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Q.
What is freehold vs. leasehold? I've heard that foreigners
cannot buy a freehold interest in Dubai. Is this true,
and if so, then how is this property to be sold?
A.
If you buy a freehold interest in a property (also known
as owning it "fee simple,") you own the land,
any buildings on it and the right to live there indefinitely.
You can make any changes to the property, within the
bounds of the law and planning restrictions. Houses
are commonly sold this way.
With
a leasehold property you buy the right to live there
for a set period of time, paying ground rent to the
land owner. At the end of the lease, ownership of the
property reverts to the land owner.
At
present there is no federal law to govern foreign freehold
ownership of property in Dubai, so you are right in
thinking that foreigners cannot buy a freehold interest.
Therefore, in the properties we represent, condo hotel
units are sold as 99 year leaseholds with automatic
renewals for the cost of 100 dirhans, which is roughly
$27 U.S.
However,
in a few months developers hope and expect that the
law of freehold ownership will change, and the properties
that are currently leaseholds will be transferred to
freehold status at that time.
The
above question was submitted via e-mail by a visitor
to www.CondoHotelsDubai.com.
The answer was prepared by Joel Greene, a licensed real
estate broker, who specializes in condo hotels and the
Dubai real estate market.
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