Dubai Real Estate Buying Guide | Legal Process, Risks and Investment Advantages

Dubai Real Estate Buying Guide | Legal Process, Risks and Investment Advantages

Introduction

In this article, we will comprehensively, systematically, and legally examine the process of purchasing real estate (hereinafter referred to as “property”) in Dubai, its legal framework, the risks to be considered, and the procedural steps — particularly for individuals and professional legal consultants seeking to invest in real estate abroad.

1. Structure of the Legal System in Dubai

1.1 General Legal System

The legal system in the United Arab Emirates (UAE), and therefore Dubai, is based on the civil law tradition; the Constitution, Sharia principles, federal laws, and local emirate laws operate together.
Specifically in Dubai, matters concerning ownership, real estate, zoning, and construction are regulated both at the emirate level and by relevant administrative bodies.
Furthermore, different legal regimes (e.g., common law/English law) may apply in certain free zone areas such as the Dubai International Financial Centre (DIFC).

1.2 Key Institutions in Property and Real Estate Law

Dubai Land Department (DLD): The main governmental body responsible for the registration of real estate transactions in Dubai.
Real Estate Regulatory Agency (RERA): Operating under DLD, RERA regulates the real estate sector, including licensing, rental supervision, and project oversight.

1.3 Key Legal Notes

All transfers of ownership and the creation/modification/removal of rights must be registered with DLD.
Local authorities (e.g., Dubai Municipality) are also involved in planning, zoning, usage permits, and construction supervision.

2. Property Acquisition by Foreigners in Dubai

2.1 Ownership Rights for Foreigners

Foreign individuals are allowed to acquire real estate in Dubai; ownership may take the form of freehold (full ownership) or leasehold (time-limited usage right based on a lease).
Law No. 7 of 2006 is the primary regulation governing property ownership in Dubai. It defines areas where foreigners can purchase on a freehold basis or with restricted rights in designated zones.
Generally, there is no age or residence requirement for foreigners; a non-resident may purchase property under appropriate conditions.

2.2 Where and How Foreigners Can Own Property

Freehold areas grant full ownership rights over land and structures.
Leasehold rights generally cover a specific period (e.g., 99 years), where land ownership typically remains with the government or developer.
Before purchase, it must be verified whether the property is located within a freehold area open to foreign ownership.

3. The Buying Process: Step-by-Step Legal Guide

1. Preparation Stage

1.1 Determining Purpose and Budget

The purpose of purchase must be clear: personal residence or investment/rental? This determines the suitable location, property type, and financing method.
A budget must include not only the purchase price but also additional expenses (registration fees, agent commissions, maintenance/management costs).

1.2 Choosing the Area and Property Type

Only certain areas allow foreigners to acquire full ownership (freehold).
One should consider whether to buy a ready property or an off-plan property (under construction); each has distinct advantages and risks.

1.3 Legal Due Diligence

Title deeds, developer licensing, zoning, land use, and the seller’s legal status should be verified. Professional legal advice is strongly recommended.
Financing conditions may vary depending on the bank; foreign buyers should evaluate available loan options carefully.

2. Offer, Contract, and Deposit

2.1 Making an Offer and Negotiation

Once the property is selected, an offer is submitted with the assistance of an agent or lawyer; terms are negotiated.

2.2 Signing the Purchase Agreement

A preliminary contract or Memorandum of Understanding (MOU) may be signed, followed by the official Sale & Purchase Agreement (SPA), which sets the framework for the transaction.
At this stage, a deposit is usually paid (commonly 10%).
Ensure the seller’s or developer’s legal standing is clear, particularly by obtaining a No Objection Certificate (NOC) from the developer.
The contract must specify delivery dates, payment schedules, penalties, and termination rights in detail.

2.3 Deposit Payment

Deposits are generally paid at the time of contract signing; the amount may vary based on the property value and negotiation terms.
Transfer fee: Typically, a 4% registration fee is payable to DLD.

2.4 Verification of Legal Documents

The seller’s and property’s legal obligations must be reviewed: check for mortgages, liens, and unpaid service fees.

3. Official Registration and Transfer

3.1 Title and Registration

The property must be officially registered under the buyer’s name at the Dubai Land Department (DLD).
For off-plan projects, an Oqood (temporary title) is issued until completion, after which a full Title Deed is granted.
Upon completion, the property title registered under the buyer’s name serves as legal proof of ownership.

3.2 Fees and Charges

Government fees apply, such as DLD’s 4% registration/transfer charge.

3.3 Special Provisions for Off-Plan Properties

If the property is under construction, the Oqood certificate is issued, replaced by a full Title Deed upon project completion.
Law No. 19 of 2017, Article 11, grants developers and DLD certain rights if the buyer fails to meet contractual obligations.

4. Post-Purchase: Use, Management, and Exit Strategy

4.1 Taking Possession and Use

Upon delivery, maintenance and management issues (e.g., service charges, building management contracts) come into effect.

4.2 Leasing and Investment Management

For investment purposes, consider rental income, occupancy, operating expenses, and tenant regulations.

4.3 Exit Strategy and Resale

When reselling, evaluate market conditions, resale fees, and procedures for selling to another foreign buyer.

4.4 Inheritance and Estate Planning

Inheritance and estate issues can differ significantly in Dubai; foreign investors must have a clear inheritance plan.

5. Summary Timeline

Stage	Description	Approx. Duration
Preparation & Research	Area selection, budgeting, due diligence	2–4 weeks
Offer & Contract	Offer, signing, deposit payment	1–2 weeks
Registration & Transfer	DLD registration, title deed issuance	1–4 weeks
Property Delivery & Use	Handover, management processes	Depends on completion
Rental / Exit Planning	Ongoing investment strategy	Continuous

6. Legal Risks and Warnings

6.1 Developer or Seller-Related Risks

Risks include unlicensed or unreliable developers, project delays, or non-completion.
For off-plan projects, developers may have unilateral termination rights if buyers default (Law 19/2017, Art. 11).
Check for encumbrances (mortgage, lien, unpaid service charges).

6.2 Foreign Buyer-Specific Issues

Ensure the property is in a freehold area; otherwise, rights may be restricted.
Financing and resale conditions for foreigners may differ.
Since June 2025, new regulations require property-sale proceeds to be received via a UAE bank account.

6.3 Procedural and Registration Risks

Avoid relying solely on informal promises before registration.
Ensure the property’s zoning and permit status align with its intended use.
Lack of estate planning may cause inheritance complications for foreign owners.

7. Legal Checklist and Application Matrix

Control Point	Description
Freehold/Leasehold Status	Confirm property lies in a freehold zone.
Seller’s Ownership & Liabilities	Check title, mortgage, lien, and service fee records.
Developer’s License & Project Status	Verify license, completion, escrow account (if off-plan).
Contract Content & Language	Review Arabic/English SPA carefully — focus on termination, delay, handover clauses.
Official Registration with DLD	Confirm title deed is registered under buyer’s name.
Financing & Payment Plan	Verify deposit, installments, bank terms.
Zoning & Permits	Confirm property’s authorized land use and valid permits.
Inheritance & Estate Planning	Prepare legal arrangements for inheritance matters.
Post-Sale Management	Review service fees, management contracts, rental potential.

8. Key Legal Regulations

Law No. 7 of 2006 – Governs property ownership and real estate rights.
Law No. 19 of 2017 – Regulates off-plan sales and developer–buyer relations (notably Article 11).
DLD and RERA regulations on registration and freehold area definitions.

9. Conclusion and Legal Recommendations

Dubai’s real estate market is highly attractive for foreign investors, but legal awareness and risk management are essential.
Legal counsel should be actively involved throughout — from contract review to title transfer and compliance checks.
Foreign investors must prioritize issues such as freehold eligibility, inheritance, and off-plan obligations.
Post-acquisition, property management, maintenance, and leasing require ongoing legal and practical follow-up.

10. Major Advantages of Buying Real Estate in Dubai

10.1 Tax Advantages

Apart from one-time transfer/registration fees to the DLD, there are no annual property taxes, no rental income tax, and no capital gains tax.
For foreign investors earning rental income, the absence of income tax is a major advantage.

10.2 Ownership Rights for Foreigners

Foreigners may acquire full ownership (land + structure) in designated freehold areas.
This enhances both investment security and resale flexibility.

10.3 Investment Returns and Market Dynamics

Dubai’s strong demographics, tourism, and trade infrastructure sustain real estate demand.
Investors benefit from high rental yields and appreciation potential.

10.4 Other Advantages

Safe living environment, modern infrastructure, and long-term residence opportunities (e.g., “Golden Visa”).
Strong institutional oversight ensures investor confidence.

In summary, purchasing property in Dubai offers significant advantages for foreign investors in terms of taxation, ownership, return potential, and legal reliability.

11. Detailed Review of the Escrow Account (Secured Payment Mechanism)

11.1 Legal Basis

Law No. 8 of 2007 – Concerning Escrow Accounts for Real Estate Development in the Emirate of Dubai regulates this mechanism.
It mandates that developers selling off-plan properties must maintain separate escrow accounts for each project, ensuring that buyers’ funds are used solely for that project.

11.2 Operation

The developer must open a dedicated escrow account for each project.
Payments by buyers or lenders must go directly into that account.
Withdrawals can only occur upon regulatory approval, corresponding to verified construction milestones confirmed by RERA/DLD.

11.3 Importance for Investors

Protects buyers’ payments against misuse or non-completion risks.
Ensures funds are only released as construction progresses.
Enhances transparency and minimizes fraud in off-plan projects.

11.4 Buyer’s Checklist

Confirm the escrow account details (bank name, branch, and account number) are clearly stated in the contract.
Verify RERA/DLD approval of both the project and the escrow account.
Review the developer’s license and project permit status before making payments.

12. Warnings and Legal Advice

Always work with licensed brokers and developers; ensure official registration and escrow compliance.
Obtain professional legal counsel before signing; contracts must specify developer obligations, delay penalties, and termination clauses.
Be cautious of unrealistically high returns, low deposits, or unfinished projects — these are common fraud indicators.

13. Purchasing Property in Dubai through Keleş Law

Secure, Legal, and Professional Real Estate Investment from Turkey

Dubai is one of the world’s most popular destinations for foreign property investment due to its tax advantages, investment yields, and ownership security. However, as with all cross-border investments, it requires careful attention to local laws, licensed institutions, escrow systems, and title registration procedures.

Keleş Law & Consultancy provides end-to-end legal support for Turkish investors to acquire property in Dubai safely and lawfully.

1. Why Buy Property through a Lawyer?

Legal Protection

The biggest risk in cross-border investments is contractual and registration disputes.
In Dubai, contracts with developers, agents, or consultants are prepared in Arabic–English bilingual format.
The Keleş Law team reviews these agreements under Turkish legal standards, verifies RERA/DLD-licensed entities, and confirms escrow account details.

Protection Against Fraud and Fake Investments

According to DLD data, around 15% of 2024 real estate transactions required “extra verification.”
This highlights the rise in fake listings, unlicensed brokers, and off-plan fraud risks.
Our firm mitigates these risks by verifying developer licenses, escrow registrations, and title details in cooperation with our Dubai-based legal partners.

2. Keleş Law’s Service Model

A. Preliminary Legal Due Diligence

Verification of whether the selected project/property is in a freehold area, the developer’s license, RERA registration, and existing debts.
Under Law No. 7 of 2006 and Law No. 8 of 2007, all off-plan projects must have approved escrow accounts — no payments are made without verification.

B. Contract Stage

The Sale & Purchase Agreement (SPA) is reviewed for compliance with Dubai law.
Risky clauses for Turkish investors (e.g., unilateral termination, default penalties) are identified and negotiated.
If necessary, our partner law firms in Dubai perform on-site document verification and notarization.

C. Registration and Title Process

Ownership transfer is completed before the Dubai Land Department (DLD).
Representation by power of attorney is possible for remote investors.
After title issuance, we offer follow-up services — property management, lease agreements, and inheritance planning.

3. Advantages of Investing from Turkey in Dubai

Tax exemption: No income tax on real estate returns.
Full ownership in freehold zones: Foreigners own both land and structure.
Long-term residence: “Golden Visa” eligibility for investments exceeding 1 million AED.
Secure escrow system: Buyer funds are protected until project completion.

4. Escrow Account – Safe Payment Mechanism

Under Law No. 8 of 2007, developers must open a separate escrow account for each project.
Thanks to this system:

Buyer payments can only be used for the specific project.
Funds are released gradually under RERA supervision as construction progresses.
Even if a developer goes bankrupt, the buyer’s funds remain protected.

Keleş Law meticulously oversees escrow verification and banking approval processes on behalf of investors.