Dubai’s property market is booming. As other major markets in Europe and the US have faltered, Dubai continues to go from strength to strength, attracting foreign investors in their droves. Drawn by Dubai’s strategic location as a global business and transit hub, its investment friendly policies and tax incentives, investors have a multitude of options available, from luxury villas and off-plan properties to apartments and commercial spaces, potentially lucrative investments are plentiful.

Total sales in the first six months of 2023 reached AED 178 billion and residential property sales prices rose by 17%, demonstrating the current strength of demand and the potential for significant returns.

This article looks at the intricacies of property ownership for foreign companies in Dubai, focusing on the various ownership structures available and the advantages and applications they have. 

Company property ownership

Owning property in Dubai as a company offers a number of advantages that align with various business objectives. Primarily, it serves operational needs, providing a stable and secure base for business and removing the costly overheads associated with rental or leasing. It can also serve as an investment strategy, offering a reliable source of rental income and the potential for substantial capital gains as property values appreciate over time.

Property ownership also serves as a valuable risk management tool, providing a layer of security and asset protection in various financial and legal scenarios.

In the event of legal disputes or liabilities, holding property separately from your company’s operational assets can mitigate risks by ring-fencing assets and protecting you from any legal claims against the business.

Additionally, as a tangible asset with intrinsic value, a property can be sold or leased, providing your company with a source of liquidity during financial challenges, or used as collateral to secure loans or lines of credit to access financing more easily and potentially at better terms compared to unsecured loans.

Where can foreign companies own real estate in Dubai?

The ability for a company to own property in Dubai hinges on the company’s legal structure and its ownership, whether local or foreign.

Companies fully owned by UAE or GCC nationals enjoy broader property ownership rights, including freehold titles, long leases, or usufruct rights that can extend for up to 99 years across Dubai. In contrast, foreign-owned companies face specific regulations that restrict their property ownership to designated areas as determined by the Dubai Land Department (DLD). While the list of these areas is extensive and subject to periodic updates via decrees and new regulations, foreign investors tend to gravitate toward several prominent locations such as:

• Arabian Ranches
• Business Bay
• Downtown Dubai
• Dubai Marina
• Emirates Hills
• Jumeirah Beach Residence (JBR)
• Jumeirah Lakes Towers (JLT)
• The Palm Jumeirah

These locations offer diverse real estate options, whether for residential living, commercial ventures, or long-term investments, making them prime choices for foreign investors.

What types of companies can hold property in Dubai?

In the United Arab Emirates (UAE), various types of companies can hold property, each subject to specific regulations. Here is a categorised list of these business structures and their property ownership allowances:

• Free Zone Companies: Companies under foreign ownership in Dubai free zones such as DMCC, DIC, DHCC and JAFZA can hold property within the respective zone and in Designated Areas. This also extends to ADGM registered companies thanks to an MOU between the Dubai Land Department (DLD) and the Abu Dhabi Global Market (ADGM).
• Limited Liability Companies (LLCs): UAE-based LLCs and onshore registered companies can own properties in designated areas. However, foreign companies registered onshore must first establish a presence through a branch or representative office and obtain necessary licences and permits to own property in Dubai.
• Public Joint Stock Companies (PJSCs): PJSCs are allowed to hold property in the UAE, but this requires approval from relevant authorities.
• Real Estate Investment Trusts (REITs): While relatively new in the UAE, REITs are gaining popularity. They allow investors to participate in real estate investments without direct property ownership, as the REIT itself holds the property assets.
• Dubai International Financial Centre (DIFC): Companies registered in DIFC can acquire property outside of DIFC jurisdiction but usually need special approval from the DLD. However, future changes may align DIFC companies’ rights with those of companies in other free zones. This doesn’t apply to offshore companies with shareholding held by a DIFC entity, granting them full access to DLD-designated areas.
• Special Purpose Vehicles (SPVs) and Holding Companies: SPVs and passive holding companies are established to isolate legal and financial risks from parent companies. The Abu Dhabi Global Market (ADGM) allows the establishment of SPVs and holding companies that enable foreign investors to own various property types in designated areas of Abu Dhabi and Dubai. These properties must be registered with the Dubai Land Department (DLD) under the ADGM entity and must adhere to ADGM regulations and UAE Real Estate Law.
• Foundations: Wealthy families and high-net-worth individuals (HNWIs) commonly use foundations to segregate personal and commercial assets. While foundations typically serve philanthropic purposes, they also find non-charitable applications such as wealth management, asset structuring, and succession planning. Foundations combine elements of both companies and trusts. They possess their own legal identity apart from the founder but are considered “orphan” structures, devoid of shareholders or members. Instead, foundations operate in accordance with charters and by-laws, managed by a council that acts in line with the founder’s wishes. Foundations in ADGM and DIFC allow property ownership within designated Dubai areas while safeguarding foundation assets from forced heirship or creditor claims.

How can The Knightsbridge Group help?

The Knightsbridge Group has over 20 years of experience in the domain of corporate structuring and wealth management. We have unparalleled knowledge of business practices and legal requirements in the UAE as well as an international network of contacts and a deep understanding of the needs of modern-day high net worth clients and international businesses.

We can help you choose the best business structure for property ownership based on your unique circumstances and requirements. From establishing the right corporate entity to managing ongoing financial and legal matters, we will assist you every step of the way, obtaining approvals, navigating local regulations and ensuring tax optimisation and asset protection.

If you need help with this or any other immigration, financial or corporate structuring issue, please don’t hesitate to contact us on info@kbgroup.ae and we will be happy to help.