Pros&Cons: freehold vs. free zone

Freehold and free zone are terms you have probably been hearing quite often, especially when people around you are discussing the current state of the market. Don’t know what’s the difference? Easy. propertyfinder.ae gives you an easy guide to help you decided between investing in a freehold or a free zone company when you decide to buy a property in Dubai.

Freehold

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What is it?

Properties referred to as freehold in Dubai are those located areas designated by the ruler in which non-GCC nationals can own properties. These areas were established by Law No 7 of 2006 Concerning the Land Registration in the Emirate of Dubai, Article 4 of the law gave non-UAE nationals the right to acquire real properties in certain areas of Dubai and to have their rights registered with the Dubai Land Department (DLD).

Where is it?

The most popular freehold areas in Dubai are: 

The Palm Jumeirah – Emirates Hills – The Meadows – The Lakes – The Springs – Dubai Marina – Jumeirah Lake Towers – Downtown & Old Town Burj Khalifa – Discovery Gardens – Dubai Investments Park – Jumeirah Beach Residence  The Greens – Arabian Ranches – Falcon City – The Villa – Al Barari – Dubai Sports City – Motor City – Green Community – Business Bay – International City – IMPZ – Jumeirah Village – Jumeirah Islands.

Click here for thousands of properties for sale in freehold areas in Dubai.

Who is it for?

Investors looking to buy property in Dubai to make revenue or expatriates wishing to settle into their own home. 

Pros: 

  • Owner has complete control over the property.
  • Owner can lease, resell and modify the property.
  • Freehold areas offer a number of investment opportunities.

Cons:

  • If an owner wishes to use the property for business purposes, he can only own 49% of the shares in the company and needs to have a local partner. 

Free zone

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What is it?

Free Zones are special economic zones set up with the role of offering free customs duty benefits to expatriate investors and foreign companies. Free Zones in Dubai are governed by special framework of rules and regulations applicable to concerned free zones by free zone authorities.

Where is it?

Free zone areas in Dubai are:

Dubai Airport Free Zone – Dubai Cars and Automotive Zone (DUCAMZ) – Dubai Healthcare City – Dubai International Academic City – Dubai Internet City – Dubai International Financial Centre – Dubai Knowledge Village – Dubai Media City – Dubai Gold and Diamond Park – Dubai Multi Commodities Centre (DMCC) – Dubai Silicon Oasis (DSO) – International Media Production Zone – Jebel Ali Free Zone – Dubai World Central (DWC) 

Click here for thousands of listings for sale in Dubai’s free zone areas.

Who is it for?

Free zone areas are mostly prefered by foreign companies wanting to operate in UAE and maintain 100% of ownership. 

Pros:

  • Eliminating the need for a local partner.
  • Enabling investors to own 100% of the company.
  • Special considerations and more freedom of operations.
  • No restriction for doing more than one activity.
  • Tax exemption.

Cons:

  • Free zone companies are only allowed to operate within the free zone areas in the Emirate, limiting their expansion opportunities. 

Conclusion:

  • If you’re looking to invest in properties in order to become a homeowner, a landlord, or even to resell the property when it is profitable, you’re advised to invest in a free hold area.
  • If you’re looking to invest in properties in order to start a business and wish to be the sole owner of the company, we advise you to invest in a free zone area.