Freehold vs. leasehold in the Emirates

In the Emirates the first question is not where, but what you are buying. Freehold is absolute, time-unlimited ownership of both the unit and its share of the land it sits on. You may live in it, rent it out, sell, mortgage, gift or bequeath it without restriction, and there is no expiry date. It is ownership in the fullest sense.

Leasehold is a different instrument. It is the right to occupy and use a property for a fixed term, typically 30 to 99 years, without owning the underlying land, which remains with the freeholder, whether a government body or a master developer. At the end of the term, ownership of the property reverts to the freeholder unless the lease is renewed. The asset depreciates toward zero as the term runs down, which is why the years remaining matter as much as the address.

Between the two sit a family of lesser rights that a foreigner outside the freehold zones will meet often: usufruct, a registered right to use and draw benefit from another party's property for up to 99 years; and musataha, a right to build on and own structures on another party's land, capped in Abu Dhabi at 50 years and renewable for a further 50. Both are real, registrable interests. Neither is freehold.

A non-UAE, non-GCC national can take freehold only inside government-designated areas. In Dubai, the framework is Law No. 7 of 2006 on real property registration, under which Regulation No. 3 of 2006 lists the areas open to foreign ownership. More than 40 designated communities now qualify, among them Palm Jumeirah, Downtown Dubai, Dubai Marina, Business Bay, Jumeirah Lakes Towers, Arabian Ranches and Dubai Hills Estate. All dispositions must be registered with the Dubai Land Department to be valid; the DLD is the only body authorised to register property rights and long-term leases.

Abu Dhabi arrived at foreign freehold later. Law No. 13 of 2019, effective April 2019, allowed non-UAE and non-GCC individuals and companies to hold freehold for the first time, and confines it to designated investment areas such as Saadiyat Island, Yas Island, Al Reem Island, Al Maryah Island, Al Raha Beach and Al Reef. Outside those zones a foreigner is limited to usufruct, musataha or a long lease, the last treated as a personal contract capped at 25 years for a non-national. The registry is the Abu Dhabi Real Estate Centre, working through the DARI platform.

One structural nuance is worth flagging on the islands. On Al Maryah and Al Reem, the common-law jurisdiction of the Abu Dhabi Global Market can apply instead of onshore ADREC law, which changes how title and disputes are handled. It is a question for a lawyer on a specific address, not a detail to assume away.

An apartment or a master-planned home is rarely an island. It is jointly owned property: separately owned units sharing common areas, lobbies, lifts, pools, facades and grounds. In Dubai this is governed by Law No. 6 of 2019, in force from November 2019, which repealed the older Law No. 27 of 2007. It scrapped the previous Jointly Owned Property Declaration and the automatic owners-association model, and replaced them with a Building Management Statement and bylaws that form part of the title you take.

Management now runs on a three-tier system under Article 18. In major projects the developer manages the common parts or appoints a RERA-approved management company; hotel projects use a RERA-approved hotel manager; other projects have RERA select and engage a specialised management company. Each is overseen by an owners' committee of up to nine RERA-selected members, an oversight body that reviews budgets and management quality rather than running the building directly. For other projects, that committee can ask RERA to replace the manager. Read the Building Management Statement: it is part of what you are buying.

Service charges fund the upkeep of the shared areas, and under Dubai's Law No. 6 of 2019 the owner is liable for them, not the tenant, unless the lease expressly says otherwise, and is not discharged if a tenant fails to pay. Developers may no longer collect these charges directly. A management entity must hold them in a RERA-recognised, bank-licensed service-charge account and deposit collections within seven working days.

The discipline behind the number is the Mollak system. Annual service-charge budgets are submitted through Mollak, reviewed against the official DLD service-charge index before approval, and visible to owners so they can see how the money is spent. It is a meaningful check: the charge is benchmarked, not set at a developer's discretion. As a guide to scale, standard Dubai apartments run roughly AED 10 to 30 per square foot a year, luxury towers AED 20 to 50, and villa or townhouse communities AED 3 to 7. These are indicative ranges; the exact figure is set per building each year through the approved budget.

The acquisition cost is separate, and lighter than the service charge over a holding period. In Dubai the headline charge is the 4% DLD transfer fee on the sale value, by market convention usually paid in full by the buyer though legally split, plus a registration-trustee fee of around AED 4,200 including VAT on sales at or above AED 500,000, a title deed fee of about AED 250, and broker commission of typically 2% plus VAT. Abu Dhabi's registration fee is lower, at 2% of value. There is no annual property tax, no capital gains tax and no inheritance tax on UAE residential property held by an individual; the recurring public levy is the municipality housing fee, charged on rental value.

One title nuance sits beneath these checks. On a leasehold or usufruct purchase, read the years remaining and the renewal terms before anything else: a 99-year right with 40 years left is a materially different asset from the same right newly granted. And on an apartment, the Building Management Statement and bylaws come with the title, so the shared regime and its costs are part of what you are agreeing to. Whether the common areas are collectively owned by the unit owners or retained by the developer is a question worth putting to a lawyer where a deal turns on it.

For most cross-border buyers the answer is freehold in a designated zone: perpetual title, the full right to sell, let and bequeath, no expiry clock, and the AED 2 million threshold that can support the Golden Visa as a separate step. It is the cleanest tenure to hold and the simplest to exit.

Leasehold and usufruct have their place, outside the freehold zones or where a defined horizon suits the plan, but they are term assets, and the term is the value. Beyond Dubai and Abu Dhabi, the picture is broadening: Ras Al Khaimah permits all-nationality freehold in designated communities, and Sharjah has widened ownership to all nationalities within named master-plans, though its emirate-wide default for non-GCC foreigners remains a long usufruct rather than freehold. These are live, project-specific frameworks that reward per-zone verification rather than a blanket assumption.

The discipline that protects a buyer here is unglamorous and decisive: read the tenure, verify the deed, confirm the zone, and price the service charge into the hold. Get those right and the Emirates are among the most transparent and low-friction markets to own in. We confirm each of them in writing on a specific address before you reserve.