Dubai’s real estate market is abuzz with plenty of words, so chances are, you’ve heard freehold and freezone plenty of times. What is less commonly mentioned, however, is the difference between the two.
Free zones are special economic zones in Dubai in which companies are exempt from taxes. They are purely for businesses and do not contain residential units. It is popular with foreign companies and business owners for whom Dubai is a manufacturing region or distribution base. Dubai has always been a popular business hub, and free zones have merely made it even more attractive. Importantly, business owners who have their businesses set up in the free zone have full ownership of the business. There are certain limitations to free zones, however, with the most important one being that freezone-registered companies can never operate outside the freezone. But it is a deal many will take, as it completely negates the need for a local business partner.
On the other hand, properties referred to as freehold in Dubai are those located in ‘designated areas’ in which non-nationals can own an absolute interest in land.
Freehold areas were established by Law No 7 of 2006 concerning the Land Registration in the Emirate of Dubai. Article 4 of the law gave non-UAE nationals the right to acquire real rights in certain areas of Dubai and to have their rights registered with the Dubai Land Department (DLD).
When a buyer purchases the property, they are free to rent, lease or sell the property. In addition the buyer does not have to be a residence of the UAE, foreign investors can also purchase a property in freehold areas.
Once you have purchased a property in one of the freehold destinations in Dubai, you will have to register your name as the landowner with the DLD (Dubai Land Department). This will officially entitle you as the property owner and the contract will be applicable in perpetuity, which means that any family member entitled will inherit the property.