Investment laws and regulations are evolving in the UAE and are expected to become more conducive to foreign investment. At present, the regulatory and legal framework favors local over foreign investors. There is no national treatment for investors in the UAE, and foreign ownership of land and stocks is restricted.

Up until recently, only UAE nationals and other GCC nationals were permitted to own land in the UAE, while foreigners, who comprise 80-85% of the population, had been restricted to renting. In May 2002, the Emirate of Dubai announced that it would permit so-called "free hold" real estate ownership for non-GCC nationals by giving permission to three companies to develop and sell freehold properties on government-designated pieces of land. However, because specific laws regarding freehold ownership remain to be codified and procedures for title documentation and conveyance remain to be established, potential buyers are unsure whether they will have an absolute freehold title that means the same as it does in Europe of the U.S.

Property law, like any law, is also a dynamic area; minor (and sometimes major) changes are constantly taking place, even in the most mature of property markets. In the case of Dubai and the UAE, property law is very young and still taking its long-term shape, although the key elements are straightforward to understand.

Perhaps the most important impediment to freeholds is that owners cannot register titles with the Dubai Land Department, a step that allows owners access to the full range of legal protections and transactions that property ownership requires. If a national and foreigner try to register a change of land title, the Land Department normally turns them away. Inheritance laws present another area of concern to freehold buyers, and current legislation appears ambiguous. Freeholds are so new that there are no court precedents yet.

With the increasing numbers of buyers and investors in Dubai there is skepticism over the legalities in buying property in the region. However, statements from the Dubai Chamber of Commerce Director-General Abdul Rahman G. Al Mutaiwee, have gone a long way to reassure buyers of freehold property in Dubai that what they are doing at least secures their rights. At present there is no federal property law in the UAE, so freehold cannot be held to be illegal, but neither is it explicitly legal. As Mr. Al Mutaiwee said, 'we do need a law to formalized expatriate freehold ownership of properties'. The Federal Government is currently working on the property ownership law'. For current buyers, he added: 'A fair contract between a property seller and buyer would ensure the rights and privileges of the expatriates owning freehold properties in Dubai. If anyone has any doubts about his rights, he should carefully study the contract'. The Emaar Properties sale agreement promises 'a clear and unencumbered freehold title to the Lot to the Purchaser, subject only to instruments, easements, rights of way, covenants or agreements with or in favor of a government authority.'

Effectively there is a declaration from the Dubai Government that it will safeguard the freehold rights of buyers until the federal law is passed. And it should be noted that a federal law couldn't be passed without the agreement of the Dubai Government. So do buyers have any reason to worry about the present absence of a federal property law? Should they wait-and-see as some lawyer's advice? In truth if you intend to buy in Dubai then you should be aware that nothing is going to change the fact that buying in the Middle East carries different risks to some alternative locations. However, Dubai has a long tradition of upholding property rights and has no history of arbitrary confiscation of property. As a trading center Dubai recognizes the inviolability of private property, and the only real reason for foreigners not to buy property is if they think that is going to change. That seems highly unlikely.

Inheritance Issues in Dubai

Few people realise that whenever they purchase property outside their original country of residence where they are most likely to have a will that the property in the country in which they have purchased, is covered only by local laws. Dubai is no different, and the inheritance of property in the UAE is covered under Islamic Shariah Law.

This stipulates that in the event of a 'mans' death, property would pass automatically to the eldest son in the family and not necessarily the 'mans' spouse, even if the property is jointly owned by husband and wife. Advice from a variety of locally based law firms produces different recommendations, including putting in place a local will in the UAE if you are a resident, or adding a codicil as a supplement to your existing overseas will indicating that any assets you own in the UAE should be covered by laws of the will in the jurisdiction in which it was originally written. Some solicitors have also advised that this will and codicil should then be notarised by the UAE Embassy in the country in which the will was written, in the event that an inheritance dispute ends up in the law courts of Dubai.

Another option is purchasing the property through an offshore or service company in order that the shares of that company may be gifted to your chosen beneficiaries under the terms of your will. In any event, we strongly advise that you talk your own lawyer and a local UAE based lawyer (who we can introduce you to) on purchasing your property.

Legal Contacts

Here is a list of legal advisers based in UK and UAE:

Company Name	Contact Number(s)	Website	Location
Emirates Advocates	+ 971 2 639 44 46 + 971 4 330 43 43 + 971 4 390 08 20 + 971 4 887 16 79 + 971 6 572 86 66	www.emiratesadvocates.com	Abu Dhabi Dubai
Sami Al Mifav	+971 4 227 2701	N/A	Dubai
Key & Dixon	+ 971 4 332 3324	www.keydixon.com	Dubai
GSC Solicitors	+44 (0) 20 7822 2222	www.gscsolicitors.com	UK (London)
Sekhon & Firth Solicitors	+44 (0) 1274 744462	www.sekhonfirthsolicitors.com	UK (Bradford)
Fox Hayes	+44 (0) 113 249 6496	www.foxhayes.co.uk	UK (Leeds)