Property Investor Visa: How to live and retire in Dubai and the UAE.
Foreigners can get long-term residence and retire in Dubai and the UAE
Expats can buy ONLY in areas designated as Areas for Ownership by Non-Nationals
Whether for investment, retirement, or as a second home, foreigners can buy a villa, an apartment, a shop, an office, a warehouse, or land in over 60 different communities in the UAE. Which also grants them a long-term renewable residency visa (under some conditions that we’ll explain below).
During last week’s webinar, Julian L. asked:
What I need to know [is] when you buy a villa [in Dubai] are you the owner of the land? What I understand is [that] the land belongs to the state as per the federal law. A clear answer would help.
The clear answer is YES and NO.
YES, buyers can own the land. But only when they buy in one of the over 60 freehold areas. That’s for villas, apartments, shops, and hotels.
While for industrial prosperities expats can own the land only in the free zones (it’s a bit different for UAE and GCC nationals who can buy anywhere, including the ‘old’ Dubai).
NO, if they buy leasehold properties.
I know, I know. That’s not crystal clear at all.
So, let’s start from the beginning.
When was the foreign ownership law first passed?
First and foremost, there’s no express prohibition in the Civil Code against foreign land ownership.
Nevertheless, each emirate does have its laws to regulate ownership of properties and lands.
In 2001, the Dubai government allowed expats to lease a property for 99-years. In selected locations.
Then, in 2002, His Highness Sheikh Mohammed bin Rashid issued a decree allowing foreigners to buy freehold ownership.
This sparked the 2002 - 2008 real estate boom of Dubai. Dubai’s second boom.
To recap, properties can be owned in freehold or in leasehold.
What is the difference between Freehold and Leasehold in the UAE?
The seven emirates forming the UAE follow similar legislation. But there are differences.
In Dubai - by far the biggest real estate market in the UAE – investors can own land in one of the following ways:
- Freehold – the right to use, enjoy and occupy land or property permanently;
- Musataha – the right to build on the land for a specified duration not exceeding 50 years. The holder of a Musataha right is deemed to own all buildings on the land during the specified term; and
- Leasehold and Usufruct – the right to use, enjoy, and occupy land or property belonging to another person for a fixed term not exceeding 99 years. Usufruct is similar to the concept of leasehold under English law.
- Grant - land can also be gifted by the ruler to a UAE national at no cost for commercial, industrial, or residential purposes. Granted land is not freehold land and is subject to various restrictions.
The main difference between freehold and leasehold is about who owns the land.
With leasehold, investors own the property for a set period of time (that can be extended under certain conditions). But the land is owned by the freeholder.
Once the lease expires, the property reverts back to being a freehold property. Where both the building and the land are owned by the freeholder. And the leaseholder loses all the rights to the property.
While buying a freehold property means that investors are the owner of both the building and the land it stands on. In perpetuity.
That’s why buying and selling freehold property is less stressful than buying and selling a leasehold property. Where the value decreases over time. And there is a set of rules of what can and can’t be done with the property.
Can foreigners own a property in Dubai?
Yes, foreigners can own the land and the property built on it. But it is not the same for every nationality. The biggest difference between UAE Nationals and expats is about where they can own these lands and properties.
UAE nationals, Gulf Cooperation Council (GCC) nationals, and companies fully owned by either of these can own property anywhere in Dubai (Article 4 of Law 7/2006).
Foreigners – non-UAE or GCC nationals - can own lands and properties only in areas designated as Areas for Ownership by Non-Nationals (these areas are listed in Regulation 3/2006, then amended by Regulation 1/2010).
Non-UAE citizens can also own land in any of the free zones.
The same applies to companies owned by UAE/GCC nationals or foreigners.
Can property buyers get a residency visa?
Yes, property investors can get a residency visa in Dubai. But the property MUST be located in a Freehold Area.
Because, if the property is in a leasehold area, then you can’t apply for a residency visa. As the title deed will mention for how many years you have leased the property.
To get a residency visa through property investment the purchase value of the property must be at least AED 1 mil (INR 2 cr, EUR 230k, USD 270k). Or above.
So, if a property’s market value is over AED 1 mil but the purchase price was less than that, then the property does not qualify for the visa.
This is applicable against residential properties (Apartment/ Villa) and commercial properties (Hotel Room, Hotel Apartment, Office, Warehouse).
For visa purposes, the purchase value is what counts. Not the market value.
Does it apply to all property types?
Not all properties are accepted for the residency visa through property investment.
That’s because properties that are not ready (off-plan), land plots, disputed, and not livable properties are not eligible for any residency visa.
Even if the price is more than AED 1 mil.
Some developers falsely claim that buyers can get visa for under-construction properties. That is not true.
Rules to get Property Investor Residency Visa:
- Investors are eligible for a residency visa even when they buy up to three properties (as long as they’re worth AED 1 mil combined);
- When 50% of the home loan is paid also mortgaged properties are eligible (as long as the title deed mentions the investors as the owner instead of the financial institution);
- If the property is owned by multiple people, then those whose shares of the property crosses AED 1 mil can apply for UAE’s investor visa;
- If a property is owned by a married couple then one spouse can apply for the UAE investor visa. Even if the property’s purchase price is AED 1 mil (for this you’ll need an attested marriage certificate).
Types of Residency Visa through Property Investment
There are a few types of visas. Let’s look at them in a bit of more details:
Six Month Multiple Entry Dubai Property Visa
The six-month visa is technically a tourist visa. So you will not be issued an emirates ID (a local identity card) and you don’t need to do the medical examination. Most people who choose these options do it because cheap and takes less time to process.
Three Year Dubai Property Visa
This is by far the most popular visa type. It is issued for three years. And can be renewed for a nominal fee.
Five Year Dubai Property Visa
Since 2019, property investors can apply for a 5 years investor visa.
Provided the property’s purchase price is at least AED 5 mil (INR 10 cr, EUR 1.2 mil, USD 1.4 mil).
These kinds of visas are for residency only. Which means that you or your family can not work on that visa.
To work, you or your family will have to change the visa type.
Can people retire in Dubai?
In 2020 the Dubai government announced Retire in Dubai.
This is a global program that grants eligible residents aged 55 years and above a Retirement Visa. Renewable every five years.
To qualify, retirees must meet one of the three requirements below:
- Earn a monthly income of AED 20k (INR 4 lakhs, EUR 4.6k, USD 5.5k),
- Have savings of AED 1 mil (INR 2 cr, EUR 229k, USD 273k),
- Own a property in Dubai worth AED 2 mil (INR 4 cr, EUR 459k, USD 545k).
In its initial phase, the program’s focus is on UAE residents working in Dubai. Before expanding to residents of other nations.
Retirees can benefit from world-class healthcare, hassle-free living, connectivity, safety, and comprehensive inheritance laws and services.
Can properties be given for inheritance?
Yes, properties and lands can be given as an inheritance.
The Inheritance Property Law is quite complex when compared to other Dubai property laws.
For instance, many expatriates living in the UAE don’t know that if they don’t have a legal Will the division of assets is governed by the mandatory Sharia rules.
This applies to all nationalities. Typically, the husband or wife, son, daughter, father, and mother would inherit a portion of the estate after debts are satisfied.
By default, inheritance issues for all Muslims (UAE nationals or expatriates) are dealt with in accordance with Sharia rules.
Since those rules are codified by the Law of Personal Status (Federal Law No. 28 of 2005) which governs UAE inheritance law.
This is the default for all Muslims. Irrespective of their nationality. But there’s an ‘opt-out’ option available to individuals who are both expatriates and non-Muslims.
Article 1(2) of the Law of Personal Status allows non-Muslim expatriates, with assets in the UAE to make a Will under the law of the country of their nationality (i.e. the country of their passport).
Since 2015 DIFC allows non-Muslims to register Wills for their Dubai and Ras Al Khaimah real estate assets with the DIFC Wills Service Centre (“WSC”).
In DIFC the registration fee for a single DIFC Will is currently set at AED 10,000 plus VAT. While in Abu Dhabi the process is relatively simple and straightforward currently costs AED 5,500.
On 13 August 2020, Sheikh Mohammed Bin Rashid issued Decree 23 of 2020 Regulating the Sale of Inherited Residential Properties by Heirs in Dubai (“Decree 23”).
Decree 23 is applicable to all residential properties located in Dubai. It does not make a difference between properties that are located in designated versus non-designated areas for foreign ownership. That’s why it is applicable to all nationalities.
The Dubai Land Department (DLD) is authorized to approve an application of sale submitted by any of the heirs, and transfer title to a purchaser. DLD may also authorize the sale of a property by auction (if appropriate).
Following a sale, the DLD will distribute sale proceeds to the heirs based on their individual entitlement.
Now non-Muslims can deposit their wills in Dubai and Abu Dhabi. Starting in 2018 non-Muslim expatriates can also register a Will with Dubai Courts. Or at the Abu Dhabi Judicial Department. Under the new Will law non-Muslims, expatriates can have full testamentary capacity to leave their assets to their heirs and not be subject to Sharia inheritance rules.
Rental Property Laws
Most people think that property investors’ success is based on selecting the right property at the right price. While pro investors know that demand and rentals decide the success or failure of a property.
That’s why we look at property rental laws in:
For rental properties in Dubai, the tenancy contract is usually valid for one year. If not then it will be specified in the contract.
Based on Decree No. 43 of 2013 landlords can increase rents only when:
- If the rent is up to 10 percent less than the average rent of a similar property in the same area then the landlord cannot increase the rent.
- If the current rent contract is 11 to 20 percent less than the average rent of similar properties, then the maximum rent increase cannot exceed 5 percent of the rent value.
- In case of rental values that are 21 to 30 percent less than the average rent for similar units, the rent increase allowed is up to 10 percent of the rental value.
- If the rent of a residential unit is 31 to 40 percent less, then the maximum rent increase allowed is 15 percent.
- For properties leased at less than 40 percent or more compared to the average rent of a similar unit, the maximum rent increase applicable is 20 percent.
To calculate how much – if at all – rents can be increased the Dubai Government has provided the Rent Increase Calculator.
In case of disputes tenants and/or landlords can register a case with the Rental Disputes Settlement Center (RDC).
In order to register a case, the tenancy agreement has to be deposited with Ejari for a nominal fee.
Registering the tenancy agreement with the Government protects both parties, as the Government can intervene and settle any dispute that may arise.
Can Foreigners get a Mortgage in the UAE?
List of Freehold Areas and Free Zones