Dubai is one of the few cities in the world that saw investment inflows when the world was shutting down during Covid. Statistics indicate that during this time, its real estate sector grew at a faster rate and will continue to do so in 2023.
The strong economy and the thriving real estate industry make Dubai a highly safe city to invest in. However, many foreigners are confused because of the different options and real estate types available to them.
Today, we will learn about a common term called Leasehold zones in Dubai. We will discuss everything from what they are, their benefits, their disadvantages, and how they differ from freehold properties in Dubai.
What are Leasehold Properties in Dubai?
A leasehold property in Dubai is one that the owner can lease out for up to 99 years. These properties are available in certain leasehold zones in Dubai.
Owning a leasehold property allows you to have a home in Dubai for a lifetime, but you don’t own the land it is built on.
After the lease period, the property rights revert to the original owner. As a leasehold owner, you can also renew the lease once it expires after reaching a mutual agreement with the original owner.
However, when living in a leasehold property, you cannot make any changes, modifications, additions, or renovations without the owner’s permission.
Still, regular maintenance of the property is the job of the owner. Most importantly, the lessee cannot sublet or rent out the property to someone else.
Pros and Cons of Leasehold Properties in Dubai
Let’s have a look at the goods and the bads of leasehold properties in Dubai.
Pros of Leasehold Property in Dubai
Here are some most notable advantages of a leasehold property in Dubai:
- Unlike freehold properties, which are only available in designated areas, you have more options for leasehold properties. You can find more variety in terms of neighborhood and price when looking for a leasehold property.
- As a lessee living in a leasehold property, you have limited liability when it comes to routine maintenance of the property. It is the owner’s responsibility to make repairs when needed.
- Even if the contract on your leasehold agreement ends, you can renew it through mutual agreement with the original owner.
- Leasehold properties are generally more affordable as there is more supply and less demand. This makes it a good option if you want to live in an economically stable city such as Dubai without spending a fortune on property.
Cons of Leasehold Property in Dubai
Here are some cons of living in leasehold properties:
- You don’t have the right to make any changes, modifications, additions, remodeling, or renovations to the property without written approval from the original owner.
- Under the leasehold agreement, you are prohibited from subletting the property to someone else.
- Some properties might have additional conditions, like the prohibition of keeping pets.
Difference Between Freehold and Leasehold Properties in Dubai
It is easy to feel confused between Leasehold and Freehold properties. Here are the key differences between freehold and leasehold properties in Dubai.
| Leasehold Properties | Freehold Properties |
| Has ownership of the property but not land/plot for the duration of the lease (can be up to 99 years). Restrictions on making modifications, alterations, additions, and renovations. The lessee needs written approval from the original owner. Lease properties offer more areas/neighborhoods to choose from. Lessee cannot rent or lease the property to someone else. | Has ownership of the land and the rights to build, sell, and rent out the property built on this land. Owners have full rights to modify and renovate their property while sticking to the local real estate laws. These properties can only be purchased/leased in the designated freehold zones in Dubai. The owner can rent out the property without any restrictions. |
When to Choose Leasehold Property in Dubai?
It can be challenging to choose between leasehold and freehold properties. Both are excellent options and offer significant advantages to ex-pats looking to live in a thriving economy. However, in some cases, investing in a leasehold property instead of a freehold property makes more sense.
For example, you can purchase a leasehold property to enjoy the benefits of living in Dubai instead of owning a freehold property at a massive cost. This is perfect for people with a limited investment.
Moreover, 99 years is a long time. And even after the expiration of the lease period, you can get it extended through a mutual agreement.
Similarly, you can choose a leasehold property if you want more options and to live in areas that are not designated freehold zones. This perk is unique only to leasehold zones.
Lastly, you don’t have to spend money on yearly maintenance and repairs for a leasehold property. It is the owner’s responsibility, and you get to save that money instead.
All in all, freehold properties are best suited for people who want to have an investment in Dubai, while leasehold properties fulfill most of the residential needs while also being more affordable.
FAQs
- Where can I find leasehold properties in Dubai?
Leasehold properties are located in areas such as Dubai Marina, Jumeirah Lake Towers, Downtown Dubai, Dubai Sports City, Palm Jumeirah, and more.
- When is it a good idea to buy leasehold property?
It is wiser to purchase a leasehold property when you’re looking for more options, such as relatively affordable prices and the freedom from spending yearly money on repairs and maintenance.
- What happens to leasehold property after the lease expires?
After the expiration of the lease period, the rights revert to the property’s original owner. However, this period can be extended again after an agreement with the owner.
Final Words
Although it may seem relatively easy to go and purchase a leasehold property in Dubai, some intricacies are involved. For example, depending on your chosen area, not all properties offer up to 99 years of lease.
To make a safe and beneficial decision, it is best to hire the services of a local real estate agency that knows the city, its laws, and how they apply to different areas. Hiring these services can also save you from making mistakes and investing your hard-earned money in the wrong place.