March 31, 2021

Real Estate

Dubai Opens Doors for Freehold Conversion Along Key Areas

Scope of the Initiative

The new policy enables the conversion of 457 plots into freehold ownership:

Sheikh Zayed Road: 128 plots from the Trade Centre Roundabout to the Water Canal.
Al Jaddaf: 329 plots.

This initiative presents property owners with an opportunity to enhance the value and investment potential of their assets in these high-demand areas.

Freehold vs. Leasehold: Key Differences

Understanding the impact of this shift requires a comparison between freehold and leasehold ownership:

Freehold Ownership

Grants full ownership of both the property and the land.
Allows owners to sell, rent, or occupy the property without restrictions.
Generally attracts higher market value and investment interest.

Leasehold Ownership

Provides property rights for a specific term (up to 99 years).
Does not include land ownership.
May impose usage restrictions, often requiring approval from the freehold owner.

Switching to freehold ownership increases property values and enhances the appeal to both local and international investors.

How to Convert Ownership

Property owners can follow these steps to transition to freehold ownership:

Verification: Use the “Dubai REST” app to check eligibility.
Application: Submit an application to the DLD for property evaluation.
Fee Assessment: Determine common area fees and service charges as per Real Estate Regulatory Authority guidelines.
Conversion Fee: Pay a 30% conversion fee based on the property’s valuation (calculated using Gross Floor Area).
Title Deed Issuance: Receive a new map and a freehold ownership title deed after payment.

This streamlined process provides property owners with greater control and flexibility over their investments.

Transforming Dubai’s Real Estate Landscape

Eng. Marwan Ahmed bin Ghalita, Director General of DLD, emphasized the significance of this initiative in driving Dubai’s real estate growth. This move aligns with the emirate’s Real Estate Strategy 2033, which aims to position Dubai as a premier global hub for real estate investment.

Key benefits include:

Increased Market Value: Freehold properties generally experience higher market valuation.
Enhanced Investment Appeal: The change is expected to attract substantial foreign investment.
Greater Ownership Flexibility: Freehold status gives owners complete control over their assets.
Economic Boost: The process and its ripple effects are poised to benefit various sectors within the local economy.

Broader Real Estate Innovations in Dubai

This freehold initiative is part of a broader wave of reforms in Dubai’s property sector. Recent advancements include a smart rental index featuring:

Average rent calculations for buildings and areas.
A star-rating system for properties.
Comprehensive building data, including maintenance and parking management.

These innovations aim to create a transparent, efficient, and investor-friendly market.

What This Means for Property Owners and Investors

For property owners in these prime locations, the new rule offers:

Increased property value.
Greater control over real estate assets.
Potential for higher rental income or resale prices.

For investors, this development opens opportunities to:

Enter or expand in Dubai’s lucrative real estate market.
Benefit from long-term investment security.
Achieve significant capital appreciation.

Considerations and Challenges

While the initiative brings numerous advantages, there are factors for property owners to consider:

Conversion Costs: The 30% conversion fee can significantly impact finances and should be weighed against potential long-term gains.
Market Trends: Owners should evaluate current and projected market conditions.
Legal Implications: Consulting legal and financial experts is advisable to understand the impact of the transition.
Community Dynamics: Large-scale conversions could influence the demographic and social fabric of these areas.

Future Outlook

This initiative is likely to set a precedent for similar policies in other parts of Dubai. As the emirate’s property sector evolves, future developments may include:

Expansion of freehold conversion options to additional strategic locations.
Further enhancements to property valuation and rating systems.
Increased emphasis on sustainable and smart property development.

Conclusion

Dubai’s decision to permit freehold conversions in key areas along Sheikh Zayed Road and Al Jaddaf marks a pivotal moment for its real estate sector. This change not only adds value for property owners but also underscores the city’s commitment to fostering a dynamic and investor-friendly market.

As Dubai advances toward its Real Estate Strategy 2033 goals, such initiatives showcase its ability to adapt to global trends and investor needs. For property owners, investors, and real estate professionals, this development offers an unparalleled opportunity to shape the future of Dubai’s skyline and contribute to its position as a leading real estate destination.

The coming years will reveal the full impact of this policy, potentially reshaping ownership patterns and the economic profile of these iconic areas. Discovery Homes and other stakeholders in the real estate sector are keenly observing how this initiative unfolds and what it means for the future of property ownership in one of the world’s most dynamic cities.