Research Paper Help on Real Estate in the UAE: Dubai

Real Estate in the UAE: Dubai


            The real estate market in the UAE has experienced many challenges to an extend of moving investors out due to financial constraints. However, the slowdowns in the property prices have regained profitable levels, and this has attracted many investors back into the country since 2012. Similarly, the current investment activities have been cautioned due to the experience of the global financial crisis in 2008. This entails that the federal government has an imperative task to guarantee investors that they are cautioned against the exploratory conduct to allow the country to achieve progressive development from the real estate industry. As a result, the Central Bank in the UAE has executed long-term actions to manage this conduct by legislating a restriction to the Loan-To-Value ratios for mortgages given to foreign experts and local Emiratis to a value of 50 and 70 percent respectively (Latham & Watkins, 2011). This policy was developed in 2012 and it has been the subject of debate in the UAE real estate market.

            As an enduring measure, it is essential that the federal government to legislate proper policies to regulate the market and develop a strong foundation for growth (Case et al., 2000). However, this has to be consistent to the value of property and rent prices development. Further, it is projected that about $ 70 billion was invested in the real estate market in 2013 indicating the sector is a strong economic pillar to the region. Therefore, this paper seeks to provide an analysis of the real estate systems like title, financing, trade, and professional community in the UAE with focus to Dubai.

Private or Public restrictions on ownership

            The federal constitution has mandated each country to set up free zones within their jurisdiction for specified activities. The free zones encourage foreign investment in the UAE. In the free zones, owner of business entities can be foreigners but in the other regions the locals (Latimer, 2010) should own at least 51% of the companies. Additionally, the free zones are expected to establish their own laws without restrictions from the federal government. This report seeks to outline the basic procedures and legal contracts that are involved before a business entity is allowed to operate in the UAE.

            The UAE region has for a longtime been associated with various employee relations problems in the world. As such, various problems have developed for the ever-increasing number of workers, workers payments and the working environment. After 2002, the federal government of the UAE decided to allow other foreigners to acquire property in the region. The foreigners who acquired property through these legislations were given a deed from development companies that were under restrictions from the Dubai government. This was a disadvantage to the foreigners, the government was forced to rethink about this policy, and they subsequently introduced a freehold ownership later in 2006. However, the Dubai legislation does not restrict the maximum number of properties that a foreigner can own in the region (Helbling & Terrones, 2003). As such, this does not result to tax implications for any property ownership procedures. On the other hand, in a situation where a foreigner plans to purchase a property through a different corporate entity, then it should be registered in the UAE. Similarly, it can operate as an offshore corporation founded under the Jebel Ali Free Zone. Consequently, the ownership of property in Dubai is based on Ad-Valorem duty that involves charging a duty is imposed calculated as a percentage of the value of the property (Helbling & Terrones, 2003).

            It is relatively easy to acquire a property in Dubai due to the easy procedures. Four major steps are involved in the property acquisition process. Firstly, the buyer and the seller have to agree the terms of sale for the products, but this does not include the presence of a real estate broker. The second stage is signing of sale agreement, which can only be signed after a deposit of 10% has been remitted for the cost of the property. The third step is application of a ‘No Objection Certificate ‘that is acquired from the office of the developer. The certificate is issued under the conditions of a fully paid amount of service charges. The last step involves presenting the ‘NOC’ to the. ‘Dubai Land Department’ for the final process of transferring ownership of the property. The specific restriction at the department is to have the purchasing price paid after which a new title deed is given to the new owner.

            Conversely, in a situation where the buyer is purchasing the property through a Mortgage, the bank will be required to present itself as part of the terms. In addition, the buyer is evaluated for any outstanding mortgage so that further procedures can be applied for those who pose other mortgages. On the other hand, a property can also be owned through the power of the attorney. In this case, the power of the attorney must be signed prior to a ‘Notary Public’. This is done before it is presented to the department for transfer of ownership. Currently, the power of the attorney has been restricted to two years. The procedures for acquiring a property in the region talks about one month to be finalized. During the process, the government through the office of the developer is abler to obtain some taxes for owning property. However, there are no substantial capital gains that are obtained in the four major stages of acquiring a property.

            In order for business entity to be incorporated in the UAE or own a property, a foreign investor is required to establish a formal legal presence within the region. This can be done through an agent in the UAE or directly by the business owner. Other options for entry are; incorporating a local business, registering a branch of a foreign company, obtaining a free zone entity or merging into a commercial agency relationship.

            The federal law restricts ownership of shelf companies in the UAE. A foreigner or local incorporated entities have to obtain the required documentation to be allowed in business. These legal trading licenses are; a trade license and authorization from the government. A trading license is obtained from the department of economic development from authorized agencies in the Emirates or its offices. Local entities can be formed under the UAE civil code that was amended in 1984.

            Entities formed under the civil code are not allowed to carry out commercial activities. A few activities may be allowed under the civil code. These activities are; consultancy services, art or literature works and sale of agricultural products by farmers (Latimer, 2010). Civil code entities take the form of a professional services company, speculative venture partnership or an Islamic Shari’a-compliant. However, real companies in the UAE are formed under the companies’ law and not the civil code. Further, professional services companies are not a separate legal entity from its foreign owners. This limits the entry of business in the UAE under the civil code, as the companies’ law does not recognize such.

            The companies’ law regulates all locally incorporated companies with the exception of those established under the UAE civil code. Under the companies law, business entities can operate as, either Limited Liability, Private Joint Stock, Public Joint Stock, Joint Participation Ventures, Limited Partnerships, Partnership Limited with Shares or  General Partnerships. The limited liability company form of business ownership is common because it is possible for foreigners to exert significant control over the business. In addition, it requires comparably low amount of capital to start at about AED 300, 000 or AED 150, 000 in Dubai and Emirates respectively (Davenport & Parker p. 174). The amendment to article 227 provided that this form of formation to raise any amount of capital that would support the realization of its operational objectives. The limitation of establishing business entities under the companies’ law is that 51% of the company’s capital is required to be owned by a UAE national.

            A representative office or branch can be opened outside a free zone under the companies’ law. This is stipulated in the article 313 and 316 of the companies’ law. The opened office is only allowed to carry out only activities that form the major task of the mother company. Additionally, a branch is allowed to perform more functions than a representative office. The parent company is required to acquire a commercial agent if it wants to advance its sales activities within the UAE region. In addition, the law requires that the parent company to appoint a local national as its agent in the branch or office. The national agent is involved in obtaining the trading license and entry permits from the government (Davenport & Parker, 2012). Consequently, the national agent is not liable for any liability resulting from the branch or representative office thus limiting his managerial authority.

            Free zone entities enjoy the benefit of being owned by the foreigners. They take the following forms; a branch or representative office, Free Zone Company or a free zone establishment. Free zone entities are owned by single individuals or a company. However, this entry to business is limited to free zone. Operation in the free zone area requires the following licenses; trading, service and manufacturing/industrial licenses.

The operation of foreigners in the UAE requires that foreign owners to enter a commercial agency relationship with a local owned entity. The two parties agree on the sales commission, region of distributorship and the period of the agency relationship. However, a registered commercial agent at the ministry of economy enjoys protections. Theses protections are; exclusivity, commissions and termination. These protection gives the agent the right to; import the goods, receive commissions on the sales they make and that agency can only be terminated for material reasons accepted by the Commercial Agencies Committee.

            Foreign business entities do business in the UAE after fulfilling the requirements of the public sector procurement rules stipulated in the Order No. 16 of 1975. These rules require that, the entity must have; a UAE national representative, set up an entity and work through a joint participation venture (Barron, 2012). There is no income tax levied on any entity in the UAE. However, those entities operating in Dubai are under the Dubai income tax ordinance. The federal law governs all employment activities. The federal law has set up minimum thresholds for employing juveniles, working hours, vacation and public holidays, sick leave, maternity leave, employee records, safety standards and termination of employment (Barron, 2012).

             Immigrants into the UAE region are welcomed. They are required to obtain visas upon arrival at the airport. Visa obtaining procedures are generally easy as compared to other countries. Real property ownership is restricted in certain areas. Designated freehold areas and specific free zones allow property to be owned by foreigners. Business entities operating outside the free zones are allowed to lease space upon successful registration as a locally incorporated entity. Within the free zones, individuals are required to apply for a lease from the free zone’s real estate authority.

            The offer phase of this contract was made following significant discussions and

negotiations. The discussions were face to face between the representative of a foreign company and the federal government department representative. The offer was represented in the form of an agreement between an existing company and the UAE federal government. The offer stipulated the companies’ law requirements that were read out by the counsel. Upon the acceptance of the offer, both parties signed the agreement and witnessed by the legal counsel.

            The contract was accepted and signed under the terms stipulated in the contract agreement. The contract will remain valid until it is over stepped by the set time of the contract stipulated in the agreement. However, the secrets of this agreement are warranted in the UAE’s Industrial Property Law (Law No. 17 of 2002) and the general contract law. The conditions for incorporating this company as a local entity within the UAE are stipulated in the contract agreement. All the operations of the entity will be governed by the companies’ law entity for Limited Liability Company.

The mechanism of dispute resolution will be a binding arbitration. This gives the company the possibility to select professional arbiters, its confidential and it saves time to solve the conflicts. Arbitration has a legal backing within the UAE after the ratification of the New York Convention. The London Court for International Arbitration will be involved in the conflict resolution mechanisms. Each party of this agreement has agreed with the rules of this case.


            In Dubai, title deed is the official documents used to show ownership. The title indicates ownership of a particular real estate. In this case, the real estate covered by the Title includes land and any building that can be damaged if moved. They are registered in the public register, also called the ‘Ogood’ that is under the Dubai Land Department.

In the case of subdivided land or building apartments, individual owners have their titles indicating their ownership of their divided portions and in the common area. A Musataha right gives an individual ownership right for a given period. Dubai Land Department serves as the legal grantor in the issuing of Title certificate.

            There are elements necessary to validate a title/deed. These elements are a description of the property, details on the property rights, the property location, property owner, and date when the certificate was issued. For a group of people owning a common property, their title must contain a site plan and master association rules and regulations that guide use of the land. Above all, the information in the titles must be in synchrony with those in the Dubai Land Department’s Property Register.

            In Dubai, it is only the grantor who is under the Land Department that needs to sign the Title. There are procedures legally and successfully to transfer ownership of a real estate’s title. It involves giving the Land Department an official letter requesting a new Title following a change in property ownership. A requestor will need to fill a request form then sign it. The department will also require valid passports of owners, company trade licenses, agreement showing sale or lease, and receipt showing payment of transaction fees at the Land Department. The Master Planning Department then reviews the requests within one working day.

            There are four types of ownership in Dubai. The most common one is individual ownership where one registers the property under their name. The second is joint individual ownership, which mostly involves a married couple. Third is the traditional offshore type of ownership. It requires registration of real estate under the name of companies started under the traditional offshore mandate. The last ownership type is done under the offshore company called Jebel Ali Free Zone, hence the name Jafza ownership. After foreign companies were prohibited from registering new properties under foreign offshore, they have been forced to register under Jafza offshore companies.


            Although Title insurances are available in Dubai, they are rarely used. In addition, the state does offer a guarantee for the Title deeds.

Homeowner’s insurance is one intended to protect individual homeowners under private category. It is a combination of a number of personal insurances. In order to acquire a homeowner’s insurance, there must be at least one person covered by the insurance living in the home. It will translate to the home having a homeowner’s insurance.


            Contracts are legal agreements that bind parties to certain terms, which if not adhered to can be enforced through a court. In Dubai Emirate, the contracts are under the Dubai Contracts Law (1971). It applies to all contracts, even those made before its formation. According to this law, there are certain elements that are mandatory in any valid contract (Borio & McGuire, 2004). The first element is there is an offer in the contract. Second, there is consent of parties entering into an agreement. Third, the agreeing parties need to be capable of entering into a contract. Fourth, it should abide by the law. Fifth, the purpose of the contract should be lawful. Lastly, it should not qualify for the invalid contracts category.

            Sale contracts do not have special formats. Verbal agreements in this contract are valid (Borio & McGuire, 2004). The seller usually drafts them. It is usually brief. There are elements that should be present in the sale contract. Not all parties are supposed to sign the agreement simultaneous, as is the case in other contracts. The sale contract does not mandate the buyer to sign a contract. It should show the content of the transaction agreed by the transacting parties. For off-plan properties, the purchase agreement is accepted by the master developer and handed to the Land Department in Dubai attached to official Title deed request letter.

            When contract terms are broken, the law is applied to ensure liability of the damages is obtained for aggrieved parties. The nature of the damages resulting from a breach of contract may be interest, moral, profit, direct, opportunity loss and consequential damages. The court will assess the damages incurred because compensations are usually stated in the contract if it is defaulted.

There are no abstract documents in UAE. However, there is (Real Estate Investment Trust (REIT) such as the Arabian REIT, DIFX Islamic REIT, and the Emirates Islamic REIT.

Property and Agent Disclosure requirements


            Leasing a property in Dubai has a number of requirements from the tenants and the Landlord or estate agents. The tenant is required to provide copies of a valid passport, residency visa for foreigners, and a statement indicated their income. If the tenant does not have a UAE residency visa, then they are can give an employer’s acknowledgment letter showing that visa processing is underway (Zhu, 2005). However, long-term leases are often given to residents of UAE and short-term leases to the foreigners.

            The owner is also required to prove their ownership of the property through title deed or a sale contract. The proprietor’s copy of the visa is also required or residency visa if they are not natives of UAE. Agents who handle the transaction need copies of their Broker ID card. When a tenant rents the property, the owner or agent has to provide a receipt indicating the amount paid and it should contain a letterhead.

The proprietor and tenant have responsibilities during the contract period. The property owner is responsible for providing the tenant with the bylaws guiding the community, property, or apartment especially in communities that are gated. On the other hand, the tenant should make prepayment depending on the landlord’s preference. Their agreement must be written down on a lease agreement.

            If the property owner or the tenant intends to cancel the rental contract before its expiry, there is a process they can follow. If it is the tenant, then they will need to give a notice of the same according to the lease agreement. The tenant may however need to continue paying the rent until the agreed date. For the property owner to evict a tenant, it has to be for specific valid reasons. One of the reasons may be failure to pay rental fee for one month after property owners notice. The other reason may be a tenant subleasing the property without the property owner’s knowledge. If the property is used for illegal or immoral activities, then the property owner can evict the tenant especially if the tenancy agreement prohibits it. Finally, the landlord must evict a tenant in case the building presents a risk of falling. The legal requirement for this tenancy agreement to be terminated follows the agreed terms in the lease contract provided they are within the law. Although there is duration recommended for eviction of tenants, the terms of the lease contract take precedence. The circumstances leading to the eviction also determine how fast the process is executed. For instance, if the house poses a danger to the tenant, an immediate removal is initiated.

The Real Estate Sales Process

            The process of selling real estate properties involves a number of activities that increase the marketability of properties. These activities include listing the properties in the market for the potential customers to view the offers. In Dubai, there are inventories created under the Multi Listing Services (MLS) to sell the real estate properties online. Besides the company websites, property owners or agents can list their properties in a number of MLS such as, and (Zhu, 2005). These platforms allow different property agents to manage the details, photos, and contacts of the properties they are offering. The database managed by these websites is proprietary. 

            The level of data made available to the public is more than onsite marketing. The public can view actual photos of the property, bid on the property and then complete payment for the property. There are properties with provisions for negotiation where the buyer can propose their price. This form of MLS, therefore, provides a lot of information to the public. To market the property, MLS have made deliberate attempts to ensure that the photos of the properties displayed on their website are the actual images of the properties. They also add honest description. It improves the marketability of the property depending on its presentation.

            The MLS services provide a complete package of services that include presentation and negotiation. Real Estate Regulatory Agency (RERA) within Dubai licenses most of the MLS agents. They offer accompanies onsite viewing, as many customers may want to visit the properties before making purchases. An excellent knowledge of the market and regulations around properties makes the MLS services in Dubai ease and hasten the sale of real estate property. For areas of low demand for property, negotiation is a tool to increase marketability. Once the buyer accepts the offer, sale contracts are drafted, and the Dubai Land Department is sent the sale contract attached to an official request letter for a new Title Deed for the property buyer. The entire process has to be backed up by the seller and the buyer. Usually, the cost on the buyer for processing the transfer of ownership request is 4 percent of the purchase price. The amount is paid to the Land Department. Until the ownership is transferred, the seller’s responsibility is not complete.

Licensing requirements and process

            In Dubai, the ‘Real Estate Regulatory Authority’ licenses the real estate sector. The major function of the organization is to ensure that all real estate activities within Dubai are regulated including the roles of agents. This organization was founded in 2007 to ensure that all real estate activities arte within the regulations of the Dubai state government, here, the main objective was to ensure that it conforms to the legislation established by the ‘Dubai Land Department.’ As such, the organization is mandated to perform an executive responsibility in establishing a successful real estate sector in the region. The department with special preference to highly qualified staff to articulate the mandate of the organization assesses the training requirements. The training programs are offered at the Dubai real estate institute before an individual can be deemed as qualified for appointment (Heath, 2005).

Responsibilities of salesperson & broker

            Acquiring a real, estate property is a long process that cannot be undertaken by an individual without the help of salesperson and brokers. The brokers form the link between the customer and the sales person for a real estate property. Their role is to act on behalf of the client in the initial process of obtaining the legal requirements for the customer. On the other hand, the salesperson has the responsibility of identifying real estate opportunities for the customers. They value the process for the properties with the brokers or clients to reach an optimum valuation price. Both Brokers and salesperson in the real estate process are paid a commission that is a percentage agreed upon by the customer and the seller (Heath, 2005). As such, the amount of the payment is restricted to the agreement between the two partiers and it is not fixed for all brokers or sales persons. Finally, the role of the broker is to find a real estate opportunity for an investor. In this regard, the broker serves to represent the investor in the real estate acquisition process.

Financing Residential Property

The real estate sector is a capital-intensive venture that requires substantial amount of money to prosper, in the last two years, the industry has continued to grow in the country due to improved financing by the banks and acquisition of mortgages. Banks within the state provide financing for mortgage properties, but they are controlled by the Central Bank that introduced the mortgage caps. The mortgage rates are given at a rate of 50 and 70 percent for local and foreigners respectively (Davis & Zhu, 2004). This mortgage caps is set to ensure that foreigners do not dominate the real estate market. Similarly, the Dubai Land Department has increased its registration fees from 2-4% to ensure that the sector is caution of an eminent bubble. For an individual to obtain a mortgage there are procedures that must be fulfilled. Firstly, mortgages are only provided for the local Emiratis or locals who live in Dubai. Similarly, individual banks have been accorded different sets of restrictions by the Central Bank that applies in the foreigners in relation acquiring a property for the first and second times and property under construction.

In case of a property that is being acquired for the first time, the mortgage is valued at 75% of its property value for any acquisition that falls short of AED 5 million. Conversely, a 65% valuation is charged to a property that exceeds AED 5 million (Davis & Zhu, 2004). Secondly, for a property that is being acquired for second or subsequent times, the mortgage valuation is 60% its cost. Lastly, for a property that is under construction, the mortgage value is placed at 50% its cost. Generally, the conditions for mortgages foreigners and locals are: it does not exceed 25 years, the maximum age limit is 65 years, the debt to income ratio is maintained at 50%, and the highest financing amount imposed to foreigners must be less than a total of seven years yearly incomer.

            Dubai has experienced a mixed price variation in its rental rates over the last few years. For example, real estates properties within the CBD have experienced a reduction in the rental rates, whilst other sectors have registered exponential growth. On the other side, the rental prices for the villa properties have increased at an average of about 8% annual increase. Further, the price of the residential property in the UAE market in the last two years has remained fragmented with price indicators based on the nature of the property and its geographical location within Dubai. On the contrary, a report by CBRE has indicated that the prices of real estate properties have remained in an upward trend within the last few years. As such, this points at the prospect of a bright future for the industry. In this regard, the recommendation for an investor seeking to exploit the real estate market is that Dubai is a good market to invest.

            Firstly, the UAE region has attracted many investors from across the globe. As the country continues to grow and develop, its economy the need for housing is eminent. Therefore, investing in Dubai is an important initiative that will help to tap the increasing demand for housing. Even after the global financial crisis in 2008, the real estate sector has recovered very well to profitable levels in the last two years. This is because the demand for housing has increased and both the local s and foreigners have demands for housing. Moreover, the economic development is a surety that the real estate industry will continue to grow in the region because it will continue to attract more foreign investors. As such, the entry of the foreign investors into the market implies that need for their residential as well as office space will be required, therefore, the future of the real estate market in Dubai is bright.

            Secondly, the process of acquiring a real estate property in the country is comparatively low to other regions in the world. For example, the land registration fee is placed at 2%, which makes it more affordable. In addition, the acquisition process is shorter and it can take at least a month to be completed. This way the investors are able to acquire the land or property within a shorter time so that he or she can start development projects. The reduced producers make the process effective and this provides an advantage to the investor to acquire subsequent properties in the region.

            Thirdly, the structure of the financing process is elaborate and efficient for the investors. In Dubai, foreigners and locals are able to access mortgage financing to ensure that their properties are completed without financial constraints. The access to mortgages is not biased and it is very easy, this is an important factor for the investor because it facilitates the process of establishing an efficient real estate process in the region. In particular, the Central Bank has set the mortgage caps for foreign and local investors at 50and 70 percent the total cost of the property. Similarly, the mortgagee is repaid for up to 25 years, but the repayment amount cannot exceed the total annual income for seven years. This means that the mortgage is readily available for both the foreigners and the locals.

Secondary market


            A foreclosure is a defined process in law that allows a lender formulates to obtain the amount due from a borrower who has stopped servicing his loan. The legal process allows the lender to publicly sale any property that was provided by the borrower as collateral. Before this action is taken, the law requires that the lender obtain a court order that revokes the ownership of the property from the borrower. In Dubai, a failure to pay the promissory notes is a major reason that can warranty a foreclosure process. Similarly, in the event that the contents of the promissory notes was made with a recourse, the lender is obliged to filed a “deficiency judgment” claim to settle the outstanding amount from the initial sale of the real estate property. The problem of foreclosures was common in Dubai because of the extensive housing rout that forced prices to reduce. This was a major setback to the borrower because they were forced to stop servicing their mortgages. For example, Barclays Plc was the pioneer financial institution to obtain a foreclosure order for its $16 billion loan advanced as mortgage. According to the foreclosure law in Dubai, all lenders are required to notify the homeowners of their intent to launch a Foreclosure claim within 30days. A court review process that will rule over a debt judgment to allow the “Dubai Land Department” to auction the real estate property follows this. As such, the process can take between two and four months to be completed. On the other hand, the housing rout increased the expense to the side of the borrowers and this has initiated another trend of out-of-court process to mitigate the problem. Consequently, the lenders in Dubai have resorted to alternative ways to foreclosures like prolonging the payment period. In this regard, the absence of securitization in obtaining the mortgages has facilitated UAE lenders to have the ability to restructure their loans compared to other parts of the world like the US.

Property management

            Property management is an important aspect of real estate market in Dubai because it provides the approaches of managing properties. In Dubai, the law requires this process of management to be undertaken through third parties. Here, a company dealing with property management issues is contracted to provide these services on behalf of the owner. However, this is not a common trend in Dubai, especially concerning large real estate properties. Conversely, the law requires such third party companies to be registered and authorize to management properties on behalf of their clients. Consequently, the manager of the company is authorize d to management the property through liaising with the tenants. On the other hand, the “Decree No. 4 of 2010” controls management of property in Dubai. Here any real estate property developed on a piece of land granted to Emiratis requires special permission by the ruler of Dubai before it is disposed.

Commercial Market

            The Dubai real estate commercial market has continued to grow in the last one year. The prices in of real estate properties have increased progressively to about 20% making the commercial market very viable. However, the development of the commercial market has been hampered by disputes. Consequently, developers and contractors have resorted to litigation as an approach to solve the problems. Thus, the main problems affecting the commercial market revolves around construction problems and defaults in the loan payments. Also, stalled projects have also hindered the development of the commercial market, but this is being resolved by the Dubai Land Department through cancelation of such properties. This move is prompted to ensure that the transactional rate of the sector continues to increase. Similarly, the “Central Bank” has initiated the mortgage caps to ensure that more investors are attracted to the commercial market. Particularly, the mortgage caps have set the prices of properties not to exceed 75% the total cost of the property on completion and 80% for the local Emiratis (Jones Lang LaSalle, 2012)..

                        Securitized Real Estate

            The process of obtaining real estate properties in the UAE can be obtained through ‘REITs.’ This company is in charge of operations leading to an income producing real estate business. REITs ownership ranges from offices, housing apartments, warehouses, shopping malls, and hospitals. The major responsibility of the REITs is to ensure that it provides funds for investment stocks through public or private listings. In Dubai, the REITs organizations are permitted to own property through the purchase of such properties from the “Dubai International Financial Centre” (DIFC). However, this can only be obtained from this institution in the context of Dubai, thus limiting their usage in the country. On the other hand, a specific legislation was developed to ensure that REITs are functional in the country. Here, the “Investment Trust Law” no. 5 was drafted to provide the legislation of the RTEITS in Dubai.

Construction of new property

            The process of acquiring land in Dubai is properly outlined in the legislative structures of the land acquisition. All structures constructed on any land form the basis of the real estate property. Once buildings have been constructed, they are registered by the “Dubai Land Department” in the property register. Further, in big apartments, each owner is issued with a property ownership that is separate to the single entity.

Building permits

            The construction of new buildings in Dubai requires an initial building contract before any work is undertaken. Specifically, this process will be achieved through filling an application form to provide details for the property and the land. Here, the investor is required to apply for such permit through the contractor. The first stage involves obtaining a design approval that covers shoring excavation and hoarding. This is followed by a preliminary design where the contractor is obliged to obtain a piling permit. Consequently, the third stage is to access the final design approval that will be obtained by submitting all documents presented in the approval and preliminary stages. However, this permit will only be provided after successful provision of an original current building permit. Design acceptance letter, and fee receipt.

Cost of new construction

            The cost of constructing a real estate project in the UAE varies from one project to another. The initial requirement is to register the project in the “Dubai Land Department” where the holder is compelled to pay a sum worth 4% of the purchase price. An administration fee is added to this cost that is currently set to be AED315 (Case et al., 2000). This is exclusive of commissions to the brokers that are required to be paid by the buyer. Incase the property will be constructed through a mortgage, and then an extra mortgage registration fee will be paid at 0.25% the loan amount. Lastly, another extra fee will be paid to obtain a building permit.

Government restrictions

            There are no major government restrictions in the process of obtaining a real estate property in the UAE. The only major restrictions have been set by the Central Bank to ensure that three real estate does not become a bubble. The federal government has specific roles to play in the real estate market. It is tasked with the role of; overseas policy, defense and security. However, each government is tasked with the responsibility of handling all local matters that are not stipulated in the federal constitution under article 113 of the federal constitution. These local issues are; issuing trade licenses, health and incorporation of corporate entities. The UAE has a varying judicial system. Another important government restriction is provided by (Article 4, Law No. 7 of 2006) that provide the legislation of ownership for property by the GCC nationals (Latham & Watkins, 2011). In this regard, a foreign company initiated in the UAE with a dominant foreign shareholder, it will not be considered for registration for lack of an Emirati. As such, the entity will be registered as a freehold or leasehold property for duration of 99 years.


            In addition, the mortgage caps have been set to ensure that chances of a real estate bubble have been contained. This will ensure a good market for real estate propriety in the future. In conclusion, the decision to invest in the Dubai real estate industry is well informed and viable for any investor across the world.


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