify and make structural changes as they desire. However, leasehold owners also have some control, with a typical lease lasting 99 years. The decision between leasehold vs freehold will depend on various factors such as the long-term use of the property, budget, and needs. It is essential to research the property and the surrounding area to determine the most appropriate option.
Considering the significant financial commitment involved in buying a home in Dubai, it’s recommended to learn about saving money for a down payment. In addition, it’s recommended to learn about property ownership rules for foreigners. Additionally, ownership laws may differ between the Emirates.