Sunshine all year round, the sea never far away, an extremely low crime rate, modern infrastructure and a high standard of living – there is a lot to encourage foreigners to buy property in the United Arab Emirates.
There seemed to be no limit to the property boom in the United Arab Emirates. At least until the end of 2008 and then came the rude awakening. Dubai, where the drive to build was crazy, suffered particularly hard from the consequences of the property crash. But the Emirate rose like a phoenix from the ashes. After a few years of stagnation, the property sector is once again showing excellent growth figures – and not only in the Emirate of Dubai. Purchase prices and rents are rising in the UAE and attracting numerous interested parties to the chic desert metropolis. Buying property here is easier than you think and just now particularly exciting. Still, there are still some interesting, affordable properties, but with the positive forecast, these might soon be quite scarce. As a holiday home, investment, residen – tial or office, property in the UAE is popular with foreigners. But you should be clear about the purpose and use of the property and the legal situation beforehand. In the UAE, there are no federal property laws; each of the seven Emirates has its own particular regulations.
PROPERTY LAW IN DUBAI
Foreigners have been able to buy pro perty in the Emirate of Dubai since 2002, but it has been limited to certain regions and only with an entry in the ownership directory. The “Law No. 7 of 2006 regarding Land Registration in the Emirate of Dubai clarifies to what extent foreigners can acquire title to real estate, and how the rights are registered“ (source: Deutsch- Emiratische Industrie- und Handels kam – mer). The properties can be pur chased today for an unlimited period (freehold). This was not always the case; previously ownership of a property was limited to 99 years. However, what is still subject to restrictions is the location. Foreigners may only purchase property in certain areas. Now rest assured, this doesn’t mean that non-Emiratis get the slice of the cake that is not as nice. The selected locations are very attractive, as shown in the example of The Palm. The man-made island has now become a home from home for many celebrities. And Dubai Marina, Arabian Ranches, or Emirates Hills are also exclu – sive places where life is excellent. To avoid any nasty surprises, you should only trust brokers registered with the RERA (Real Estate Regulatory Authority). Anyone going for a property receives the Title Deed (similar to an entry in the land register) after the purchase and payment in full. The acquisition process is fairly straightforward; a simple handwritten purchase contract is sufficient – and binding. Another benefit is that you can apply for a residence permit after pur – chasing but this doesn’t entitle you to a work permit.
PROPERTY LAW IN ABU DHABI
Anyone who is a resident in a Member State of the GCC (Gulf Cooperation Council) may purchase property in the investment zones. Other foreigners, however, only have the option of buying apartments; they are not allowed to purchase land. However, those interested in a villa or an office building in the largest Emirate can purchase a 99-year leasehold, which covers both the property and the land.
The UAE is a tax haven; there is among other things no property tax, local rates, residential tax, inheritance tax, capital gains tax or stamp duty. However, for foreign property owners this does not mean that their income from immovable property is exempt from tax. How this is handled exactly always depends on the country of origin. In Germany, for example, tax must be paid on this revenue. This excludes independent subsidiaries of a German-based company under the Foreign Tax Relations Act. Their profits are not subject to German taxation. The United Arab Emirates have learned from the building boom disaster of 2009. The property sector is now aiming for growth with caution and prudence. This makes the UAE more attractive than ever for anyone looking for some time out under a blue sky or a return on investment.
Text: Mark Valentini
Fotos: © DTCM, © TCAA