Real Estate Transactions in Dubai: Some Aspects of This Subject

If you are interested in the real estate transactions in the Emirate of Dubai, first of all, you should know that there are several categories of premises, respectively Freehold and Leasehold. Let’s take a look at each category in detail, for a full and objective understanding of the structure of the real estate transactions in this Emirate.

Freehold Category

This category of real estate in Dubai enables the transactions on buying and full ownership of the real estate or land plots. Such regulations were taken from the principles of the English law, where the right of property of the land or building is owned by the proprietor and may be alienated, presented, transferred by inheritance, etc. Creation of such zones on the territory of the Dubai megalopolis has become the main impetus for the rapid development of the investment construction and attraction of the direct investments into the related economic sectors.

The Freehold Category provides the purchaser of real estate with the full set of the rights and obligations which are connected with it. The property right is valid until its owner will not transfer it by the established procedure to another person or upon the owner's death, it will be passed to the heirs.

Restrictions on transactions for owners and investors

At the same time, the current legislation establishes some requirements for the possible use of the land lots and the construction of the different objects. Potential investors and entrepreneurs are obliged to follow the current legislation in the area of regulation of the type of use of the property. For example, for the construction and the commissioning of the construction of the building project, the approval from the appropriate regulatory bodies will be required. The proposed object must meet the requirements of the plan and meet the target type.

Besides, the are other restrictions which can serve the arrangements with the owner which oblige to the certain actions, or on the contrary which restrict the certain activity. For example, the city authorities may oblige the owner to provide adequate maintenance for the property or to bear the expenses on the repair of the common area. As to the limitations, it can be a ban on the construction of the commercial real estate, or even a cessation of the construction works. As a rule, such restrictions are established to fulfill the previously approved standards.

Transactions with Leasehold Category

This category provides transferring of the property right to the real property owner only after the occurrence of the certain events. It can be a certain period, allotted for the calculations with the previous owner, including the payment of rent, etc. Leasehold Category has its own specific distinctions. First of all, there are restrictions on the period of the ownership of the real estate or land plot. For example, the property right is transferred to the owner for 90 years term.

As a rule, estate property in the UAE is passed into the ownership under the Leasehold conditions in the residential sectors, where there is a need of the collaborative care and maintenance of the property. This may be the payment for the utility services, expenses for the repairs and maintenance, decoration of the facades, lifts, etc. For example, the real-estate developer, a large construction company, acquires a land plot into the ownership. Then after constructing the residential apartments, it passes to an owner under the conditions of the Leasehold category for the long term rent.

The main drawback of this category is the limitation of the period of the immovable property ownership. But, under the condition of payment of the required fees, the term of tenure may be extended for a similar period.

Real estate transactions in Dubai – legal framework

All the real estate transactions in Dubai are governed by the rules of the Government real estate transactions Law: «Real Estate Law.» This legislative act was enacted in May 2002 and had made it possible to acquire the property by the foreign citizens. According to international experts, this law had become the main event that caused a construction boom in Dubai. Subsequently, some laws which regulate the real estate transactions and responsibilities of the parties of the transaction were adopted.

If to make a consolidated analysis of these laws, we can derive several obligatory regulations, in particular:

  • All the estate property on the territory of the Dubai Emirate is available for the citizens of the country, including renting, leasing and owning;
  • For persons without UAE citizenship, the real estate is available only in the specialized areas.

For the transaction with the real property, you will need a valid foreign passport. The contract of transferring of the property rights is concluded after the payment of the defined initial installment. If you purchase a new property directly from the developer's company, you will not have to pay a broker fee. In the secondary market, the size of the fees for the realtors can be in the range of 2%-3% of the transaction value.

The UAE: advantages when buying real estate

The modern Dubai megalopolis is the region's largest tourist and financial center, which combines local traditions and the most advanced technologies. It is not a secret that the wealthy people of our planet seek to acquire into ownership the estate property in the UAE – what is the reason for its attractiveness? Is it an investment incentive or another impulse of a rich man?

Fortunately, Dubai is ready to satisfy all, even the most daring, ambitions and wishes. These are the traditional Arabian ranches with thoroughbred horses, luxury villas, located next to the world's best golf courses, unique residential complexes on the artificial island formations “World” and “Palm.” It should be noted that there are properties which allow paying for a real estate transaction by installment or by taking a mortgage/loan.

The quality and the standard of living in Dubai deserve special attention among the main advantages and benefits of purchasing property in the UAE. The perfect urban infrastructure and the modern communications, the world's best educational institutions and universities, modern banking sector and the health care system – these are the best indicators which ensure the popularity and the investment attractiveness for the United Arab Emirates.

Summarizing this chapter, several key factors which influence the choice of the Dubai megalopolis for the real property transactions can be singled out. In particular, these are:

  • Free currency regime and the preferential conditions for the potential investors;
  • Exemption from the tax payments, including the income taxes;
  • A high standard of living, economic and political stability;
  • Favorable geographical location;
  • The possibility of obtaining a residence permit for the family of the property owner;
  • Legal protection of property rights and long-term investment prospects.

The Dubai Emirate is also the most optimal platform for improving business to the international level and for the expansion of the markets. In addition to the fact that one can fly from Dubai to the majority of the countries of the world in 4-5 hours.


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