Two weeks ago Clyde & Co issued a real estate alert regarding the Dubai Land Department's policy affecting foreign companies registering property in Dubai.  This update contains further Q&As on the topic.

Can the following entities register title to property in Dubai? 

  • Dubai onshore LLC with foreign ownership up to 49%
    There is no Land Department restriction on these entities, provided that the property is located in a designated area where ownership by non-UAE and GCC nationals is permitted.
  • Dubai free zone companies (i.e JAFZA, DMCC, TECOM), and DIFC companies, with foreign ownership
    There is no Land Department restriction on these entities, provided that the relevant free zone issues an "NOC" to the Land Department and the property is located in a designated area where ownership by non-UAE and GCC nationals is permitted.  Relevant free zone rules and regulations would also apply. 
  • Free zone or offshore companies established in other Emirates (i.e SAIF FZ and RAK FTZ/RAKIA) with foreign ownership
    We are informed that the current restrictions do apply to such companies. 
  • Companies that are registered onshore in established foreign jurisdictions?
    We are informed that the current restrictions do apply to such companies. 

Will UAE Law apply to the JAFZA offshore company's shareholdings such that shares held by non-Muslim individuals may be caught by Islamic Sharia law provisions regarding inheritance?

The use of a JAFZA regulated offshore company does not address inheritance issues in the same way as a BVI, Cayman or other non-UAE offshore company.  As stated in our previous alert, a foreign offshore company should be able to own the shares in the JAFZA offshore company that is required for the property registration.  As such, this layered structure is likely to be the preferred option where estate planning is required.

Do we know yet what fees are likely to be charged by the Land Department in the event of a change of shareholding in the JAFZA offshore company?

This is yet to be confirmed, but we understand that the intention is to levy a fee commensurate with a property transfer.  The main question is then what thresholds and considerations would apply, as there will be cases where the main purpose of the transfer of the shareholding is not to give effect to a sale of the property.  These issues will need to be addressed as the policy is implemented.

Will a second registration fee be payable if property registered on the interim property register (Oqood) in one name is then transferred to a JAFZA offshore (or other company acceptable to the Land Department)?

Provided the property is transferred to a company with the same shareholders as the existing Oqood owner, we understand that the Land Department will view this as an amendment to the register and not as a new registration.  The Land Department is likely to charge a small administration fee to amend the register.  Any entity or authority that is required to give an "NOC" for the registration may also require an administration fee.  As an example, JAFZA's fee for an "NOC" is currently AED 600 and developers are typically charging AED 5,000. 

What if an offshore company has mortgaged its interest in an off-plan development?

The relevant bank will need to be involved and documentation may need to be amended to reflect change of details to the borrowing entity.  We suspect that this is unlikely to affect many purchasers as cases of bank financing to offshore entities has traditionally been limited.

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