Country Overview | Key Property Facts

Types of Tenure

On 14th March 2006 came the long-awaited law legalizing foreign ownership in designated areas of Dubai. The law allows foreign owners to register a freehold title with the Dubai Lands department, and to sell or lease the properties without restriction.

Forms of Ownership

Ownership of property in Dubai is an absolute and exclusive right as set out in the Dubai constitution. In addition to sole ownership, it’s also possible for property to be owned jointly by several legal persons at the same time through a form of co-ownership or condominium.

Restrictions

Foreign nationals are now allowed to buy freehold properties in designated areas in Dubai. Gulf Cooperation Council (GCC) nationals are allowed freehold ownership anywhere in the Emirates.

Generally, residence visas are issued to property owners, which extend to their immediate families. These visas are renewable every three years during ownership.

Property Rights

The Dubai real estate market is in its infancy and regulations are constantly changing to accommodate its fast development.

With regard to specific property rights, the Heritage Foundation’s Index of Economic Freedom states: “The ruling families exercise considerable influence on the judiciary. Incompetence and corruption are rarely challenged.”

Impact of RERA

The RERA (Real Estate Regulatory Agency) has been given wide powers to regulate property transactions in Dubai by virtue of Law No. 14 of 2007. RERA’s powers include:

Licensing all real estate activities in Dubai.
Introducing new real estate licensing categories such as real estate development licenses, mortgage broker licenses, building inspection licenses and community and facilities management licenses.
Licensing real estate brokers
Regulating real estate advertising.
Regulating tenancy contracts.
Overseeing the activities of the rent committee (which determines landlord and tenant disputes).
Regulating owners’ associations following the introduction of the new strata law.

Given that RERA has only recently been established, it is difficult to predict at this stage what impact it will have on property transactions in Dubai.

Mortgage finance

Mortgages are now available from most banks and a number of financial institutions in the UAE.

Issues and risks

In Dubai and the UAE, property law is still taking shape, although the key elements are straightforward to understand. Prospective investors should be aware of following issues relating to the purchase of property in Dubai:

The legal position regarding freehold ownership by non-UAE nationals and non-GCC nationals is ambiguous and requires clarification.
The immigration law and the practice and procedure for issuing residence visas to expatriate buyers (and their families) are ambiguous and require clarification.
Mortgage finance is now being offered to expatriates by some local banks and specialist organisations on specific terms.
Transfer of property rights, including real estate, can be performed just by means of a simple private written contract in Dubai. The notarization usual in other countries does not take place, so be wary of signing anything without in a rush and without due consideration.
Definitive laws on real estate are still being developed in Dubai, and until this time, purchases are recorded in the register of ownership of the developer concerned, who undertakes in the purchase agreement to ensure a transfer in the land register as soon as it is available. Do not therefore sign an agreement that does not include a clause with this undertaking.
Deposits of 10% or often even 20% of the purchase price are commonplace. Further instalments are paid over the agreed period of time up to the completion of construction.
Purchase of real estate is at present tied to the simultaneous acquisition of a residence permit for the UAE, which is, however, not a work permit.
Transfer to a third party is usually permitted in the purchase agreements. For this purpose the original buyer normally has to pay to the vendor a transfer fee of up to 2% of the original price. In practice attempts are made to pass on the transfer fee to the new purchaser.

Key Property Markets

The Dubai property market, certainly as far as overseas buyers is concerned, is concentrated in and around the massive new development areas aimed specifically at the foreign market. Within these zones are a number of individual developers constructing their own projects. The following are among the most notable:

The Palms
The developers of The Palms projects took an innovative approach to solving the problem of Dubai’s lack of beachfront – they’re creating three vast palm tree-shaped developments along the emirate’s coastline and provide waterside living space. Thousands of apartments and villas, along with retail, leisure, hotel and entertainment facilities are in the process of being constructed at Jumeirah, Jebel Ali and Deira.

The World
Perhaps more outrageous than The Palms is The World, another development of some 300 man-made islands, this time in the shape of a map of the world 9km wide and 7km long. A huge range of properties will be available when this development is complete, in a wide variety of architectural styles that will typify the Dubai vision.

Dubai Sports City
Just one of a number of specialist developments underway in the emirate, Dubai Sports City features a number of state-of-the-art facilities for football, cricket, golf, hockey and countless other sports pastimes, along with extensive residential, commercial and retail properties. Set within the huge Dubailand entertainment complex, the Sports City resort is set to be a magnet for enthusiasts and professionals alike.

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