Dubai’s property market has long attracted buyers from around the world looking to purchase real estate in this modern Middle Eastern metropolis. While historically the emirate’s property laws prohibited foreigners from buying freehold property in Dubai, regulatory changes over the past couple decades have opened up the market significantly.
Today, there are several options for foreigners looking to purchase property in Dubai – both short and long-term. While freehold purchases that grant full ownership rights are generally limited to certain designated areas, new visa rules also enable foreign buyers to acquire renewable 5 and 10 year residency visas by buying property in Dubai.
Below we’ll explore the ins and outs of buying property as a foreigner in Dubai, including:
- Options for freehold ownership
- Leasehold purchases
- Visa rules for property buyers
- Steps for purchasing
- Ownership restrictions
- Financing
- Taxes and fees
- Inheritance and wills
We’ll also provide answers to some of the most frequently asked questions about buying real estate in Dubai as a foreigner.
Freehold Ownership Options in Dubai
Prior to 2002, Dubai property laws prevented foreigners from buying freehold title to real estate in the emirate. Only citizens of Gulf Cooperation Council (GCC) states could purchase freehold property in Dubai.
That changed with Law No. 7 of 2006 Concerning Real Property Registration in the Emirate of Dubai, which opened up certain designated areas to freehold ownership by foreigners. Under the law, foreign individuals, companies and developers can purchase freehold property in these designated zones and register it under their own name.
The designated freehold areas in Dubai include:
- Emirates Hills – a luxurious villa community popular with expat families
- Palm Jumeirah – the iconic man-made island development home to villas and apartments
- Dubai Marina – a bustling neighborhood known for its high-rise towers and waterfront dining
- Jumeirah Beach Residence – a strip of beachfront condo towers popular with vacationers
- Downtown Dubai – the vibrant central district and home to the Burj Khalifa
- Business Bay – a commercial and residential zone near central Dubai
- Arabian Ranches – a desert community of villas and townhouses
- Damac Hills – a golf community with luxury homes and villas
- Dubai South – a newer development near the Al Maktoum International Airport
New freehold areas are occasionally added through changes in the law. However, the majority of property in Dubai remains governed by leasehold rules.
Leasehold Property Ownership
While freehold ownership is limited to designated zones, foreigners are permitted to buy leasehold property throughout Dubai. This grants the buyer usufruct rights to use and benefit from the property for a specified lease term.
Lease terms for foreigners buying property in Dubai are typically 50 to 99 years. At the end of the lease period, ownership reverts back to the freehold owner – usually a developer or the government.
Leasehold purchases are common options in areas like:
- Deira – Dubai’s oldest neighborhood known for its souks and markets
- Bur Dubai – a historic district bordering the Dubai Creek
- Jumeirah – a coastal residential area home to luxury hotels
- Satwa – a bustling residential and commercial neighborhood
The leasehold structure means buyers don’t fully own the land. However, 50 or 99 year leases are often de facto lifetime ownership. Banks will provide mortgage financing for long leaseholds the same as freehold title.
UAE Residency Visas Through Property Purchase
In recent years, the UAE government enacted new visa rules to encourage foreign property investment in Dubai. Buyers can now obtain renewable 5 and 10 year residency visas through real estate acquisition.
The 5 Year Retiree Visa is available to individuals over 55 who purchase a property worth at least AED 2 million. Applicants cannot work but are allowed multiple entries in and out of the UAE.
The 5 Year Investor Visa has a lower minimum property price of AED 1 million. It allows holders to live and work in Dubai with renewable 5 year terms.
The 10 Year Golden Visa was created in 2019 and offers the longest residency privileges. To qualify, buyers must purchase a property worth at least AED 10 million. Golden visa holders can sponsor family members and enjoy extensive privileges.
These long term visas provide strong incentives for foreigners seeking longer term stays in Dubai. The flexible renewals act as de facto permanent residency.
Steps for Buying Property in Dubai as a Foreigner
While processes can vary between off-plan and resale purchases, there are some typical steps for foreigners buying property in Dubai:
- Identify the property – With the help of a real estate agent, identify suitable properties based on budget, lifestyle needs, location priorities, and more. Visit communities and tour homes in person whenever possible.
- Due diligence – Conduct thorough due diligence before making an offer. Review comparable sales, average rents, developer reputation, payment plans, community amenities, and other factors. Hire a lawyer to review the SPA.
- Make an offer – Work with your agent to negotiate an offer price and terms agreeable to both parties. Expect to put down a deposit of up to 10%.
- Sign a sales and purchase agreement (SPA) – This contract will outline the full terms of the deal including sale price, payment schedule, handover date, penalty fees, and more.
- Apply for residency visa (if desired) – If seeking a 5 or 10 year visa through property purchase, begin the application process after signing the SPA.
- Secure financing – Work with banks or financial advisors to secure a mortgage or payment plan tailored to your needs.
- Ongoing payments – Stick closely to the payment schedule outlined in the SPA as the property nears completion.
- Registration & handover – The developer will register the property and handle ownership transfer. Inspect the property and complete any snagging repairs.
- Settle fees & taxes – Pay all outstanding taxes, fees, duties and service charges. The property will then be ready for full use and occupancy.
Throughout the entire process, it’s wise for foreigners to work with a reputable real estate agent and property lawyer in Dubai. Their expertise can prove invaluable.
Property Ownership Restrictions in Dubai
While Dubai’s property market is open in many regards, some restrictions remain in place:
- Location – Freehold ownership is limited to designated zones; leasehold more widely available.
- Land size – Foreigners cannot buy empty plots of land, only completed or near-completed properties.
- Floor limits – In some areas, foreign buyers may only purchase properties above certain floors.
- Title deeds – Some areas prohibit registration of title deeds under foreign names.
- Citizenship – GCC nationals enjoy added freehold rights. Emiratis get exclusive access to some areas.
- Multiple units – Developers may block foreigners from buying multiple properties within the same development.
- Business licenses – Investors must show valid UAE business licenses to purchase commercial freehold property.
- Inheritance – Foreign heirs may encounter difficulties inheriting Dubai property without a valid residency visa.
While significant, these limits primarily impact real estate investors. Foreigners purchasing a single family residence or apartment for personal use have extensive options in today’s market.
Financing Property Purchases in Dubai
One major advantage for expat buyers in Dubai is the availability of mortgage financing. Many major UAE, international and Islamic banks offer real estate loans for up to 80% of a property’s value to foreign buyers.
Popular options include traditional mortgages, self-certified mortgages, buy-to-let mortgages, fixed rate mortgages and variable rate mortgages. Banks consider factors like the borrower’s income, loan amount, property value and monthly payments when approving financing.
It’s also common to purchase property in Dubai through payment plans direct from developers. Off-plan properties can be bought with installments spread over construction. Consult a financial advisor to understand all financing options.
Taxes & Fees When Buying Dubai Property
Several taxes and fees apply to purchasing real estate in Dubai:
- Transfer fee – Levied on the property sale value; higher for land, lower for buildings. Paid by buyer.
- Registration fee – Based on the property sale value. Paid by buyer.
- Mortgage registration – Small fee to register any bank mortgage on the property.
- Service charges – Ongoing fees for community upkeep paid by owner to developer.
- Utilities – Residents pay monthly bills for DEWA water & electricity usage.
- Annual rent – For leasehold properties, a nominal annual ground rent is due to the freehold owner.
- Value added tax (VAT) – A 5% VAT applies to commercial property sales and residential rents.
Dubai has no capital gains tax on property sales. And personal income tax does not exist. Overall property taxes are very low compared to many countries.
Inheritance & Wills for Dubai Property Owners
Making a will is crucial for foreigners who purchase property in Dubai. This ensures your assets are distributed as desired in the event of your death.
Without a will registered in the Dubai courts, inheritance matters fall under Sharia law. This could prevent foreign heirs from succeeding ownership without first taking up UAE residency.
Key things to know about inheritance of Dubai property include:
- Only a valid Dubai will is enforceable for assets in Dubai
- Wills from other countries have no bearing locally
- Without a Dubai will, Sharia inheritance laws apply
- Foreign heirs without UAE residency may forfeit inheritance rights
- Instead, the property may be passed to local family members
- Having a Dubai will can prevent this unintended outcome
To ensure Dubai property passes to your chosen successors, consult a legal advisor when making your will
Key Takeaways
- Foreigners have several options for buying real estate in Dubai – both freehold and leasehold
- Designated zones exist where foreigners can purchase freehold property registered fully under their name
- Outside these areas, long 50-99 year leaseholds grant usage rights similar to ownership
- Property buyers may now qualify for renewable 5 and 10 year residency visas in the UAE
- Financing, ownership transfer, taxes and inheritance all have unique processes for foreigners
- Seeking legal guidance is key, as Dubai property laws continue to evolve
- With proper guidance, buying property in Dubai remains an attractive opportunity for many foreign buyers
Conclusion
Over the past two decades, Dubai has opened its real estate market significantly to foreign buyers. While some constraints remain, expats can purchase freehold or long leasehold properties to live or invest across this business-friendly emirate.
Freehold areas grant full ownership similar to other global markets. And 50-99 year leaseholds allow de facto lifetime usage rights. Combine this with the ability to obtain residency visas through property purchase, and Dubai stands out as an accommodating environment for foreign real estate investors.
Yet restrictions do remain on where foreigners can buy land and register deeds. It is essential to conduct thorough due diligence and seek expert legal advice before entering any purchases. Carefully tailoring your ambitions to the market realities will set you up for success buying property in Dubai.
With the right guidance and understanding of its evolving rules, the Dubai property market offers exciting opportunities for foreign buyers seeking a foothold in this vibrant crossroads between East and West.
Frequently Asked Questions
- Can I get a mortgage to buy an apartment in Dubai as a foreigner?
Yes, many banks in Dubai offer mortgage financing up to 80% of the property value for foreigners looking to buy apartments or villas. - What are service charges when buying property in Dubai?
Service charges are annual fees paid by homeowners and tenants to cover maintenance and upkeep of the building and community amenities. - Is it better to buy property in Dubai freehold or leasehold?
Freehold offers full ownership while leasehold grants long-term usage rights. Freehold provides greatest benefits if seeking permanent UAE residency. - Can Dubai property be inherited by non-Muslim family members?
Without a Dubai will, inheritance follows Shariah law which could prevent non-Muslim heirs from succeeding ownership. - Can I buy an off-plan property in Dubai with a UK mortgage?
Off-plan purchases in Dubai typically require cash payments up front directly to the developer. UK mortgages generally only fund completed properties. - Do I need a residency visa to buy property as a foreigner in Dubai?
No, you do not need an existing Dubai residency visa. Property purchase grants eligibility for renewable 5 or 10 year visas. - Can foreigners buy land or just real estate in Dubai?
Foreigners cannot buy vacant land, only completed buildings. Some freehold areas permit land purchases for GCC nationals only. - What are the purchase costs for property buyers in Dubai?
Buyers pay a transfer fee, registration fee, and mortgage registration fee. No recurring property taxes but service charges apply. - How much deposit is required when purchasing property in Dubai?
Off-plan purchases require 10-20% deposits. Completed resale properties typically need 10% down payments. - What is the difference between freehold and leasehold property in Dubai?
Freehold provides full ownership while leasehold grants usage rights for a fixed period before reverting to owner. - Can Muslims from any country freely buy property in Dubai?
Yes, Dubai places no restrictions on foreigners buying property based specifically on religious background. - Who pays for property broker commissions in Dubai?
Commissions are often split between buyer and seller. Typical fees range from 1% to 5% of the sale price. - How can I check a developer’s reputation before buying in Dubai?
Research their portfolio, project completion record, years in business
