Understanding The Real Estate Laws in Dubai

Overview:

The real estate sector in Dubai has contributed a lot to boost its economy. Due to the introduction of new measures and rules, the real estate market is considered stable and investors are happy to play their part. Additionally, to gain confidence and attract the attention of potential buyers, the government is setting up some new visa rules. As of now, it is possible to obtain a visa by purchasing a property. For starters, there are many options available that one can choose from. Depending on the circumstances, you can choose a 6-month visa, a 3-year long visa, a 5-year visa, or a 10-year visa. It all comes down to your favorite choice.

It has succeeded in establishing a strong legislative system to regulate the real estate sector over the past years, to ensure the sustainability of the real estate boom based on real demand from the end-user, and this system constituted a turning point for the sector, enhancing its ability to attract foreign investments to the real estate sector in the emirate.

Real estate ownership in Dubai for UAE/GCC nationals

The Dubai Land Department has the authority to register rights over the property such as the freehold title, usufruct, musataha, and long-term leases over real estate in Dubai. However, the Dubai International Financial Center is an exception having its own property laws and a separate property register for the real estate located within the DIFC.

According to Article 4 of Law Number 7 of 2006 concerning Real Property Registration in the Emirate of Dubai (“Property Ownership Law”) Companies that are wholly owned by UAE or GCC nationals have the right to own freehold title to real estate and to acquire all types of real estate interests such as usufruct, musataha, and long-term leases up to 99 years located in any area in the Emirate of Dubai excluding the free zone.

Real estate ownership in Dubai for Foreign nationals

As listed in the amended regulation number 3 of 2006 the non-UAE/GCC nationals can only own the freehold, leasehold (up to 99 years), or usufruct in the designated areas in Dubai. This also applies to foreign companies, subject to the Dubai Land Department’s policy on the title to real estate that came into force on 1 January 2011. Some examples of the designated areas in Dubai are:

The Palm Jumeirah, The World Islands, Downtown Dubai, Old Town, Burj Khalifa, Business Bay, Dubai Marina, Emirates Hills, Jumeirah Lakes Towers, Jumeirah Beach Residence (JBR), Discovery Gardens, Arabian Ranches, Midriff (specified plots), Dubai Investment Park, Falcon City, Dubai Sports City, Dubai Motor City, International City, Jumeirah Islands & Jumeirah Village

In addition, a foreign person can acquire a lease in the area outside these designated areas (Law Number 7 of 2006). Foreign ownership is also allowed in the free zones, for example, the DIFC.

Under the current Dubai Land Department policy, title to real estate in the designated areas is not issued to companies other than those registered onshore in Dubai or offshore in the Jebel Ali Free Zone and certain other free zones. The Dubai Land Department (DLD) must be informed of any change in shareholding of the companies up to the ultimate beneficial owner in Dubai Companies that own property in Dubai. If a company fails to notify the DLD of the change in shareholding and pay the transfer fees until all the outstanding fees are paid, the DLD will not permit the company to sell the property in the future, and a fine of double the outstanding transfer fee on the company can be imposed by the DLD with retrospective effect. Real estate cannot be mortgaged to any person or entity other than a bank licensed and operating in the UAE.

Registration of property interests

His Highness Sheikh Mohammed bin Rashid Al Maktoum issued Law number 7 in 2006 regarding the procedures for the real estate registration in all the emirates of the United Arab Emirates, Gulf Cooperation Council, and the companies owned by them and joint-stock companies. The law also authorized the rulers of the United Arab Emirates to approve the investment areas of the citizens of the Gulf Cooperation Council to obtain freehold without restrictions in addition to the rights of leasehold ownership for a period of up to 99 years.

However, the recently enacted laws in Dubai and the DIFC allow foreigners to participate in investments through real estate investment trusts established by the DIFC. These laws must be included in the context of the laws governing the right of foreign investors to own real estate in the various emirates of the United Arab Emirates, especially in Dubai and the “free zones”, including the Dubai International Financial Center.

The decree also allowed foreigners to buy and own real estate absolutely within certain areas of Dubai.

A registration system was also established in the Lands and Property Administration, with the aim of guaranteeing property rights. If you need any help with your property rights you can reach out to the exclusive real estate department of Fotislaw.

Title deeds of real estate owned in the Emirate of Dubai are issued by the Land Department, and there is no requirement for any age for ownership in the Emirate.

In Dubai, only UAE nationals and the Gulf Cooperation Council nationals can fully own real estate. However, Article 4 of Dubai Property Law limits the right of foreign individuals and foreign companies to freely own, usufruct, or lease real property for a maximum period of 99 years in some areas specified by the Ruler of Dubai. The Land Investment Department has indicated that it is not permissible to register a lease or usufruct right unless it has a period of at least 10 years. With the exception of some public shareholding companies, such as Emaar, which is listed in the Dubai Financial Center, the company owned by foreign shareholders has not considered Emirati or Gulf companies for the purposes of owning real estate.

Requirement for registration

The local laws set out the requirements and procedures necessary for registration which differ between the emirates. The creation of a property right in the name of the purported owner will not be perfected without registration. In Dubai, the Dubai Land Department is responsible for registering property rights and long leases on its real estate register. As proof of ownership, the owner of a property then receives a title certificate. Contracts for properties purchased off-plan should be registered with the Dubai Land Department on its register of off-plan properties. The Real Estate Regulatory Authority (RERA) must register the short-term leases on its register of tenancy contracts (Ejari)

Registration Benefits

The registration of the owner’s real estate interests is the exclusive proof of his ownership of them. All conditions, covenants, mortgages, or other obligations relating to real property rights must be mentioned in the package specified in the real estate unit. It is also permissible for other parties, such as banks, to claim ownership interests for any kind of reason. These types of third-party rights are registered in the title deed and become binding on the title itself. Therefore, each person to whom ownership is transferred becomes subject to the interest applied by the third party, if registered. In the absence of registration, the interest of the third party shall be applied against the original owner only by requesting the termination of the contract.

New Laws concerning the real estate in Dubai

New legislation has been issued by the government of Dubai on certain real estate related matters for which we have provided an overview below:

Law Number 19 of 2020 concerning Dubai Interim Registration Law

Law Number 19 of 2020 amends Article 11 of Law Number 13 of 2008 concerning Interim Registration in Dubai. The amendment deals mainly with the circumstances in which a challenge to a previous decision by Dubai Land Department, canceling a sale and purchase agreement registered on the interim register, can be brought.

Law Number 20 of 2020 concerning Dubai Real Estate Institution

Law Number 20 confirms the dissolution of DREI and the transfer of employees, responsibilities, and services of DREI to the Dubai Land Department.

Law Number 32 of 2020 regarding Land Designated for Educational Use

Law Number 32 confirms that the ownership of certain land plots designated for educational use (as defined in the Law), shall be transferred to the Knowledge Fund.

Real Estate Developers are entitled to retain ownership of such plots provided that 75% of the plot’s market value is paid to the Knowledge Fund. Law Number 32 also sets out the framework for such payment, including the ability to pay in installments over a maximum period of 34 years.

Law Number 33 of 2020 regarding the Judicial Committee for Liquidation of Cancelled Real Estate Projects in Dubai

Law Number 33 replaces Law. Number 21 of 2013, and extends the jurisdiction of the Judicial Committee to incomplete real estate projects (as well as canceled projects). The Law also widens the authorities of the Judicial Committee and sets out procedures for the Real Estate Regulatory Authority’s transfer of matters to the Judicial Committee for consideration and resolution.

Conclusion:

The real estate sector in Dubai is based on strong foundations and pillars that stem from the elements that are unique to the UAE and Dubai, as we all see that the state leads a state of economic momentum in all sectors, foremost of which is the real estate sector, which it supports mainly thanks to several factors, most notably the approaching launch of the “Expo 2020” activities. Dubai”, and the initiatives of the UAE government regarding amendments to granting state citizenship, facilitating foreign ownership of fully local projects, and work visas, and the Dubai Urban Plan 2040. The UAE presented the best model in dealing with the “Covid-19” pandemic, and the real estate sector responded quickly to the changes imposed by the pandemic and expanded the scope of reliance on modern technologies and innovative solutions to stimulate sales, while the rapid deployment of vaccines will have an impact. The significant return of economic activities, and rapid recovery at a better pace than the economies of the Middle East region. The real estate sector in Dubai also enjoys the momentum of population growth, the improvement of the business environment, the continuous development of infrastructure, and service facilities that enjoy the highest quality standards, as well as the high real estate returns, compared to international levels, and the low value of tax fees imposed Based on the foregoing, the approval and development of some legislative amendments represent an “urgent necessity”, in order to strengthen the current legislative structure of the real estate sector, with the aim of preserving the gains achieved by the sector, increasing its competitiveness and its capabilities to attract local and foreign investments, which would achieve a positive response towards increasing confidence in the sector. Investors in the future of the real estate market in Dubai, and motivates them to seize the available opportunities