New Dubai Property Laws To Boost Foreign Ownership

by Lorys Charalambous, Tax-News.com, Cyprus

04 August 2003

Following the announcement in Dubai last year that foreigners will be allowed to buy freehold property in the Emirate, the National Bank of Dubai's latest economic report assesses the potentially large impact this development will have on the local economy.

"The idea behind the change is that it will give expatriates a greater sense of belonging to Dubai - which in turn will encourage them to invest their savings and establish new businesses there," the report observes.

"As people move out of rented accommodation into their own properties, rents will fall - or at least increase more slowly. Lower rents will reduce the costs of doing business and encourage foreign companies to invest," the report adds, continuing:

"The change will also help integrate Dubai with the world's economy. If a country partially isolates itself from the rest of the world by allowing only nationals to invest in real estate, shares and trading businesses, it gives its people wealth creating opportunities in the short term, but in the long term limits their ability to market the assets they create."

However, the National Bank of Dubai report notes that certain issues have been raised by lawyers, bankers and surveyors in the emirate as to a variety of legal issues concerning title.

"It was suggested that buyers would need to know: (a) whether they would have an absolute freehold title registered with the Dubai Lands Department, and whether this would mean the same as it did in Europe and America; (b) whether they would be able to sell or lease their property without restriction on whom they could sell/lease to; (c) when they died would that be able to leave their property to whomever they wished - and would the applicable inheritance law be that of their own countries or that of the UAE; and (d) what were the costs and obligations of ownership."

On the issue of visa rights and residency, the report explains:

"It was announced at an early stage that anyone in the world would be able to buy property - as a winter holiday home for example - and that buying would give the right of residence. There was mention of the automatic renewal of four year residence visas, and speculation that this would be extended to granting residence for life - but exactly what the government's policy will be on these matters has not so far been made clear. One important point which has been taken for granted from the start is that "residence" will not involve an absolute right of abode. The Dubai government, like any other government, will still be able to revoke the residence of anyone it considers undesirable."

Nevertheless, despite some ambiguitiues surrounding some of the legalities connected to foreign property ownership, a recent report in the Khaleej Times stated that the authorities believe the issues are fairly black and white. This is apparently confirmed by the managment of Emaar, one of the two major property firms in the region, which maintains that buyers of their freeholds have absolute title and have full freedom to let their properties.

Recommended