Freehold vs Leasehold in Dubai: Key Differences Every Property Buyer Should Know

If you are drawn to the ever-growing real estate market in Dubai, then it's time to explore all the investment opportunities available to you as a buyer. But the catch is that you might find yourself confused between freehold land vs leasehold land, as each has its own set of pros and cons.

And unless you are aware of the difference between leasehold and freehold, you might make the wrong choice. However, the good part is that real estate developers like DarGlobal are here to assist you. 

Our luxury projects, such as DG1 Living, Trump International Hotel & Tower Dubai, and D-Villas at Jumeirah Golf Estates, are strategically located to deliver strong returns in Dubai’s booming real estate market.

Let us delve deeper into their characteristics and explore the benefits of freehold versus leasehold properties in Dubai, ensuring safe investments in the city's thriving real estate market.

Key Takeaways:

• Understand the crucial distinctions between freehold and leasehold properties in Dubai to make informed decisions about real estate investments.
• Freehold refers to full property ownership, whereas leasehold grants usage rights for a term of 30 to 99 years.
• Freehold owners enjoy complete control, can modify properties freely, and pass them on to heirs automatically.
• Leasehold owners face usage restrictions, require approvals for changes, and the property reverts to the landlord after the lease ends.
• Freehold buyers cover all maintenance costs, while leasehold owners rely on landlords for significant repairs.
• Freehold properties demand higher upfront investment but offer better long-term returns; leaseholds are cheaper initially but may limit gains.
• DarGlobal’s luxury freehold developments combine ownership security with premium locations and strong investment potential.

What Is A Freehold Property In Dubai?

Freehold property is where you own the land and the property. When you purchase the property, you own it for life. You can sell it, rent it, build upon it (with permissions), or pass it down to your heirs.

Dubai opened its doors to foreign investors purchasing freehold properties in 2002, and with real estate developers like DarGlobal, the appeal of freehold properties in Dubai is growing stronger. Its properties, like DG1 Living and Trump International Hotel & Tower, are the epitome of freehold investments for long-term growth and high returns.

What Is A Leasehold Property In Dubai?

A leasehold property entitles you to occupy a property for a specified number of years, typically ranging from 30 to 99. However, you do not own the property, as the real estate developer or the landowner still retains ownership. When the lease expires, the property will go back to the original owner unless it is renewed.

Key Differences Between Leasehold And Freehold Properties

Now that we know what freehold and leasehold are, let us explore the differences between freehold and leasehold properties.

• Freehold grants complete title ownership of a property and land, while Leasehold offers a right to use the property for a limited period (typically 30–99 years).
• Freehold properties are typically located in specific areas accessible to foreigners, whereas leasehold properties are available in a broader range of places.
• Freehold owners have complete control of the property (subject to certain conditions), whereas leasehold owners require permission from the landlord to make modifications.
• Successors can inherit freehold ownership, but leasehold ownership automatically reverts to the landlord upon expiration of the lease.
• In freehold properties, maintenance is entirely in the hands of the owners, while in leasehold properties, major maintenance is in the hands of the landlord.
• Freehold property is usually more expensive to purchase initially, while leasehold property is generally cheaper to start with.
• The resale of freehold properties is not subject to restrictions, whereas the resale of leasehold properties can be conditional.
• Freehold properties offer the opportunity for a renewable UAE residence visa when the property is valued at over AED 1 million, whereas leasehold properties are not eligible for a visa.

Here's a comparison table for freehold vs leasehold Dubai:

Pros And Cons Of Freehold Vs. Leasehold

Before buying leasehold vs freehold, it is essential to consider the pros and cons of both:

Pros Of Freehold Properties 

• Owners are eligible for a renewable UAE residence VISA if the property is worth more than AED 1 million.
• The developer will own the property in its entirety.
• The right of inheritance allows property to be passed to heirs and thereby provides long-term family security.
• They can sell or rent the property without any limitation.
• Foreigners are allowed to buy freehold properties in Dubai even without UAE residency.
• They can design and customize their houses as they wish.

Cons Of Freehold Properties 

• Owners bear the entire responsibility, including costly repairs.
• The buyers are limited to properties within approved freehold areas, which can restrict their selection.
• Annual maintenance fees can be pretty expensive.
• Freehold property is generally more expensive to purchase than leasehold, which could deter some potential purchasers.

Pros Of Leasehold Properties

• Leasehold properties are typically available in more areas, even outside of freehold boundaries.
• Their lower initial purchasing price makes them available to a wider group of investors.
• They have lower cost burdens on maintenance and repairs, which are typically the responsibility of the original owner.
• Developers can offer installment payment schemes for leasehold apartments.
• Leasehold properties usually include communal facilities, such as swimming pools and gyms, to improve the standard of living.

Cons Of Leasehold Properties 

• Leasehold property alterations or refurbishment tend to be complicated and require permission from the original owner.
• Subletting is generally not allowed in Leasehold contracts.
• Leasehold contracts can include resale restrictions, which can make the resale of the property difficult.
• Ownership is limited for a specified period (typically 30-99 years), after which ownership returns to the original owner.

Where Can You Buy Freehold Properties In Dubai?

Dubai boasts different freehold zones where foreigners can invest easily. Some of these areas are:

• Downtown Dubai is home to iconic landmarks such as the Burj Khalifa and Dubai Mall. Downtown is also centrally located and is known for luxury living, making it one of the most desirable areas for property buyers expecting a good property price hike in the area.
• Dubai Marin renowned for its waterfront properties, is highly sought after by buyers and investors for its high rental yields.
• Jumeirah Village Circle (JVC) is another prominent freehold property zone that attracts investors due to its affordable pricing and family-friendly environment. 
• Business Bay is well-known for its modern lifestyle amenities and serves as a hub for both commercial and residential activities. It is famous among investors for its high rental potential. 

DarGlobal properties, such as DG1 Living in Business Bay and D-Villas at Jumeirah Golf Estates, offer a perfect investment opportunity for investors seeking to purchase freehold property in Dubai.

Legal Considerations For Foreign Buyers

Purchasing property in Dubai, particularly as a foreigner, is surprisingly easy but needs careful legal considerations:

• Eligibility: You must be over 21 years old and hold a valid passport. Residence is not required in a freehold purchase.
• Key Documents: Copy of passport, proof of address, no-objection certificate (off-plan), bank statements (where mortgage is involved), and signed Memorandum of Understanding (MOU).
• RERA Supervision: Transparency and protection of buyer interests are guaranteed by the Real Estate Regulatory Agency. Always ensure developers and agents are RERA-certified.
• Registration Of Property: Complete the process with Dubai Land Department (DLD) by paying down payment and transfer fees to receive the title deed.
• Financing Regulations: Non-residents can consider getting mortgages up to an LTV (loan-to-value) of 50% for homes with prices under AED 5 million.

DarGlobal's credibility and luxury projects simplify the legal procedure, reassuring the investor in investing in the real estate sector of Dubai.

Conclusion

Selecting freehold vs leasehold Dubai is not just a legal choice, it's a choice about making the best real estate investment in Dubai. While freehold provides long-term possession, ownership, and potential for high return, leasehold can be flexible and affordable, but is restrictive. 

The choice will depend on your plans, aspirations, and budget. So, whether you're seeking a home that's ready for move-in, a profitable investment, or a legacy to be left behind, you can trust us. At DarGlobal, we ensure that our projects, such as DG1 Living, Trump International Hotel & Tower, and D-Villas at Jumeirah Golf Estates, will help you achieve a high return on your investment.

So, what are you waiting for? Check out our projects to be sure whether you want to buy your dream house on lease or get a freehold on it!

FAQs

What Is The Difference Between Freehold vs Leasehold Dubai?

A freehold transfer grants full ownership of a property and land. In contrast, leasehold transfers the right to occupy a property for a specified period, after which the ownership reverts to the freeholder.

Can Foreigners Buy Freehold Property In Dubai?

Yes, freehold properties can be purchased by foreigners in certain zones, such as Downtown Dubai, the Palm Jumeirah, and JVC. DarGlobal's developments in these zones offer safe and profitable investments. 

Is It Better To Buy Freehold Or Leasehold Property In Dubai?

Your choice between buying a freehold or leasehold property largely depends on your preferences. Freehold offers complete control and long-term value, while leasehold provides lower upfront costs and greater flexibility.