As a world-class hub for trade and tourism in the Middle East, Dubai, the ultramodern metropolis and one of the major cities of the UAE, wears its global reputation as a medal and attracts a plethora of visitors each year, enchanting them with its myriad wonders. With the country and its major cities having reached a climax of development in a variety of aspects, many seek to find themselves a new home in the UAE, especially in Dubai, and enjoy the unique perks and high quality of life it has to offer.
If you, too, want to live a dream life in Dubai or make a lucrative investment in this gorgeous city, one of your best and most straight-forward options would be buying a property in Dubai. In this article, we are going to walk you through steps and terms of buying property in Dubai and the UAE and cover every aspect of the subject. Stay tuned!
Terms of Property Ownership for Foreigners in the UAE
Major cities of the UAE boast their diverse and lively real estate market. If you are a foreigner looking to buy property in Dubai or other major cities of the UAE, you’ll be confronted by myriad choices not only for the properties you want to buy, but also for the terms and conditions of your purchase. This means you’ll get to choose your dream house while tailoring the purchase contract to your satisfaction.
Property ownership in the UAE falls under two main categories: leasehold and freehold. In both systems, you’ll get to purchase a property and get accommodated in it. However, These two systems offer different ownership rights. Below is a brief review of the two categories:
Buying a leasehold property means purchasing the rights to live in a property for a fixed period of time. The period of occupation is usually set at 99 years, though it can be reduced in some instances. A leasehold ownership only grants you the rights to the property itself and not the land it is constructed on.
Furthermore, when purchasing a leasehold property, you can not make any changes in the property since the ultimate owner of the property and its land is the freeholder from which you have purchased the leasehold. This also applies to any significant repairs, especially the ones that involve a change in the structure of the property.
When the leasehold contract expires, the leaseholder can renew the contract and continue residing the property. If, however, the leaseholder decides to end the contract, all the ownership rights will be returned to the freeholder.
Investors who purchase properties under this category of ownership will be granted the full rights to both the property and the land it is constructed on. The buyer will be issued a title deed and their name will be registered as the “landowner” by the authorities. In other words, the freeholder has full control over the property and its land and can renovate, sell, rent, or lease their property. The freehold property can also be inherited from the owner by their heirs.
Overall, the price of a leasehold property might be lower than a freehold, though being a freeholder comes with many benefits. Not only you’ll be entitled to full rights to the property and its land, but also you’ll get to choose your dream house from a wide range of residential properties available for sale in Dubai and other major cities of the UAE. Besides, buying a freehold property makes you eligible for obtaining a UAE residency visa. We will briefly review the terms and conditions of obtaining the visa in this article, though if you want to learn more, do read our comprehensive guide on how to get a UAE residency visa through real estate investment. With the property ownership systems now explained, we can now review the laws and terms of buying property in Dubai and other major cities of the UAE.
Laws Regarding Property Purchase in the UAE
Laws of buying property in the UAE used to be quite strict and foreigners were not allowed to purchase property in the country. The emirate of Dubai, however, broke the traditions and approved legal amendments which allowed the UAE non-citizens to purchase any type of property in the country. Soon, other emirates followed Dubai’s lead in this matter and nowadays, the UAE has been turned into a paradise for foreigners who want to invest in real estate.
The laws of buying property in the UAE vary from an emirate to another. However, there is one common rule: foreigners who want to invest in real estate in the UAE, can only purchase properties that are located in districts labeled as “freehold areas”. Freehold areas are neighborhoods specified by the authorities in each emirate that are designated to foreign property ownership. Depending on the emirate in which you want to buy a property, there are different systems through which you can make your purchase. Here is an overview of these laws and systems in Dubai and other emirates of the UAE:
Purchasing Real Estate in Dubai
As mentioned above, Dubai was the first emirate that allowed foreigners to invest in its real estate market and the laws governing property purchase in Dubai are more lenient and investor-friendly than other emirates. There are no restrictions regarding the type of the properties foreigners can purchase. UAE non-citizens are allowed to purchase lands, commercial properties, villas, apartments, and townhouses in Dubai.
The world-renowned ultramodern metropolis of the UAE features a diverse and lively real estate market. Investors can find a wide range of modern, top-notch apartments for sale in Dubai. These flats come in a variety of designs, price ranges, and sizes. There are also plenty of state-of-the-art villas for sale in Dubai each having the potential to become your dream house.
Keep in mind though that similar to other emirates, foreign property ownership in Dubai is only allowed in freehold areas. This, however, does not limit your options at all. Aside from boasting a diverse real estate market, Dubai’s list of freehold areas is pretty long. Below is a number of the many freehold areas you can purchase a property in:
Dubai’s Freehold Areas for Foreign Property Ownership
If you want to buy an apartment in Dubai, you will have plenty of districts to choose from. Some of the most popular freehold areas for buying an apartment in Dubai are:
- Business Bay: One of the most popular districts among the investors, Business Bay is distinguished by its high-rise apartments and offers a wide range of commercial and residential properties for sale; from studios, 1-, 2-, and 3-bedroom apartments to opulent 4- and 5-bedroom penthouses.
- Downtown Dubai: Home to the iconic Burj Khalifa, Downtown Dubai is one of the most sought-after freehold areas among investors, featuring myriad luxurious flats. If you are looking for affordable properties though, Downtown Dubai might not be your best choice!
- Discovery Gardens: Situated near the Ibn Battuta Mall, this family-friendly apartment community features affordable studios and 1- to 2-bedroom apartments.
- Dubai International Financial Center (DIFC): Developed to serve as a financial hub to the Middle East, South Asia, and Africa, DIFC offers a wide range of both commercial and residential properties. It is also a free trade zone suitable for those who can’t stay away from their businesses for long.
- Dubai Marina: Dubai Marina is Dubai’s most sought-after freehold area for good reasons. Reasonable property prices, diverse property portfolio, and myriad facilities and amenities such as malls, spas, and restaurants all contribute to Dubai Marina’s increasing fame among foreign investors.
- Many other districts such as Dubai Creek Harbour, Dubai Science Park, Jumeirah Heights, Mirdif Hills, The Greens, and more.
If you want to buy a villa in Dubai, you can choose from a wide range of neighborhoods including:
- Arabian Ranches: One of the top villa communities of Dubai, Arabian Ranches currently comprise three phases of development, each featuring top-notch, modern villas and a variety of facilities and amenities.
- Emirate Hills: If you cherish opulence and grandeur, then Dubai’s most luxurious development, Emirate Hills, is the perfect choice for you. The state-of-the-art villas of Emirate Hills suit only the most high-profile of investors.
- The Meadows: Those in search of a peaceful neighborhood to live a comfortable life in will find the Meadows quite to their satisfaction. Comprising nine villa communities, the Meadows treats its residents with its vivid green spaces and the serenity of its lakes.
- The Sustainable City: This unique development is like nothing you’ve ever seen and completely lives up to its name by equipping its villas with solar panels and allowing for residents to do urban farming and grow their own products. The Sustainable City also has one of the most alluring urban green spaces in all of Dubai. Furthermore, this futuristic development is also equipped with all the necessary amenities and facilities such as schools, medical centers, and shopping centers.
- Jumeirah Islands: This gorgeous collection of 50 artificial islands is one of the most prominent projects developed by Nakheel Properties construction company and is considered one of the iconic landmarks of Dubai featuring 4- to 6-bedroom villas and 4-bedroom townhouses.
- Plenty of other areas such as The Springs, The Lakes, Reem, Jumeirah Park, The Villa and more.
There are other freehold developments and districts that offer both apartments and villas. A number of such developments include:
- DAMAC Hills: DAMAC Properties is a one of the property developers in the UAE that is headquartered in Dubai, and has contributed significantly to the diversity of this city’s real estate market. You can find many astounding projects developed by DAMAC Properties construction company in Dubai among which one of the most populars ones is DAMAC Hills. Properties for sale in DAMAC Hills comprise high-end apartments and villas and feature spectacular views and top-notch amenities.
- A plethora of other developments such as Dubailand, Dubai Sports City, Dubai Hills Estate, Al Barari, Al Furjan and more.
Purchasing Real Estate in Abu Dhabi
The rules governing the real estate sector in Abu Dhabi are more strict than in Dubai. Foreigners who want to invest in real estate in the capital city of the UAE are legally allowed to purchase only apartments and villas; again exclusively in areas designated as freehold. Investors intending to buy property in Abu Dhabi can do so through one of the four systems below:
Property owners with ownership contracts are granted ownership deeds for up to 99 years. This allows them to fully dispose of their property. However, an ownership deed does not entitle the buyer to the land the property is built on.
If you purchase a property through a Musataha contract, you will receive the rights to reside in the property and also alter it or construct it for up to 50 years. After a Musataha contract expires, it can again be renewed and extended for another similar period if both parties are in agreement. A Musataha holder, however, will not be entitled to the land the property is built on. Meanwhile, the landowner is not allowed to mortgage the Musataha property without permission from the contract holder. After ten years, the Musataha holder can dispose of their property without consulting with the landlord.
- Long-term Lease
It is a leasehold contract issued for a period of not less than 25 years.
A Usufruct contract allows the buyer to own and reside in a property for a priori of up to 99 years, but it does not grant the buyer the rights to the land or to make any changes to the property. However, in a Usufruct contract, the land owner can not mortgage the property without the permission of the Usufruct holder. Similar to the Musataha contract, A Usufruct holder can dispose of their property without consulting with the landlord after 10 years.
Freehold Areas for Foreigner Property Ownership in Abu Dhabi
If you want to invest in real estate in Abu Dhabi, you can purchase an apartment or a villa in one of the following freehold areas:
- Yas Island: This area is quite popular among expatriates because it is home to myriad attractions such as Ferrari World (expansive theme park offering a plethora of fun activities), Yas Bay, Warner Brothers Abu Dhabi, and Yas Mall. Yas Island also overindulges its residents with its various facilities and amenities such as golf courses, shops, restaurants, schools, opulent resorts, and leisure centers.
- Saadiyat Island: If you are an avid art and culture fan then Saadiyat Island is one of the best places for you to invest in real estate in Abu Dhabi. It is one of the projects developed by ALDAR Properties construction company and is widely considered Abu Dhabi’s cultural hub. Saadiyat Island is home to many museums and cultural attractions and art exhibits are frequently held in the districts. This, however, does not mean that Saadiyat Island is all about art and culture. Residents of this area can always enjoy its various restaurants, golf courses, and gorgeous beaches.
- Other districts such as Al Raha Beach, Masdar City, and Al Reef.
Purchasing Real Estate in Sharjah
If you want to buy property in Sharjah, you should keep in mind that foreigners are not allowed to purchase freehold properties in the Emirate of Sharjah but the law allows them to buy property through a usufruct contract which was explained above. The Usufruct contract can remain valid for up to 100 years and the purchase has to be registered with the Sharjah Real Estate Registration Department (SRERD).
Similar to the case with freehold properties, purchasing a Usufruct property in Sharjah is possible only in locations specified by the government. Furthermore, if you intend to buy property in Sharjah, you should keep in mind that the Usufruct rights are granted to the buyer only after the approval of the ruler of Sharjah is received.
Now that you’ve got a glimpse of the laws governing the real estate market across the UAE, you can see why Dubai is more popular among those who want to buy property in the UAE. In Dubai, foreigners are allowed to purchase a wide range of properties, from offices and warehouses to apartments, villas, and townhouses, and obtain full rights to both the property and the land it is built on. In the next section, we are going to walk you through the process of buying property in Dubai.
Legal Process of Purchasing Real Estate in Dubai
The process of purchasing a property can be complicated and frustrating. In Dubai, however, thanks to the investor-friendly real estate laws, buying a property is pretty straight-forward. Below are the steps you should take after finalizing your decision on buying a property in Dubai:
Drafting the Sale Contract
The first step after finding a suitable property in Dubai is formulating the terms of your purchase in a contract and negotiating the price and the payment method with the seller. At this point, you have the options to either buy the property on cash or apply for a mortgage. If you can manage to pay for your desired property in cash, you will usually be more successful in bartering for a lower price.
When drafting your contract, make sure you address every point as specific and clear as you can. Refrain from using vague terms and mention the selling price, payment method, and other important factors in the contract. You can complete this step by yourself and without the help of a real estate agency. However, if you ever felt the need for consulting with a professional, don’t hesitate to contact us at dxboffplan.com.
Signing the Memorandum of Understanding
The Memorandum of Understanding (MOU) is a sale agreement between the buyer and the seller and signing it is required to finalize the purchase deal. The MOU is one of the official RERA real estate forms in Dubai and is also called the Form / Contract F. You can get the Form F from the official website of the DLD, Dubai Land Department. At this point, an agent from your real estate agency drafts the Contact F for you and the seller to sign.
The signing of the MOU by the buyer and the seller has to be done at the Registration Trustee Office and before a witness, who is usually the real estate agent. Moreover, during this step, the buyer is obliged to pay a standard 10% security deposit on the property to the Registration Trustee. Once the property transfer is completed, the buyer will get the deposit back.
Obtaining a Certificate of No Objection
In order to be able to finalize the transfer of the property you are purchasing, you need to obtain a No Objection Certificate (NOC) from the developer that has constructed the property. In order for the NOC to be issued, the buyer, seller, and real estate agent should gather at the office of the developer of the property.
There, the buyer should apply for a NOC and pay a certain application fee. If there are no unpaid service charges on the property, the developer then issues a NOC.
Finalizing the Transfer at Dubai Land Department
In order to transfer the ownership of the property from the seller to the buyer and finalize the purchase, the buyer and the seller has to meet at Dubai Land Department (DLD) and present the following documents:
- A cheque for the price of the property issued to the seller
- Identification documents of buyer and seller (Emirates ID, passport, visa)
- No Objection Certificate
- Form F, signed
After submitting the required documents at the DLD, your purchase will be finalized. A new title deed for the property will be issued in your name and the ownership transfer will be completed.
Legal Expenses of Buying Property in Dubai
Aside from the money you pay the seller for the property you want to purchase, there are several other fees you are required to pay in the process of finalizing your deal. These include:
When you are buying a ready-to-use property in one of Dubai’s freehold areas directly from a developer, you have to pay certain fees to Dubai Land Department (DLD) which are as follows:
- DLD fees, an equivalent of 4% of the property price.
- Title Deed fees, AED 250
- Admin fees, AED 4200
In case you are buying an off-plan property, a land, or an office, the DLD fees would vary and you’d have to pay an additional AED 40, AED 430, or AED 580 respectively. In addition, If you are buying a property through a mortgage contract, you are required to pay an additional Mortgage Registration Fee to DLD. A Mortgage Registration Fee equals 0.25% of the mortgage value in addition to an AED 290-admin fee.
Moreover, if you are not buying directly from a developer and are making your purchase through a broker from a real estate agency, you will have to pay an additional Agent Fee.
Service charges are management costs paid by the homeowner to cover property maintenance, cleaning services, security, landscaping and other aspects of the general upkeep of the building. Service charges, therefore, are variable and determined based on several factors such as:
- Property square footage
- Property location
- Type of the project
- Property usage
Depending on these factors, service charges for properties in Dubai usually vary between AED 3 to AED 30.
Dubai Electricity and Water Authority (DEWA) is the government body in charge of distributing water and electricity connections to all of the residential properties in Dubai. If water and electricity connections have not been installed for your house yet, you have to pay a set up fee to DEWA. The set up fee varies depending on the type of your property and its location and often ranges somewhere between AED 2300 for apartments to AED 4000 for villas.
Getting a UAE Residency Visa Through Buying Property
You can obtain a UAE residency visa by investing in real estate in Dubai if your property meets certain criteria. The most important thing that you should keep in mind is that not every type of property makes you eligible for getting a residency visa. In order to be able to apply for a UAE residency visa, the property you purchase has to meet the following criteria:
- You should purchase either a commercial property (such as a hotel apartment) or a residential property (an apartment or a villa).
- The price of the property you purchase should be no less than AED 1 million. Keep in mind though that you can not pay for the property in the form of a loan.
- The property should be complete and ready to use. Off-plan properties, therefore, do not make you eligible for a residency visa.
- If you want to nominate your family members for a residency visa, your property should have enough room for accommodating them.
- If you are mortgaging your property, you should pay at least 50% of the property price.
Depending on the amount of your investment in real estate, you can apply for and obtain several types of UAE residency visa:
- 6-month multi-entry visa
- 3-year residency visa
- 5-year long-term residency visa
- 10-year long-term residency visa
Aside from the 6-month multi-entry visa, all other visa types are issued by Dubai Land Department. Keep in mind though that obtaining a residency visa does not necessarily make you eligible for a work permit. Getting a work permit has its own separate process.
Learning about the steps and terms of buying property in Dubai and the UAE can help you plan your purchase more thoroughly and find yourself more suitable deals. The rules regulating the real estate sector varies in each emirate and Dubai has the most lenient and investor-friendly laws compared to other emirates of the UAE.
In order to obtain full ownership rights to both the property itself and the land it is built on, you should choose from the wide range of properties available for sale in freehold areas; districts specified by the authorities in which foreign property ownership is allowed. Only through buying a freehold property will you become entitled to the property’s land. Furthermore, buying a freehold property in Dubai can make you eligible for obtaining a UAE residency visa if its value is more than AED 1 million.
It is, therefore, advised to consult with a credible real estate agency so that you can find a suitable property and make the most out of your investment. If you want to invest in real estate in the UAE, our agents at dxboffplan.com can help you make the deal of your life.
FAQs About Real Estate Investment in the UAE
- How Long Does the Process of Buying a Property in Dubai Take?
When purchasing a property in Dubai, it usually takes somewhat between 2 to 10 weeks to finalize your purchase and transfer the ownership of the property. However, if you are buying a mortgaged property, the process can take longer and entail additional legal steps.
- Can Foreigners Buy a Property in the UAE on Mortgage?
Yes. Expatriates and foreign investors are allowed to get a mortgage to purchase a property in the UAE under certain terms and conditions such as paying 20% to 25% of the mortgage value in addition to associated costs.
- What Are the Legal Steps of Purchasing a Property on a Mortgage?
The legal process of buying a property on mortgage is somewhat similar to the process described in the article, but with several changes. You would need two additional documents. First, before signing the sale agreement, you are required to get a pre-approval on a mortgage. Secondly, your mortgage also has to be approved by the DLD.
Buying a property on mortgage involves additional expenses too. A Bank Mortgage Arrangement fee (1% of the loaned amount) and a Property Valuation fee (ranging between AED 2500 to 3500 plus 5% value added tax) will be added to your costs.
- Can You Buy a Property that Is Already Mortgaged?
Yes, you can. However, the purchase process will get a bit complicated. When the seller has an existing mortgage on their property, they are required to fully settle the mortgage before asking for a NOC to be issued.
- Can Foreigners Get UAE Residency Through Real Estate Investment?
Yes. If foreign investors purchase a property with a value of at least AED 1 million, they become eligible for obtaining a UAE residency visa.
- Can Family Members of an Investor Get a UAE Residency Visa?
Yes. If the value of the purchased property is above AED 1 million and the property has enough room to accommodate all the family members, the buyer can apply for a UAE residency visa for immediate members of their family.
- Does Buying a Property in the UAE Grant You Work Permit?
No. Neither buying a property nor obtaining a residency visa will grant you a work permit in the UAE. Obtaining a work permit has a completely separate process and is governed by different laws.
- Does Owning a Property in the UAE Oblige You to Pay Taxes?
No. There are no taxes on property and income in the UAE.