This is a question that would have crossed every buyer’s mind while deciding to invest in Dubai real estate. And it should! It is always a good idea to do your due diligence before you take the leap and make one of the most expensive purchases in your life.
What further adds to the complication is the availability of both types of properties and lack of clarity about leasehold pros/cons amongst buyers. Infact, I still keep coming across buyers from different parts of the world who are not aware that Dubai offers freehold properties. They still think that Dubai has leasehold system only.
To give a historical perspective, Dubai allowed foreign citizens to acquire real estate properties in 2001. To start with, expats could only buy leasehold property but just a year later (in 2002), government allowed expats to buy freehold properties too. What it means is that an investor of any nationality (except select few) can buy leasehold or freehold properties in this amazing metropolis called Dubai.
If you also have questions between these two ownerships, this article will explain all about leasehold vs freehold properties and their advantages/disadvantages.
Most residential leasehold properties in Dubai/UAE entitle you to an ownership for a maximum of 99 years. Theoretically, the ownership passes back to the freehold owner on expiry of lease tenure. One more thing to note is that leasehold purchase allows the buyer to own the unit, not the land on which it is built. Usually, most lease tenures can be extended for a period of further 99 years thereby making the total lease tenure of almost 20 years. However, it will be in the interest of buyer to get a clarity regarding this before buying.
PROS OF LEASEHOLD OWNERSHIP
- Prices of leasehold properties are generally lower than Freehold properties thereby making them more attractive from an investment perspective.
- You can extend the lease for a further term. A tenure of 200 years is practically way much longer than any buyer can plan to live in that property.
- Maintenance / Renovation of the property is the responsibility of freehold owner. Lessee doesn’t have to worry about that.
CONS OF LEASEHOLD OWNERSHIP
- You cannot sublet your unit.
- One downside of leasehold properties is that you can’t make changes to your property without the permission of freehold owner. Any changes/additions to the property can only be made with a written approval from freehold owner.
- Leasehold properties don’t entitle you to a residency visa unlike freehold properties.
A freehold property in Dubai entitles the owner to enjoy many more benefits than a leasehold. Owner has complete ownership of his/her property including the land. One can sell or lease the property without any hassle.
PROS – FREEHOLD OWNERSHIP
- Any freehold ready property of purchase price more than AED 1 million entitles the owner and his/her family to get a UAE residence visa.
- Property is passed on the family after owner’s death.
- One can renovate the property anytime.
CONS – FREEHOLD OWNERSHIP
- Freehold properties are a little more expensive than leasehold properties.
LIST OF LOCATIONS OFFERING FREEHOLD PROPERTIES
The below mentioned areas offer freehold properties in Dubai. However there may be certain pockets within these areas which may offer only lease hold properties. It is advaisable for a buyer to check the status before buying the property.
|Al Barari||Dubai Investment Park||Jumeirah Village ( Triangle )|
|Al Furjan||Dubai Marina||Layan Community|
|Al Thanyah First||Dubai Outsource Zone||Legends|
|Al Waha Project||Dubai Residence Complex – Dubai Land||Masakin Al Furjan|
|Arabian Ranches 1||Dubai Silicon Oasis||Meadows|
|Arabian Ranches 2||Dubai Sport City||Mudon Projec|
|Arjaan||Dubai Studio City||Old Town|
|Badrah Project||Emirates Hills||Palazzo Versace|
|Barsha Heights (Tecom)||Ewan Project – DIP||Palm Jumeirah|
|Burj Khalifa Tower||Falcon City||Project ( Dubai Sustainable City )|
|Business Bay||Green Community DIP||Project ( Golden Mile Palm Jumeirah )|
|City Walk||Green Community Motor City||Project ( Mira )|
|D1 Tower||Greens||Queue Point ( Dubai Land )|
|Damac Hills||Ibn Battuta Gate||Remraam|
|DIFC-INDEX TOWER||IMPZ (Int. Media Produc. Zone)||Ritaj Project – DIP|
|DIFC-LIBERTY HOUSE||International City||Sky Court Tower – Dubai land|
|DIFC-LIMESTONE HOUSE||International City CBD||Springs|
|DIFC-Park Tower||JBR (Jumeirah Beach Residence)||The Lakes|
|DIFC-Sky Gardens||Jebel Ali Village||The Polo Residence (Meydan)|
|Discovery Gardens||JLT (Jumeirah Lake Towers)||The Views|
|Down Town||Jumeirah Golf Estate||The Villa (Dubai Land)|
|Dubai Culture Village||Jumeirah Heights||Town Square|
|Dubai Festival City – Badia Phase 1 & 2||Jumeirah Islands||Up Town Motor City|
|Dubai Festival City – Badia Phase 3||Jumeirah Park||Veneto Project|
|Dubai Festival City – Hillside||Jumeirah Village||Wadi Al Safa 3|
|Dubai Festival City – Marsa||Jumeirah Village ( Circle )||Warsan|
Clearly, freehold properties offer many more advantages and peace of mind to the expat investor compared to leasehold properties. In case you have any further queries related to buying a property in Dubai, please feel free to write to me on email@example.com.