There are no single rules in the real estate market of the UAE. Each Emirate establishes the regulations for ownership rights for residential/commercial property. Thus, in Dubai, the citizens from GCC countries have equal access to real estate with local citizens, while other foreigners experience certain restrictions in buying and managing real estate and land.
Typically, foreigners can invest their money only in certain areas of the country in which free ownership of land for such investors is allowed. There is a local regulatory act in Dubai, defining these territories. The Law on Real Estate Registration, of 2006, recognizes the right of foreigners to buy land and real estate in specific areas (the list is provided below). Buying a share in these properties provides the freehold status to this property (you can freely dispose your real estate property: buy and sell it, rent, and pledge).
As for corporate ownership, certain restrictions are applied to companies with foreign capital (except for offshore companies registered in the Jebel Ali free zone). Offshore and onshore companies can own land only in specially designated areas in their free zones.
Despite the existing restrictions on access to real estate, both legal entities and individuals can still sell, buy, or rent real estate, land plots, appartments, villas, warehouses and other premises in Dubai. Here is why one should think about investing in real estate in Dubai:
- A calm political and economic environment.
- Good investor protection at the legislative level.
- Foreigners have complete freedom of action and are not taxed in free economic zones.
- Good developed infrastructure.
- Inexpensive energy and other utilities.
- Your rental income is not taxed. Here you can get up to 10% of the annual income from renting commercial or residential real estate.
- Demand for real estate in Dubai will only grow, you can buy an office, a shopping complex, a hotel or an apartment, a warehouse or any other object, you can then sell it profitably, so this is a profitable investment.
- When buying any premises, you get the right to get a resident visa. The UAE becomes your new home.
Now, we take a look at the latest changes in local rules regarding land ownership by offshore companies.
Memorandums of understanding (MoU) between the Dubai Land Department (DLD) and Ras Al Khaimah International Corporate Centre (RAK ICC)
Offshore companies that are registered in the Ras Al Khaimah International Corporate Center (RAK ICC) free zone offer a number of advantages to their owners, including the complete absence of taxes, a simplified and quick registration procedure, easy reporting and low business expenses, and now the list of these advantages has been added with another benefit. What used to be a limitation, and hindered the development of offshore RAK ICC companies, has now become their advantage. This is the right to purchase land and real estate in Dubai.
The Dubai Land Department (DLD) signed the Memorandums of understanding (MoU) with its partners from Ras Al Khaimah: the authorities of the Ras Al Khaimah Economic Zone (RAKEZ) and the Ras Al Khaimah International Corporate Center (RAK ICC) on July 2019. According to this document, offshore companies registered in these free economic zones are allowed to hold freehold rights to the land plots and real estate within the city of Dubai. This memorandum is part of a consistent policy of liberalization of the local land market for foreign investors.
Offshore company real estate ownership will be interesting to investors who are aimed at making a profit from renting their premises. Now, offshore companies from Ras Al Khaimah (RAK ICC) can also take advantage of this right (before this, only offshore companies registered in the JAFZA FTZ had the right to own real estate and land plots in the Emirate). Given the lower operating costs of maintaining a business in Ras al Khaimah, these companies are becoming an interesting alternative to registering a legal entity in the JAFZA FTZ.
As expected, new rules will significantly revitalize the local real property market, since many RAK ICC companies have their business interests in the Emirate of Dubai, and thes changes will open new opportunities for them, because now to own property in Dubai you do not need to have a commercial/trade license in the local free zone.
Now the estate property market in Dubai is becoming an essential place for investment, and such innovations undoubtedly give new impulses to the development both in the Emirate itself and in the whole country.
Conditions of immovable property acquisition for RAC ICC offshore companies
To register immovables in Dubai, a RAK ICC company will need to request a “No Objection Certificate” from RAK ICC authorities which is done over the company’s registered agent, and then submit it to the DLD to register an acquired property. Also, they have to pay a regular property registration fee by the procedure adopted. The DLD will register ownership and other property rights, both for legal entities and for a combination of individuals and legal entities.
If you are an existing single property holder or a married couple owning a property or several owners not related to each other, you can avail of the 0.125% transfer fee from the property value as per title deed/purchase contract. At least one of the owners in each scenario must be the owner of RAK ICC company to make the transfer.
If the purchase price is not written on a title deed and you don’t have a purchase contract, a re-evaluation must be undertaken by the relevant authority. The transfer fee of 0.125% can be paid via debit or credit card or, in case the payer has a residency visa, then cheque payment is also possible. Cash payment is not accepted.
In case the RAK ICC owner is not amongst the owners of the property, then that would mean a transfer of property to a third party (RAK ICC company), which is subject to 4% transfer fee from the total value of the property.
The list of areas in Dubai where real estate property is available for RAK ICC companies
Here is the list of areas, where companies, registered in RAK ICC, can get real estate property:
Accepted freehold apartments areas for the transfer:
- Jumeirah Beach Residence (JBR);
- Dubai Marina;
- Downtown Dubai;
- Palm Jumeirah;
- Jumeirah Village Circle (JVC);
- Dubai Sports City;
- Jumeirah Lake Towers (JLT);
- Business Bay;
- International City;
- City Walk;
- Dubai Silicon Oasis.
Accepted freehold villas areas for the transfer:
- The Springs;
- Palm Jumeirah;
- Arabian Ranches 1 and 2;
- The Villa;
- Al Barari;
- The Meadows;
- Emirates Hills;
- Damac Hills (Akoya);
The new document reflects the objective of the leadership of the two Emirates to strengthen economic cooperation, remove barriers to doing business, and make both regions even more attractive to foreign investors.