Investing in Dubai Real Estate: Protecting Your Rights
Dubai offers lucrative investment opportunities, with an estimated US$42.5 billion worth of projects that are under construction this year. The real estate boom in the city has been sustained for the past two decades and it is supported by a high GDP growth, which was 17% in year 2017.
If you are looking for properties in Dubai either for the purpose of investing, acquiring a private residence or securing work or commercial space, then you must seek out a reputable real estate brokerage in Dubai that can assist you in your search.
Is it sustainable or just a bubble?
Last year, the transactions on real property increased to Dh77 billion (US$20.96 billion). Contrary to some fears, the growth potential of Dubai’s real estate sector is not the result of an artificial or speculative economic bubble.
The city offers high return on investments for local and foreign real estate investments. As such, it is crucial that you learn the basics before you take the leap, such as the sustainability of growth and your rights as an investor.
What are the factors fueling the growth?
The fundamentals are robust, which are supported by a growing population and excellent liquidity in the region. The demand for residential and commercial properties is real and not just the result of market speculations of aggressive investors.
The excellent economy of Dubai is attracting workers not only from within the country, but also from overseas. This adds to the population growth of the city. The workers migrating to the city include both skilled blue collar workers and white collar professionals.
Consequently, the demand of interested investors (from ordinary middle class office workers to top corporate executives) for real estate properties is growing.
What are the latest developments?
Last year, the Director General of Dubai Land Department (Sultan Butti bin Mejren) announced the 45% increase in real estate transactions in 2017 compared to 2016. The increase is roughly the equivalent of 20,000 transactions. The announcement was made during the Dubai International Government Achievements Exhibition.
The Sultan also hosted a meeting with the CEO of the Real Estate Regulatory Authority (RERA). They launched a guide for investors, titled: “Know Your Rights as a Real Estate Investor in Dubai.” The guide encapsulates and simplifies the laws and regulations for real estate investors. It is expected to serve as an easy reference guide for would-be investors and existing investors.
Who are the regulators?
Investors and property developers have to deal with the Dubai Land Department (DLD) and the Real Estate Regulatory Agency (RERA). Permits, land use plans and specific regulations are implemented by these agencies.
The DLD and RERA ensure that all the laws and regulations for the sector are properly implemented. These government regulatory bodies also ensure that instances of fraud are prevented. They collect fees to process transactions like property acquisitions or residential property development.
These regulatory bodies also have quasi-judicial functions that allow them to serve as mediators between companies when there are disputes and make decisions on legal matters.
What are the types of property rights?
The DLD is the government agency that serves as the property registrar which gathers the official data of properties and the property owners. It recognizes different types of property rights such as freehold title, usufruct, musataha and land ownership.
However, not all areas in Dubai are within the jurisdiction of the DLD. The Dubai International Financial Centre (DIFC) free zone, for example, is an economic/business area that has its own regulations and laws. It has a separate property register.
What is the basic law for real properties?
Law No. 7 of 2006, otherwise known as the Property Ownership Law, is the basic law that regulates the registration of property in the Emirate of Dubai. The law has specific provisions for individuals and corporations in the city.
Who can own properties in Dubai?
There are two types of property Free hold & non free hold. The citizens who are allowed to own non free hold properties in Dubai are UAE citizens and citizens of the countries belonging to the Gulf Cooperation Council (GCC). The GCC has six member-countries, namely: Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain, and Oman.
On the other hand, companies that are incorporated in Dubai also have the right to own real properties, such as freehold title. They are also entitled to long-term lease agreements of up to 99 years.
The DLD also allows public joint stock companies to own properties in the city as long as they are listed in Dubai or anywhere in the UAE and GCC member-countries. They should at least be partly owned by nationals of UAE and GCC.
Foreign nationals are also allowed to directly own free hold properties, through brokerage firms or direct from the owner.
If you want to know more about starting a business in Dubai related to real estate, you may consult Flying Colour. We will guide you in the process of either directly or indirectly acquiring properties or investing in properties that are currently being developed.