Dubai opened its doors to foreign property ownership in 2006. Since then, there have been incremental changes in the approach of the Dubai Land Department, benefitting investors in the long-term.
Who can own property in Dubai?
Ownership of real estate in Dubai is restricted to UAE Nationals and GCC nationals, as well as companies wholly owned by them and public joint stock companies.
Other foreign nationals – and companies wholly or partly owned by them – have the right to own real estate in Dubai but only in certain designated areas. These include both residential and commercial areas in and around Dubai, and include include Downtown Dubai and Burj Khalifa, The Palm, Emirates Hills, The Meadows, The Lakes, The Springs, Dubai Marina and Jumeirah Lakes Towers.
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The investor is not required to hold any type of residency or similar permits in order to purchase real property.
The following types of companies can own real estate in Dubai:
JAFZA Offshore Companies
Companies established in the Dubai Mainland
Companies established in the Dubai Free Zones
Entities established in the Abu Dhabi Global Market
Entities established in the Dubai International Financial Centre
From a legacy planning perspective, the ADGM and the DIFC offer more flexibility for non-Muslims, given that these are common-law jurisdictions.
Can I register the ownership of my property under a BVI or Cayman Offshore company?
Initially, the DLD allowed all types of onshore and offshore companies to own real estate in Dubai. In 2012, it made a change in policy, allowing only JAFZA Offshore companies as corporate holders of Dubai property.
The DLD had not, however, applied any restrictions on the structure of the corporate offshore entity, so that a JAFZA offshore company could in turn be owned either by an individual or a foreign offshore company, such as a BVI company.
While this is permissible, in practice, this calls for a lot of additional compliances (Certificates of Incumbency, updated Powers of Attorneys etc.) and attestations from Embassies and Ministries, that are time consuming and cost additional money.
In 2017, the Dubai Land Department entered into formal understandings, first with the Dubai International Financial Centre (DIFC) and subsequently with the Abu Dhabi Global Market (ADGM), thus allowing investors to tailor structures for real estate ownership, under a more familiar Common Law framework.
What kind of corporate vehicles are available in the DIFC and the ADGM, for real estate ownership?
As it stands, all DIFC and ADGM-registered entities are eligible for ownership of real estate in Dubai. However, from a cost and efficient structuring perspective, the following vehicles may be considered:
DIFC – Special Purpose Companies, DIFC Foundations
ADGM – Special Purpose Vehicles, ADGM Foundations
Change of ownership
A change in ownership where an individual owner is involved, involves a 4% transfer fee payable to the DLD. Where the property is held by a company, a change in shareholding of such a company will require a No-Objection Certificate (NOC) from the DLD, prior to the proposed shareholding change. The NOC will be issued subsequent to the payment of the 4% transfer fee.
In some cases, there may be a transfer from an individual name to an entity setup by the same individual. Here, the DLD may consider the transaction as a ‘gift transfer’, which is subject to a reduced transaction fee of 0.125%.
The Registrar of Companies (ROC) in case of the DIFC, and the Registration Authority (RA) in case of the ADGM, have strict policies regarding change of ownership, and the subject entity (that holds real estate in Dubai) will have to submit a written undertaking confirming prior intimation to the Registrar in case of an imminent change.
What documents are required in order to register property in the name of a company?
Here is a list of the main documents required:
Individual seller and buyer
Original Title Deed
Corporate seller and buyer
Original Title Deed Original Certificate of Incorporation / Trade License
Original Memorandum and Articles of Association
Legal Translation of the Memorandum and Articles of Association
Original Certificate of Good Standing (not more than 6 months old)
Original Certificate of Incumbency (not more than 6 months old)
Copy of shareholder(s) passport(s)
Original Resolution approving the sale or purchase (as the case may be)
Original Power of Attorney
Attorney’s original passport
In case of corporate shareholders, the DLD may require all corporate documents until the individual ultimate beneficial owner(s) (UBO) has been established.
Will all these structures be subject to Sharia-based inheritance procedures?
One of the main reasons for using an offshore company vehicle to purchase real estate in Dubai is the avoidance of Sharia-based inheritance procedures and the application of the Personal Status Law.
To avoid the implications of Sharia-based inheritance procedures, the following options may be considered:
- Offshore company
As corporate entities do not fall under the personal status law, there would no issue of Sharia law applying.
The only type of offshore company permitted to own property in Dubai is a JAFZA Offshore company. A JAFZA offshore company can in turn be owned either by an individual or a foreign offshore company, such as a BVI company. Since BVI is a Common-Law jurisdiction, the inheritance procedures are greatly simplified. On the event of the death of the shareholder, the shares held by the BVI Company are transmitted in accordance with Common Law and hence Personal Status Law does not apply.
In practice, this calls for a lot of additional compliances (Certificates of Incumbency, updated Powers of Attorneys etc.) and attestations from Embassies and Ministries, that are time consuming and cost additional money.
Also, in the case of Muslim shareholders, Sharia may still be applied.
- DIFC/ADGM Will
The DIFC and ADGM are Common Law jurisdictions and offer Wills and Probate Registry services to non-Muslims. The will is registered, and in the event of the death of the investor, executors can obtain a probate from the DIFC or ADGM Courts, for further execution by the Dubai Courts.