Can a Business Buy Residential Property in Dubai? Understanding the Rules

Regulations and legal framework

The Dubai Land Department (DLD) and the Real Estate Regulatory Agency (RERA) oversee and regulate the real estate market in Dubai. They have outlined specific laws which govern the purchase and sale of properties by both local and international companies. 

When understanding whether a business can buy residential property in Dubai, it is important to understand that the regulations vary depending on whether the company is local or international. Companies incorporated in the UAE, including in Free Zones, are generally allowed by law to buy properties in designated areas. 

But, can an overseas company buy property in Dubai? Yes, overseas companies can buy properties in freehold areas specified by the government. These areas include prominent neighborhoods such as Dubai Marina, Palm Jumeirah, and Downtown Dubai. 

Freehold property ownership allows businesses, including those from overseas, to fully own a property without the need for a local partner. Leasehold property ownership is also available, but it is crucial to understand the differences between freehold and leasehold ownership. Unlike freehold ownership, leasehold only gives the company the right to occupy and use a property for a specified period, usually up to 99 years.

Types of properties businesses can buy

When answering the question, can a business buy a residential property in Dubai, it's important to understand the types of properties that are available for business purchases. In Dubai, businesses are allowed to buy various types of residential properties, including:

• Apartments: Buying an apartment is one of the most common choices for businesses looking to invest in residential real estate.

• Villas: Some businesses invest in standalone villas, either to house executives or to rent out and achieve long-term capital appreciation.

• Serviced Apartments: Businesses looking for flexible, short-term housing for employees could choose serviced apartments due to the convenience of services such as cleaning, utilities, and maintenance being included.

• Off-plan Properties: Businesses could also purchase a property that is still under construction, which allows for potentially lower initial costs and the opportunity to benefit from future increases in value. 

Benefits of a business buying residential property

Buying a residential property as a business can offer several benefits. Below are some of the key advantages:

• Diversification of assets: Investing in real estate could allow a business to diversify their assets, which could provide some safety against market volatility. Real estate is generally considered a stable investment that appreciates over the long term. 

• Employee housing: A large company or multinational corporation may decide to buy residential property to house employees. This can be particularly important in Dubai given its high population of expatriate workers, and also for high-level executives who require housing in prime locations. 

• Tax benefits: Although Dubai has no personal income tax, owning property through a business could bring financial advantages, such as the ability to deduct certain expenses related to property maintenance, management, or improvement.

By understanding who can buy properties in Dubai and the potential advantages, businesses can take advantage of opportunities within the city's thriving real estate market.

Challenges and considerations

Whilst there are many reasons to buy real estate in Dubai, businesses must also be aware of the potential challenges and considerations before deciding to buy an investment property. These include: 

• Compliance: Navigating the legal framework can be complex both for individuals and businesses looking to invest in real estate. For businesses, understanding property ownership laws, tax regulations, and corporate structures could require the guidance of legal and financial advisors.

• Initial costs: Whilst the costs of buying property in Dubai are relatively low by global standards, and Dubai real estate can be excellent value for money, it is still an important consideration. Businesses should budget for costs such as transfer fees, DLD fees (4% of the purchase price), and real estate agency commission (2% of the purchase price).  

• Restrictions on use: A business might wonder whether they can use a residential property for their business activities. It is important to understand that often there are strict rules that restrict the use of such properties to residential use only. This means companies cannot use these properties for business activities unless the property is designated for mixed-use.

• Property management: Managing residential properties can be time, resource and cost intensive. Companies that buy multiple properties should budget for the cost of property management services or consider hiring an in-house team.

Alternatives to purchasing residential property

If a business is unsure about the cost or long term commitment of buying residential properties, there are several alternatives that they could consider: 

• Leasing residential property: Leasing can provide housing without the significant upfront cost required for property purchases. This can be a particularly useful option for businesses that need temporary housing for employees.

• Serviced apartments: For short-term housing needs, a company could use serviced apartments, which come with maintenance, cleaning and utilities included, offering convenience and flexibility.

• Corporate housing solutions – Some companies specialize in providing corporate housing for businesses. These services offer fully managed accommodation and handle all of the administrative processes on behalf of the business. 

• Investing in commercial real estate – While this blog focuses on companies buying residential properties for asset diversification, businesses could also explore commercial real estate investments. Buying commercial property such as offices, retail units, and warehouses could align more closely with the company’s operational needs or provide ongoing rental income and capital appreciation. 

Key takeaways 

Understanding how a business can buy residential property in Dubai requires an in-depth knowledge of the legal, financial, and regulatory landscape. While the process is generally straightforward, particularly for businesses incorporated in the UAE, companies must navigate freehold property laws and ensure compliance with the DLD regulations. 

When consider, can an overseas company buy property in Dubai?, the answer is yes. But, before choosing to buy property as a foreigner, businesses must weigh up the benefits, such as asset diversification and potential tax advantages, against the challenges, like regulatory compliance and property management. For businesses keen on expanding their asset portfolio in Dubai’s thriving real estate market, buying residential property presents a viable and potentially lucrative option.

Partner with Engel & Völkers for your property investment

At Engel & Völkers, we bring unmatched expertise in both commercial and residential real estate in Dubai. Our team of experienced consultants provides tailored advice, ensuring that your investment strategy aligns with your business goals. 

Whether you're a local or international business exploring your property investment options, we are here to guide you every step of the way.  With our global network and in-depth knowledge of Dubai’s property market, you can trust us to help you make informed decisions

Contact Engel & Völkers today to discover how we can support your business.