Dubai Property Real Estate Dubai

Property in Dubai Real Estate

Buying property in Dubai looks like a complex process for foreign nationals. Until recently, it was impossible, as the law did not allow foreign nationals to purchase the freehold of Dubai properties. But all this changed in May 2002, when Sheikh Mohammed bin Rashid al Maktoum, Crown Prince of Dubai, issued a decree saying that foreigners should be allowed to buy property in the United Arab Emirates. However, for this decree to be effective, first there needs to be a change in the laws for the whole of the United Arab Emirates, as Dubai is part of a federation.

Alex Upson, overseas sales manager at Cluttons, explains the problem. "At the moment, nobody knows exactly where we stand. The federal laws could change tomorrow, in a year's time or in ten years' time. Until then, what we are purchasing is the promise of a freehold." However, this is more than an empty promise reputable developers write the freehold into the contracts as a given.

You might think that this uncertainty makes buying property in Dubai a complicated and scary process, but it can actually be comparatively simple. The key is to use a good agent for the transaction, preferably one with a branch in your home country. Cluttons are agents with extensive experience in the Middle East; they have offices in Bahrain, Saudi Arabia and Oman as well as Dubai and Sharjah. Alex Upson describes the process: "You tell us you want to buy the property. It is then reserved for you, and you send the first payment direct to the developer. The developer then sends an agreement for you to sign. There is no need for you to pay for a solicitor, and there are no taxes except the registration fee, which is their equivalent of stamp duty. You pay 1.5% of the property's price, and the developer pays 0.5%. Both sums will be payable to the land registry once the federal law has been amended to allow foreign nationals to purchase freehold. Until then, you pay no taxes at all. If the property changes hands, you pay a transfer fee to the developer. This fee varies, depending on the developer. EMAAR, who we deal with, charge 1.5% of the price you paid for the property, but other developers have been known to charge as much as 7%." In many ways the process is simpler than buying a property in your own country.

When foreign nationals become able to purchase the freehold, the Dubai Lands Department will be able to register properties owned by foreigners.

In the meantime, it is still possible to go ahead and buy property, as long as you are aware that you do not own the freehold in the fullest legal sense. The Director General of Dubai's Chamber of Commerce Industry (DCCI), Mr Abdulrahman Al Mutaiwee, has stated that a fair contract between seller and buyer will "ensure the rights and privileges of the expatriates owning freehold properties in Dubai. If anyone has any doubts about his rights, he should carefully study the contract."

Reading between the lines, this might seem to be pushing responsibility for guarding against fraudsters firmly into the hands of the buyer or the buyer's agents. However, what Mr Al Mutaiwee said can be read in a reassuring light: his emphasis on the importance of the contract is indicative of the Dubaian respect for property rights. There is little history of the state confiscating private property in an arbitrary manner. However, as Alex Upson points out, "For the property buying process in Dubai to be as secure as we know it in the UK, and for the market to stabilise, the issue of freehold and foreign investors must be sorted out."

The best strategy, as ever, is to do the groundwork before deciding on buying property in Dubai. You will need to do as much research as possible. After that, putting your purchase in the hands of a reputable agent will give you valuable peace of mind.

For more information about Cluttons (and contact details), see