Dubai’s real estate market offers many investment opportunities for people from all over the world. A critical choice for buyers is deciding between free zone vs freehold properties.
Knowing the differences between these two types is key to making a smart investment. This blog will explain the main differences and things to consider regarding free zones and freehold properties in Dubai, helping you choose the best option for your investment needs.
Read below and choose wisely!
Freehold Property
Freehold properties are those located in areas designated by the ruler where non-GCC nationals can own properties. These areas were established by Law No. 7 of 2006 concerning the Land Registration in the Emirate of Dubai.
Article 4 of the law has given non-UAE nationals the right to acquire properties in certain areas of Dubai. Moreover, their ownership is legally recognised and registered with the Dubai Land Department (DLD).
You get the title deed in your name by purchasing a freehold property. Such assets remain in the family forever; even when the owner dies, heirs can easily inherit them.
Top Freehold Properties in Dubai
The most renowned freehold areas in Dubai are mentioned below:
- The Palm Jumeirah Emirates Hills
- The Meadows
- The Lakes
- Motor City
- Green Community
- Jumeirah Lake Towers
- Downtown & Old Town Burj Khalifa
- The Springs
- Dubai Marina
- The Business Bay
- Discovery Gardens
- Dubai Investments Park
- Jumeirah Beach Residence
- Arabian Ranches
- Falcon City
- The Villa
- Al-Barari
- Dubai Sports City
- International City
- Dubai Production City, formerly known as “IMPZ.”
- Jumeirah Village
- Jumeirah Islands
Investing in Dubai Freehold Properties
Freehold properties in Dubai are an excellent choice for investors seeking long-term stability and security. This can provide a sense of reassurance and peace of mind.
Pros
- Owning a freehold property in Dubai is a powerful investment choice, giving you complete control without any external conditions or restrictions. This sense of empowerment can boost your confidence in your investment decisions.
- The owner has the right to lease, resell and modify the property as per his choice.
- Freehold areas offer lucrative investment opportunities that attract foreign investors.
- The property ownership can be transferred down through generations.
Cons
- It’s an expensive choice, along with ownership documentation and related fees.
- The property must be maintained regularly to ensure a decent resell value.
Free Zone Property
Free Zones are special economic zones that promote foreign investment by exempting taxes in pre-defined areas. These areas are dedicated to business activities and do not have residential properties.
These designated zones offer investors customs-free duty benefits and a simplified business process. Free Zones in Dubai are governed by a unique framework of rules regulated by the free zone authorities. This initiative has led Dubai to become a global giant in the business world.
Top Free Zone Properties in Dubai
Free zone areas in Dubai are mentioned below:
- Dubai Airport Free Zone
- Dubai Cars and Automotive Zone (DUCAMZ) –
- Dubai Healthcare City
- Dubai International Academic City
- Dubai Internet City
- Dubai International Financial Centre
- Dubai Knowledge Village
- Dubai Media City
- Dubai Gold and Diamond Park
- Dubai Multi Commodities Centre (DMCC)
- Dubai Silicon Oasis (DSO)
- International Media Production Zone
- Jebel Ali Free Zone
- Dubai World Central (DWC)
Click here for thousands of listings for sale in Dubai’s free zone areas.
Investing in Dubai Free Zone Properties
This is a lucrative opportunity for anyone looking to establish a business in Dubai’s global market. However, free zone areas are preferred mainly by foreign companies wanting to operate in the UAE and maintain 100% ownership.
Pros
- Eliminates the need for a local business partner.
- Acquiring a free zone license in Dubai is a straightforward process, providing a sense of ease and comfort for investors. This simplicity can make the decision-making process less daunting.
- Special considerations, along with more freedom of operations, are given.
- It allows multiple business activities simultaneously.
- Investors can enjoy exemption from taxes.
Cons
- Free zone companies are only allowed to operate within the Emirate’s free zone areas, limiting their expansion opportunities.
Free Zone vs Freehold Properties: Choosing the Right Option
When deciding between free zone and freehold properties, consider several key factors. Free zone properties are ideal for businesses seeking benefits like tax incentives and full foreign ownership. Freehold properties are generally better for personal investments, offering full ownership and potential for long-term appreciation.
Consider the property’s intended use, whether for business or residential purposes and the regulations apply to each type.
Personal Goals, Investment Objectives and Risk Tolerance
Your personal goals and investment objectives are crucial in making the right choice. A free zone property might be more suitable if you aim to start or expand a business. A freehold property could be the better option for long-term investment or homeownership.
Also, consider your risk tolerance. Free zone properties involve different business risks than freehold properties, which can be more stable and less risky over time.
Here’s what the experts suggest:
- Consult Real Estate Experts: Seek advice from real estate professionals who understand the Dubai market. They can provide valuable insights and help you navigate the complexities of the real estate market in Dubai.
- Research Thoroughly: Look into the benefits and restrictions of free zones and freehold properties.
- Evaluate Financials: Assess your budget, financing options and potential returns.
- Consider Long-Term Plans: Think about how each property type aligns with your long-term goals and plans.
- Legal Advice: Consult with legal experts to understand the legal implications and compliance requirements for each type of property.
Making an informed decision requires balancing your goals, financial situation and risk tolerance with the unique benefits and challenges of free zone and freehold properties.
FAQs
1. Is Freehold Property Better or Free Zone in Dubai?
Freehold property is generally a better choice because you get complete ownership of the asset. However, free zone property offers various benefits, including tax exemptions and simplified business documentation.
2. Is Free Zone Tax-free in Dubai?
Yes, all the businesses functioning within the free zone of Dubai have 0% payable taxes on income.
3. How Many Years Is a Free Zone Visa in Dubai?
The Free zone visa is valid for two years in Dubai.
In conclusion, if you’re looking to purchase a property to become a homeowner, a landlord or even to resell it when it is profitable, you should invest in a freehold area. However, if you want to start a business and be the sole owner, we advise you to choose the free zone property.
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