Navigating property ownership in Dubai as a foreign investor or business owner can be interesting and filled with peril. Dubai’s dynamic real estate market offers several investment possibilities, especially through free zone companies, which have become increasingly popular for their property investor benefits.
A common question that arises is can a freezone company own property in Dubai. If so, what specific regulations apply? In this guide, we’ll explore “Can a free zone company own property in Dubai” in detail to help you understand the nuances, benefits, and restrictions of the property holding company involved.
What Is Free Zone Company in Dubai?
Dubai’s free zones are specialized economic areas where businesses can perform with specific incentives, including tax advantages, full foreign ownership, and a simplified business setup process.
The primary appeal of a free zone lies in its advantages, such as 100% foreign ownership and zero personal and corporate taxes. However, these areas also come with certain restrictions, especially regarding the type of property that companies within them can own.
Each free zone operates under a distinct set of regulations governed by its own authority, impacting the types of real estate a company can acquire and own. There are over 30 free zones in Dubai property, including the Dubai Multi Commodities Centre (DMCC), Dubai International Finance Centre (DIFC), and Jebel Ali Free Zone (JAFZA).
These zones registered with the Dubai land support specific industries, which include finance, media, technology, logistics, and more, and all free zone companies are limited to their respective sector.
Property Ownership: Free Zone vs. Mainland Companies
To clarify the difference between free zone and mainland companies, mainland businesses can freely operate anywhere in Dubai and the UAE for business . Free zone companies, on the other hand, are 100% foreign-owned but have historically been restricted from operating only within their designated zone areas.
For free-area companies interested in purchasing property, ownership has historically been limited to designated areas as “property in the freehold areas”. Freehold areas of Dubai are locations where non-UAE nationals and foreign companies can buy property with full property rights rather than leasehold or usufruct rights, which are typically available in different areas of Dubai in addition the right to buy property under Freezone is regulated by the governing law of that free zone
Can Freezone Companies Own Property in Dubai?
Yes, free zone companies can own property in Dubai within the UAE, but the ability to do so is often restricted to specific types of properties in designated freehold areas. Let’s dive into how this works and what types of properties are normally accessible. In addition there might be addition approvals or regulations to be followed when in free zone.
Commercial Property Ownership
Free zone companies are commonly approved to own commercial houses in their respective free zones. This means that if you own a business in a free zone like DIFC, you can likely purchase office spaces within DIFC to use for your business operations in the United Arab Emirates.
For properties outside of these zones, free zone companies may also face regulations or may need to meet specific criteria set by the Dubai Land Department (DLD) and the respective free trade zone authority.
Residential Property Ownership
In certain cases, free zone companies are allowed to buy residential property, but this is often restrained to freehold areas and comes with unique requirements. Popular freehold areas like Dubai Marina, Downtown Dubai, and Jumeirah Lakes Towers (JLT) allow foreign ownership, but permission for free zone businesses to acquire property varies.
Typically, residential properties purchased by free zone companies must be solely for company purposes, such as employee accommodation. This rule means that residential UAE real estate investment for resale or leasing outside of company use may be restricted.
Mixed-Use Properties
Mixed-use properties, which provide a combination of residential, commercial, and sometimes retail spaces, are available in some freehold areas and may be open to free zone companies, relying on zoning regulations.
This category in Dubai continues to allow businesses to purchase and manage spaces that can accommodate both office and employee housing.
Requirements and Limitations: Dubai Land Department Regulations
To purchase property outside a designated free zone, free zone companies must comply with guidelines set by the Dubai Land Department (DLD). Typically, free zone companies need to:
1. Meet Eligibility Requirements: Some free zones have partnered with DLD, permitting them to buy properties in specific areas. It’s important to check if your free zone falls under this separate legal entity.
2. Obtain Approval from the Free Zone Authority: Approval is often required from the Free Zone Authority before making any real estate purchases. This step ensures that your property use aligns with free zone regulations, broader asset protection, and estate planning.
3. Adhere to Usage Restrictions: Properties acquired by way of a free zone company should align with the company’s activities and should not conflict with the free zone’s mandate or business type.
Steps for Free Zone Companies Interested in Purchasing Property
If you’re thinking of making a final decision about purchasing property in Dubai as a free zone company, follow these steps:
1. Research Freehold Areas Open to Free Zone Companies: Familiarize yourself with areas where free zone companies are permitted to own property, together with Business Bay, Dubai Marina, or Downtown Dubai. These real estate assets provide flexibility for foreign investors.
2. Check Your Free Zone’s Real Estate Policies: Each free zone authority may have a unique policy regarding property ownership. Contact your free zone authority to make clear restrictions, conditions, and permissions for property ownership.
3. Work with a Licensed Real Estate Agent: Dubai’s real estate market can be complicated. Working with an agent familiar with free zone regulations and real estate legal guidelines can streamline the purchasing process and prevent unforeseen troubles.
4. Submit Necessary Documents to DLD and Free Zone Authorities: Prepare all necessary documentation, which includes your trade license, proof of business activities, and relevant approvals from your free zone authority.
5. Verify Ownership Rights and Obligations: Ensure you understand the implications of purchasing property, such as service charges, limited liability protection, and any limitations on resale or leasing. Clarifying these obligations helps avoid complications.
Key Advantages of Property Ownership for Free Zone Companies
There are several benefits for free zone companies owning property in Dubai, especially if the company’s operational and financial needs align with local real estate options:
Investment Potential: Dubai’s real estate market is known for its investment potential, particularly in freehold zones. Buying a property can create long-term financial benefits, as property values in certain areas have gradually appreciated over time.
Strategic Office Locations: Free zone companies located within high-demand business-friendly environment districts can improve accessibility, attract clients, and establish a presence. Owning office space in a prestigious location, like the DIFC or Dubai Marina, can boost brand reputation and contribute to growth and portfolio management.
Employee Housing Options: Providing housing solutions can enhance employee satisfaction and reduce turnover. Owning residential property in freehold areas like Jumeirah Village Circle can provide convenient living arrangements for staff, adding value to your company’s appeal with approved zones.
Full Foreign Ownership: Unlike mainland companies, free zone companies allow 100% foreign ownership, meaning that property investments remain under the company’s complete control. This can make long-term planning and decision-making more straightforward.
Final Thoughts
Dubai is home to many and owning a property there is a dream of many individuals. But the question is Can a free zone company own property in Dubai? Yes, but with careful consideration of the policies and regulations.
Property assets offer substantial benefits for companies willing to navigate these complexities, from investment in Dubai to operational growth. However, it’s crucial to remain informed and consult with real estate professionals and legal advisors to ensure compliance.
If you want to explore property ownership options for your free zone company in Dubai? Let Xpert Advisory guide you through the policies and regulations to maximize your investment potential while ensuring full compliance. Contact us today for expert consultation and make informed decisions for your company’s growth.
Frequently Asked Questions
1. Can offshore companies own properties in Dubai?
Offshore companies cant own property in Dubai which are deemded free hold They must comply with specific regulations
2. Can you own 100% property in Dubai?
Yes, foreign investors can own 100% of a property in Dubai but only in freehold areas designated for foreign investment ownership. These areas include popular locations like Dubai Marina and Downtown Dubai.
3. How long can you stay in Dubai if you own a property?
Property owners can stay up to six months at a time in Dubai if they hold a property visa, which is usually renewable every three or five years, depending on the investment size. Now if the value of property is over 2 M they can also avail a 10 year visa.
