One of the most transparent and well-regulated real estate markets in the region is the United Arab Emirates. The UAE real estate market offers a multitude of options for real estate investments, whether they are in the form of healthy capital gains, lifestyle investments, or profitable rental yields. Changes to the UAE’s real estate regulations in recent years have made it easier for foreign investors to enter the market. However, it’s crucial to understand the UAE’s property ownership regulations before beginning the process of purchasing a villa, apartment, or any other kind of real estate.
Guidelines for foreigners purchasing real estate in the United Arab Emirates
The regulations governing property ownership in the United Arab Emirates are different for foreign investors and expats. What limitations apply to foreigners who want to buy real estate in the United Arab Emirates? What is freehold real estate in Dubai, and what requirements exist for foreigners looking to purchase real estate?
In the UAE, foreigners were prohibited from owning real estate for a very long time. Dubai was the first emirate to spearhead this change. Abu Dhabi, the capital, quickly followed suit, as did the other emirates of Ajman, Sharjah, and Ras Al Khaimah. In Dubai and other emirates, foreigners are now permitted to own real estate. Not to mention, foreigners purchasing real estate in Dubai enjoy a number of advantages.
Keep in mind that there are two types of property ownership for expats: freehold and leasehold. You can gain a better understanding of your options by reviewing the differences between freehold and leasehold property ownership as well as the regulations governing foreigners’ property ownership in various emirates.
EXPATS: FREEHOLD VS. LEASEHOLD PROPERTY OWNERSHIP
Ownership of leasehold property
Depending on how long the leasehold contract specifies, purchasing a leasehold property entails owning it for 99 years or less. Buyers who make this kind of purchase are only granted the rights to the property; they are not granted the land on which the property is situated.
Ownership of freehold property
In the UAE, foreigners are permitted to purchase freehold real estate. This kind of real estate gives purchasers the opportunity to own both the unit and the property it is situated on. It’s crucial to remember that foreigners are only permitted to purchase freehold real estate in specific locations. You can read our guide explaining Dubai’s freehold property ownership regulations.
The laws governing foreigners’ ownership of real estate vary by emirate. This is a summary of the laws that apply to purchasing real estate in the various emirates of the United Arab Emirates.
Purchasing Real Estate in Abu Dhabi
The laws governing Abu Dhabi’s real estate market currently only permit foreigners to own apartments and villas. In the nation’s capital, purchasing real estate is governed by four primary systems. These consist of:
1. Musataha: Under Musataha contracts, foreign buyers have the right to use, modify, or build housing units they have purchased for a predetermined amount of time. For a maximum of 50 years, they are permitted to own residential properties. The parties involved agree on the renewal period for the same duration.
2. Ownership Deeds: Under a usufruct agreement, foreigners are granted ownership deeds to residential units for a period of 99 years. Foreign property owners can completely sell the villas and apartments they purchase, with the exception of land ownership.
3. Long-term lease: A long-term lease is one that lasts for at least 25 years during the initial period.
4. Usufruct: A usufruct contract allows foreigners to own residential property for more than 99 years and allows the owners to utilize the property and its amenities without making any changes.
Amendment to the Abu Dhabi Real Estate Law
The Abu Dhabi Real Estate Law was amended in 2019 to allow foreigners to own real estate in investment areas. According to one of the modifications, people who have been under “musataha” or “usufruct” contracts for more than ten years are entitled to sell their properties, including the ability to mortgage them, without their landlords’ approval. Additionally, without the usufruct or musataha holders’ approval, landlords are not permitted to mortgage the property.
Abu Dhabi freehold real estate
The capital city of the United Arab Emirates now permits foreigners to purchase freehold real estate thanks to recent changes to the property laws. Yas Island, Al Maryah Island, Saadiyat Island, Al Reem Island, Lulu, Sayh Al Sedairah, Al Raha Beach, Al Reef, and Masdar City are currently investment zones in Abu Dhabi that offer freehold properties.
Guidelines for foreigners purchasing real estate in Dubai
In Dubai’s freehold areas, foreigners are allowed to own real estate. This implies that foreign buyers and expatriates (who do not reside in the United Arab Emirates) can obtain freehold ownership rights without usufruct rights, leasehold rights, or 99-year restrictions.
Guidelines for foreigners purchasing real estate in Sharjah
Foreign nationals in the UAE are not permitted to own freehold real estate in the emirate, per the laws controlling the usufruct of Sharjah real estate properties. However, after registering with the Sharjah Real Estate Registration Department (SRERD), they are eligible to usufruct for a period of 100 years.
Additionally, the usufruct right must fall within the boundaries set by the Sharjah government, and the Sharjah ruler must grant special permission. See which Sharjah neighborhoods have the best properties for foreigners. There are villas and apartments for sale in Sharjah.
We suggest going to the official UAE government website for additional details about the requirements for foreign property ownership in the UAE.
RULES FOR TAXATION
The UAE is well-known for having a tax system that is favorable to foreigners. Expatriates must take into account the legal obligations that apply in their home countries even though the country does not impose taxes on property that is purchased.
Let’s say you are a US citizen purchasing real estate in the United Arab Emirates. In that scenario, it’s critical to take into account potential recurring tax obligations on earnings, such as dividend payments, interest on savings, rental income, and other obligations in the US. In this situation, it is best to speak with tax professionals in your nation to gain a better understanding of the tax obligations associated with purchasing real estate abroad before making a purchase in the United Arab Emirates.