1. Are you investing in Dubai? Dubai means something to everyone. Some consider it as an investors paradise; an expatriates permanent abode; a retirement home for the aged; a holiday home; a time share property market for holiday makers; a buy to let property for those looking for regular returns on their investment; and Organizations which identify Dubai as their Middle Eastern regional headquarters. Those investing in Dubai property come from different geographical parts of the globe. Dubai today is reported to compete with the likes of UK, Spain, Cyprus, South Africa, Hong Kong, Singapore, and Australia to get a share from prospective property buyers. Based on the statistical analysis issued by UAE Ministry of Planning in 2005, buyers from Indian sub continent comprised 40% whereas Iranian were 12% and the remaining 48% included the rest of the world. However they made a point that the growing segment is reported to be British Asians, South African and Russians. Today the trends indicate more and more investments from Russians and Iranians along with the Indian Sub Continent investors and the growing segment being GCC countries and United Kingdom.

2. Do I get the title deeds? Eventually you will. At the moment there are 87,000 new projects being built in Dubai. As this is a new venture in Dubai, you will not get the deeds until the property has been completed. If, however, you wish to sell the property before it is built, or any time up to completion, then all you need is your original contract with the developer. The land registry has now been established and staff have been allocated to developers in order to cope with the title demands when developers complete.

3. Do I need to set up a local bank account to purchase property? There is no need to set up a local bank account in order to purchase property in Dubai. Although this can be helpful, it should be kept in mind that this can involve a fairly complex process.

4. Does the Law distinguish between foreign individuals and companies? The right to own property in the Ruler’s designated areas and obtain a registered title extends to both foreign individuals and foreign companies. However, any company that wishes to purchase property in the designated areas must be able to prove its lawful existence in its home country.

5. How beneficial has the freehold law been? The Law was enacted for a number of reasons, namely: 1. To regulate and supplement the existing practice in relation to property registration for UAE Nationals; 2. To clarify and confirm the actual status of GCC Nationals in regards to their rights to own Dubai property; 3. To nominate development projects that can be owned as freehold by foreigners; 4. To provide a regime whereby individuals can be provided with a confirmation of their rights to purchase and own a property in Dubai, as well as the security of having title to the property registered to them.

6. How does a person’s residence status relate to property ownership and why was this not dealt with in the new Property Law? Residency is a Federal Government issue and not a local property law issue. In principle, a person could own a property in the UAE and choose not to reside in the property. Despite the fact that many developers are offering residence visas to property purchasers, the two issues of ownership of property and residency/ sponsorship should not be confused.

7. How does finance work in Dubai for properties? Mortgages in Dubai are not yet the developed and versatile product as people are gratefully accustomed to in the UK and USA and they are not available on all developments. Each individual developer is required to negotiate for finance to be provided on a per-development basis. This situation is expected to change drastically once Freehold Law is ratified   Lenders (generally International and local banks and finance companies) conduct due diligence analyses on those developments that have requested finance first, and due to the large marketing budgets and extreme aggressiveness of the market often these developments do sell out even before finance is available. When finance is provided, the loan will most likely have a maximum term of 15 to 20 years. Interest rates vary between 6% and 8% and as with the majority of overseas loans, an individual's net disposable income is required to be roughly 3 x the figure for the monthly mortgage repayment. Loans usually offered range from between 50% to 75% LTV.

8. How easy is it to buy property in Dubai? Very easy. There are currently no government taxes of any kind when purchasing a property in Dubai, nor is there a Capital Gains Tax. When the Dubai Lands Department registers title, buyers will pay a 1.5% tax based on the purchase price of the property. If they have a mortgage, they will pay 0.25% of the value of the loan.

9. How will apartments be registered? Article 23 of the Law is the only Article dealing with the registration of individual apartments and offices in a multi-storey building. The Land Department is currently working on a new Strata Law which should be issued within the next few weeks. It is envisaged that this new Strata Law will fully deal with issues such as ownership and management of the common areas in the building, Co-Owners Associations, rules of occupancy and so on. However, Article 23 sets the tone by stating that a multi floor or apartment real property shall be considered as a single real property unit and a folio shall be designated thereto in the Real Property Register. Supplementary folios in the names of the owners of such apartments and floors and common areas shall be added to the original folio. In practice, the Land Department will open a main register for the building itself, and within the main register there will be a sub-register for each apartment or office. The owner of an apartment or office will be registered as owning the freehold interest in his unit, together with an undivided share in the common areas of the building, calculated in accordance with his participation quota. It is envisaged that the Constitution of the Co-Owners Association and the Master Community Declaration (where applicable) will be registered on the main building register with a notation of such encumbrances will be shown on the title of each individual unit.

10. How would the Land Department know the “market value” of the property for the purpose of ascertaining what amount the 2% fee is to be levied on? Article 6, point 7 of the new Law requires the Land Department to “lay down the rules in connection with the evaluation of real properties”. It is envisaged that the Land Department will employ its own expert valuers. The Land Department’s valuers will be tasked to verify a property value; and provide a valuation for a prospective purchaser, if the prospective purchaser so requests.

11. If a third party purchaser has paid a developer a registration fee, will an additional registration fee be payable to the Land Department? Yes. A purchaser will pay two fees. EMAAR, for example, charges registration fees in additional to the fees payable to the Land Department. It must be noted that this is only applicable during this transitional phase, and once the Land Department registration process is in full swing, no registration fees should be payable to developers.

12. Is it difficult to arrange a mortgage? No, mortgages are available on a 10 to 25-year basis through several major banking institutions. Interest rates are linked to those in the United States and the UAE market

13. Is there any way for a foreigner to own property in non-designated areas? Article 26 of the new Law deals with the circumstances where agreements are made that purport to give a property ownership right to someone who is not entitled to own it, and who is therefore not entitled to register it under the new Law. Article 26(1) states that any agreement or sale made in violation of the provisions of the Law (or with the intent to circumvent its provisions) shall be null and void. Article 26(2) goes further to say that any interested third party; the Land Department or the public prosecution has the right to request the court to declare such a transaction void. There is no way under the new Law for a foreign person to own property in any non-designated areas. If a foreign person wishes to “own” property in the non-designated areas, he should enter into a long lease for the property, which, although will not be possible to register, will not go against the provisions of the new Law.

14. What about developers’ internal registries? Article 6 of the new Law states that the Land Department shall solely, to the exclusion of others, be authorised to register the real property rights and long term leases as provided under Article 4. This means that any register or other type of database maintained by a developer is not recognized under this Law. Once we have the Ruler’s approval of the designated areas, the formal process of the Land Department registrations can begin. The developer’s internal registrations will be replaced by the formal registration in the Land Department in situations where physical hand over of properties has taken place. However, where a property is still under construction, developers will no doubt continue to maintain their own internal registers.

15. What are the payment terms? Payment terms will vary according to development but normally for apartments expect to pay between a 15 and 25% deposit. The remainder of the funds will be required over the building term in stage payments, often 10% every three months. For villas, expect between 10 and 30% as deposit with the balance paid on completion. Maintenance fees for apartments range from 4 - 6AED per square foot per annum. Villas are typically 600 - 800 AED per month.

16. What are the Purchase Procedure & Legal Costs? Purchasing off-plan in Dubai is a relatively simple process which does not require use of a lawyer for any financial investment. All property investment available to foreigners in Dubai is within special zones master-planned by governmental organizations, and as a result the contract structures must be passed before the government before they can ask customers to sign. There is no capital gains tax or income tax within Dubai itself. For more advice on purchasing property in Dubai, please speak to Agent Blue

17. What if I don’t plan to live in Dubai full time? For those owners who intend to spend most of their time away from Dubai, there is no need to worry about security or maintenance issues. Dubai has on offer a comprehensive support infrastructure, which can give peace of mind for those living away. There are both local and international property management companies operating in Dubai, whom can offer an all inclusive service in regard to looking after your property.

18. What is the position of ownership for nationalities other than UAE or GCC Nationals? Article 4 of the new Law provides that all nationalities other than UAE or GCC nationals can own freehold title, a 99 year lease, or a usufruct right in designated areas of Dubai, as determined by the Ruler’s approval. We are currently awaiting the first of such Ruler’s approvals but the current indications are that this will be issued shortly and that it will include the expected projects within the portfolios of Dubai Properties, Nakheel and Emaar. Some other projects may also be included, for example, those located at Dubailand.

19. What is the position of ownership of UAE or GCC Nationals? No distinction is made between UAE and GCC Nationals, as they are afforded equal status under the provisions of the Law.

20. What is the process for title registration? Article 6 of the new Law states that the Land Department shall solely, to the exclusion of others, be authorised to register real property rights and long term leases as provided under Article 4. Once a property is completed and handed over to the purchaser, the purchaser can then procure the developer to register the title to the property in the name of the purchaser in the Real Property Register at the Land Department. The Sale and Purchase Agreement as well as the accompanying scheme documentation will possibly need to be translated into Arabic (which should be undertaken by the developer). The purchaser will then be asked to sign the Land Department standard transfer form, for the internal use of the Land Department. This form will provide the details of the parties, the property, the purchase price, etc.

21. What is the rental yield I can expect? Currently in Dubai there is a healthy rental market especially to foreigners and yields are between 8 - 10%. At present there is a shortage of property to rent with many project only due for completion towards the end of 2006. However, with the population expected to double over the next 5 years rental demand will remain high for many years to come.

22. What is the status of long leases in areas other than those designated by the Ruler? Long leases in areas other than those designated by the Ruler are not registerable at the Land Department by foreigners under the new Law. These leases remain as personal rights and are not illegal in any way. Unregistered long leases in areas outside of those areas designated by the Ruler remain enforceable as personal contractual rights between the parties. It must be noted that any dispute arising from an unregistered long lease will still be adjudicated by the Rent Committee.

23. What remedies are available under the new Law? Article 10 of the new Law deals with disputes. In short, specific performance is not available as a remedy under the Law, but the available remedy is damages. For example, if a seller defaults in his obligations under a Sale and Purchase Agreement and does not transfer the property to the purchaser, the purchaser can only claim damages from the seller for the losses suffered and cannot force the seller to transfer the property to him.

24. Who will settle disputes under the new Law? In relation to the forum for settling disputes under the new Law, any aggrieved party can file a claim directly with the Dubai Courts, or implement any arbitration process that may be agreed between the parties. There is also a possibility of the Land Department establishing its own arbitration and conciliation service, but the Land Department has not yet confirmed this. It must be noted that, in relation to unregistered long leases, these fall outside the ambit of the new Law and the Rents Committee retains jurisdiction of any disputes arising between landlord and tenants.

25. Why are property prices so competitive? No city in the world is presently more successful at marketing itself than Dubai. Property prices in Dubai are around one-third per square metre of those in the UK. Local and international banks and financial institutions in the UAE are producing more mortgage options by the day, and the net effect is to lower the cost of borrowing. If it costs less to own a home in Dubai then this is good for prices.

26. Why Invest in Dubai? Future Demand: Population is destined to increase from 1m to 3m whilst tourism will also triple from 6m to 15m, by 2010 Future Supply: All master-planning is Government controlled to carefully manage the demand-supply ratio thus maintain strong growth & returns  Capital Gains Tax: 0%  Rental Income Tax: 0% Legal & Notary Fees: None required, although legal advice is recommended Land Registration Tax: 1.5% (this is paid to the Government on completion) Transfer Fee: 1-2% (this is paid to developer on resale of the property) Buying Process: Simple. No Company formation is required nor anyl registration required Payment Structure: Following an initial reservation deposit, a deferred payment structure is usually provided by the developer with payments spread over the construction period Finance: For resident it is available from 70% to 100%. As for non-UAE residents only on certain projects, with competitive interest rates from 6 - 9%, and usually with 15 yr terms and reasonable conditions Capital Appreciation: Recent years have between 15 - 55% annually Rental returns: Recent years have returned between 10 - 20% annually Freehold: The right to obtain freehold rights on your property is provided with most non-UAE purchases of property. Residency: Resident visas are supplied with non-UAE purchase on property

27. Why is registration of title so important? Registration of a person’s interest on the title of a property provides conclusive evidence of his ownership. Article 22 of the new Law provides that the Land Department shall issue a title deed of real property rights in accordance with the current records in the Real Property Registers. Article 24 goes further to say that the title deed referred to under Article 22 shall have absolute power of evidence to establish real property rights.

28. Will Real Estate prices go higher or will they decline Its basic economics where demand and supply are playing the game and not you, me or the government. Currently we have a huge gap where demand is more than the supply. If we look at commercial space scenario, today office space cost AED 250 per sq. ft. rental per annum in a decent tower at a good location. However by 2009/10 with the inflow of commercial space especially in Jumeirah lakes Tower and some part of business bay the rate will go down, maybe to AED 175 or less. One should note that today many residential towers in Deira, Bur Dubai and Sheikh Zayed Road have temporary permission for setting up offices which no longer will be valid once these tower are available. Secondly today for many businesses Dubai is not feasible to setup their office since the rents are too high or the required space is not available. Organizations are either cramped in a small office space or in an area where they prefer not to be. Imagine in 2009 where we have good supply of office space, choice on location, view and facilities is available and rates for buying or leasing are reasonable and affordable. This will surely attract organization to move to a better location and bigger space. Further foreign businesses will be keen to setup their office in Dubai, the city with the world tallest tower and mega projects like Palm, Dubailand etc. As more and more office space gets occupied the demand accordingly will increase and as the demand increases the price will rise again and this cycle will continue for a foreseeable future.

29. Will the Land Department charge fees for the registration of these transfers? Both the seller and the purchaser will be asked to pay the Land Department’s fees at the time of title registration. These currently amount to 2% of the purchase price, which is broken up by having 1.5% payable by the purchaser and 0.5% payable by the seller. However, it should be noted that developers commonly require the purchaser to pay the full 2%. The Land Department’s fees are currently under review by the Executive Council and may be subject to change.

30. Will the Land Department charge the 2% fee on the original purchase price or the most recent purchase price? Current practice of the Land Department is that fees are charged on the original purchase price. However, as the Land Department introduces new practices, it is envisaged that the basis on which fees are levied may change, and they may take into account the purchase price in any on-sale agreements or the market value of the property.

31. Will the property be freehold? Most of the developments are offering freehold properties and your contract will confirm this.

32. Will the register at the Land Department be open to public inspection? Article 5 of the new Law states that a third party may inspect the property register and obtain a certified copy of it, provided that the enquirer has a legitimate reason for that enquiry. This means that a potential purchaser of a property, for example, will be able to make his own enquiries directly with the Land Department in relation to the ownership and any third party rights attaching to the property.