Can a Foreign Company Own Property in the UAE? Legal Pathways Explained

The United Arab Emirates (UAE) has long been a magnet for international investment, thanks to its strategic location, tax-friendly policies, and world-class infrastructure. As a result, many foreign companies are eager to establish a presence in the UAE, especially in the real estate sector. But can a foreign company own property in the UAE? The answer is nuanced, depending on where and how the company is established.

In this blog, we will explore the legal pathways available for foreign companies to own property in the UAE, with a focus on the key jurisdictions of Dubai and Abu Dhabi. We will also discuss the types of property ownership permitted, the role of corporate structures, and the implications of recent legal reforms.

Understand the Ownership Structures

There are several ways to own property in Dubai:

• Individual Ownership:  Owning property as an individual is straightforward but requires awareness of UAE inheritance laws, which differ from those in many other countries.
• Corporate Ownership: Establishing a company (e.g., a Limited Liability Company) to own property. This option offers flexibility and potential tax benefits but involves more regulatory compliance.
• Joint Ownership: Partnering with others, including local partners. This arrangement necessitates clear legal agreements to define each party’s rights and obligations.
• Usufruct: Usufruct grants the holder the right to use and enjoy the property and its benefits without owning it. This right is typically granted for a specific period and is commonly used for land development projects.
• Musataha: Musataha is similar to usufruct but includes the right to build on the land. It is often used for long-term development projects where the developer constructs buildings on leased land.

Designated Investment Zones

Certain areas in mainland UAE are designated as investment zones, where foreign ownership is permitted. These zones include:

• Dubai: Areas like Business Bay, Downtown Dubai, and Dubai Marina.
• Abu Dhabi: Zones such as Al Raha Beach, Reem Island, and Yas Island.

Foreign companies can own property within these zones, subject to the specific regulations governing each area.

Free Zones

The UAE is home to numerous free zones, each offering unique benefits for foreign investors.

Ownership and Operational Benefits

• 100% Foreign Ownership: Most free zones allow foreign companies to own 100% of their business operations without needing a local partner.
• Tax Incentives: Free zone companies often benefit from tax exemptions, including corporate tax holidays and customs duty exemptions.
• Simplified Licensing: The process of obtaining business licenses in free zones is generally more straightforward and faster compared to the mainland UAE.

Property Ownership in Free Zones

Foreign companies established in free zones can own property within the respective free zone areas. For properties located beyond these zones, companies operating in free zones may encounter regulations or may be required to fulfil particular criteria established by the Dubai Land Department (DLD) and the relevant free trade zone authority.

Offshore Companies

Offshore companies are incorporated outside the UAE but registered within specific UAE jurisdictions. Offshore companies can own property within the designated areas of their respective jurisdictions. However, they are generally restricted from owning property outside these zones.

Navigating the Legal Landscape

Given the complexity of property ownership laws in the UAE, foreign companies should consider the following steps:

1. Consult Legal Experts: Engage with legal professionals who specialize in UAE real estate law to understand the specific regulations applicable to your situation. We at eLegal Consultants have legal professionals that can guide you through the process.
2. Choose the Right Jurisdiction: Determine whether establishing a mainland company, free zone entity, or offshore company aligns best with your business objectives.
3. Understand Ownership Rights: Familiarize yourself with the different types of property ownership and their implications.
4. Stay Informed: Keep abreast of any legal reforms or changes in regulations that may affect property ownership rights.

Conclusion

While foreign companies face certain restrictions on property ownership in the UAE, various legal pathways exist to facilitate investment. By understanding the nuances of UAE property laws and choosing the appropriate ownership structure, foreign companies can successfully navigate the real estate market and capitalise on the opportunities the UAE offers.

For more detailed information and personalised advice, contact us today.