Property Possession - Deciphering Freehold vs. Leasehold in Dubai
Dubai has received massive economic progress in the past few years. It is now famous for being a Center of Excellence for those wishing to invest in a business or own a house. Historically, there were no regulations in Dubai that could allow people to possess properties. So, they preferred to buy properties in other countries. This blog will elaborate on the list of leasehold areas in Dubai and their major impacts.
In 2001, the UAE government introduced laws under which expats were allowed to reap the benefits of 99-year leases of properties in designated areas of Dubai. The government also introduced the Freehold Decree. It enabled foreign nationals to sell, buy, or rent properties. However, possessing a desirable property in Dubai remained a matter of careful financial consideration and understanding terms like freehold and leasehold.
This blog will be deciphering freehold vs. leasehold in Dubai to develop an understanding of property-related terminologies. We will also highlight the most reasonable communities for expats and discuss the pros and cons of buying freehold and leasehold properties. This will help the audience make a knowledgeable decision about whether one should buy a freehold property or leasehold property in Dubai.
Leasehold Properties
A leasehold property can be leased for 99 years or less, depending upon certain circumstances.
The owner has a complete right to the home, but cannot claim the ownership of the land on which his property is located. The right to the property goes back to the freeholder upon completion of the freehold period. Nevertheless, the lease can be renewed upon expiration.
An owner of a leasehold property can sell, use, or rent his property whenever he wants. Unlike freeholding property, leasehold property can only be modified, altered, or renovated with the permission of its freeholder. Thus, a freeholder takes care of a leasehold property.
List of Leasehold Areas in Dubai
Leasehold areas are not open to foreign investors. Only UAE nationals or GCC residents can purchase such a property. Understanding the list of leasehold areas in Dubai is essential for potential buyers as it affects long-term advantages and control over a particular property. Some well-known leasehold areas in Dubai are as follows:
- 1. Umm Suqeim
- 2. Al Barsha
- 3. Jumeirah
- 4. Mirdif
1. Umm Suqeim
Umm Suqeim tops our list of leasehold areas in Dubai. In such a high-end residential community, leasehold properties feature beachfront entertainment venues, cafes, and shops. One of the most significant advantages of renting or owning a house here is that it is situated between Dubai’s ancient and newest areas. The most iconic places, such as Burj ul Arab and Palm Jumeirah, are just minutes away.
To buy an apartment in Umm Suqeim, you must keep 4.6 million AED in mind as a starting price. Moreover, if you want to buy a villa, you can expect the sales price to start from 51.3 million AED.
2. Al Barsha
Al Barsha is one of the earliest neighborhoods in Dubai, offering marvelously designed villas and homes. The base price for apartments and villas is approximately 1.3 million AED and 9.2 million AED.
The community is subdivided into Al Barsha 1, Al Barsha 2, Al Barsha 3, and Al Barsha South areas. Here, locals and GCC residents have an opportunity to build their homes by purchasing residential plots.
3. Jumeirah
Leasehold as well as freehold properties are found in the Jumeirah neighborhood. It is subdivided into Jumeirah 1, Jumeirah 2, and Jumeirah 3 districts. It has a good reputation for eateries and entertainment venues.
It offers properties, such as 3-bedroom villas, starting from 18.3 million AED. Moreover, there are 7-bedroom houses for large families.
4. Mirdif
The next on the list of leasehold properties in Dubai is Mirdif. It is a well-known housing development with a fantastic collection of beautiful villas. Outside areas enable people to enjoy greenery and calm surroundings. You can also organize community barbecues and have tea with friends and family in the evening.
In Mirdif the starting price for villas is 4.9 million AED. However, the starting cost of a flat is 1.7 million AED.
So, make a well-informed decision to own any of these houses.
Pros of Buying a Leasehold Property
Dubai offers leasehold property holders many advantages as discussed in this section.
The initial cost is lower compared to freehold properties. The cost of maintaining areas and services is shared among residents. This shared maintenance reduces the financial burden on property owners. Thus, leasehold properties tend to be more accessible to property buyers.
Leasehold properties are subject to government laws and regulations, ensuring a level of security. They usually offer good rental yields and allow buyers to choose the duration that meets their needs. Moreover, adjustable payment plans enable them to extend payments over time.
Cons of Buying a Leasehold Property
When the lease period expires, you have to pay for renewal. It can be a significant amount depending upon duration and area.
Planning to make modifications requires written approval from the original property owner for renovations or restoration. It can also lead to disputes between residents and landowners. The realization that you do not have full ownership of the property can develop uncertainty about the property's future.
Freehold Properties
Buying a freehold property in Dubai allows a buyer to have full ownership of the home and the land on which the property is located. Such an area can be sold or leased on the owner’s will. Foreign nationals can buy a freehold property in only designated areas of Dubai. Let us have a glimpse of the designated freehold areas in Dubai below:
List of Freehold Areas in Dubai
Freehold areas include a number of communities or residential areas in Dubai. These areas include Downtown Dubai, Bluewaters Island, Business Bay, as well as Culture Village.
- 1. Downtown Dubai
- 2. Bluewaters Island
- 3. Business Bay
- 4. Culture Village
1. Downtown Dubai
Downtown Dubai is one of the top freehold areas in Dubai. It is a favorite destination among investors and homeowners. Surprisingly, it is home to famous attractions like Burj Khalifa and Dubai Mall. It offers a number of luxurious freehold apartments with average sales prices ranging from 2 million AED to 3.6 million AED.
2. Bluewaters Island
Bluewaters Island is the trendiest development in Dubai. It has the world's largest Ferris wheel, Ain Dubai. This freehold area offers 1-bedroom apartments and 3-bedroom flats starting from an average price of 3.6 million AED and 7.5 million AED, respectively.
3. Business Bay
Third in the list of freehold areas is Business Bay. This mixed community is popular among investors because it features studios, 1 to 3-bedroom apartments, and 5-bedroom luxury penthouses and villas.
Business Bay apartments can be bought for an average price of 1.02 million AED.
4. Culture Village
Culture Village is Dubai’s emerging waterfront development, home to luxury residences, hotels, and art galleries. If you want to buy sleek waterfront residences in 1 to 3-bedroom layouts, Culture Village offers it all.
Studio apartments are available for 874K AED, whereas 1 and 3-bedroom flats can be bought for an average sale price of 1.6 million AED and 2 million AED, respectively.
Pros of Buying a Freehold Property
Owners of a freehold property and their immediate families can enjoy the perks of renewable UAE visas if their property is valued above 1 million AED. Just imagine having the freedom to hold complete control over your property! You will not need anyone’s approval to make changes to your property. However, you will only need a developer’s nod for renovation or other personalized modifications.
You can still own freehold properties in Dubai even if you are a foreigner. After the death of the owner, the property passes to the heirs and enables the family to continue calling it a home. Also, a freehold property owner has full discretion to rent or sell their property whenever they want.
Cons of Buying a Freehold Property
With all the perks, there are specific cons to buying freehold properties. Owners of these properties are fully responsible for the maintenance of the property, including entire structural repairs. Dubai offers a limited option of designated freeholding properties, the owner is charged an annual maintenance fee and community service charges. These charges add an extra cost to property-buying expenses.
Freehold properties usually have higher initial costs than leasehold properties. This cost difference can keep buyers from buying freehold properties. Moreover, while freehold properties offer stability, they still face market fluctuations that affect property values.
Conclusion
Making a thoughtful decision between buying the freehold and leasehold properties demands an evaluation of financial conditions and preferences. The above-mentioned information tells that the ideal ownership structure is based on investment goals and risk management. Freehold property possession is perfect for those who seek long-term ownership and growth potential.
On the other hand, leasehold property possession is suitable for those who are budget-conscious and are prepared to tolerate modification limitations. Whatever you decide, you must partner with a reputable real estate agency to ensure a successful property purchase. Knowing the list of leasehold areas in Dubai will also guide you to the ideal property that fits your ambitions.
