Dubai has been for many years the favourite place to invest in property in the Middle East. As an individual you can choose to hold property in your own name, but an alternative is to hold it through a local property holding company. If the property is located in a freezone, a company or branch registered in that freezone or a company incorporated in the mainland can hold it. If the property is located in the mainland, a local company or a registered branch of a foreign or freezone company can hold it. If a LLC in the mainland owns the property the legal ownership would rest for 51% in the name of the local sponsor.
A disadvantage of holding the asset in the name of a trading company is that if the activity of the company changes, or the rationale for using a particular freezone, then the company would need to be retained for no other purpose than holding the property. The costs of doing so could be substantial. Alternatively the property would need to be transferred but in that case a transfer tax of 4% is incurred.
A trading company can hold multiple properties but would in most cases have to pay additional license fees for each property it holds.
The easiest way to circumvent these problems is by holding the real estate in a separate holding company set up for this purpose. The only passive holding entity that is allowed to hold Dubai real estate is the JAFZA Offshore Company
. The company can hold the real estate and lease it out to individuals or companies. Moreover one holding company can hold many properties without paying additional license fees.
Another reason for holding Dubai property with a local holding company is to avoid local inheritance law. When a business owner dies all UAE assets will be frozen immediately until the succession proceedings have been completed. By holding the shares of the JAFZA company in the name of a foreign entity, local succession proceedings can be avoided. In the other emirates a RAKEZ Offshore Company
can be used as an alternative. Another option for non-Muslims, in Dubai, is to register a DIFC Will
which will also ensure smooth succession.
Holding property in the name of a company will ensure greater privacy as well.
Finally, if you are not a local resident, it could be convenient to have local directors
. The directors of the company can then deal with any issues such as lease contracts, building and fit out approvals, fire regulations, tenancy issues, legal notices, eviction proceedings, etc for which otherwise your presence would be required. Oneworld Mideast can provide directors qualified and with practical experience to deal with these matters. Moreover as a registered agent with both RAKEZ and JAFZA we can incorporate holding companies here and take care of all the formalities related to incorporation, renewal and compliance. We have helped thousands of clients successfully establish operations in countries all over the world and manage over US$5 billion worth of assets on behalf of entities established for clients.