Real Estate 2020

Last Updated April 14, 2020


Law and Practice


DLA Piper Middle East LLP has a market-leading real estate offering, with an international multidisciplinary team of lawyers that can serve client needs globally across the real estate sector. The firm has more than 750 real estate lawyers operating in more than 40 countries around the world, serving clients in key real estate markets, with strongly established teams in the Americas, Europe, the Middle East, Africa and Asia Pacific. DLA Piper works with clients through all stages of the real estate life cycle, including planning, acquiring, finding, developing, leasing, completing, trading and divesting. Working through this cycle, it offers the following services: financing, acquisitions and disposals, asset management, construction, cross-border investment, development, fund formation, joint ventures, leasing, litigation, planning, zoning and environmental issues, public-private partnerships, REITs, restructuring, and tax. The team works alongside investors, lenders, developers and managers on every aspect of their real estate activities.

The United Arab Emirates (UAE) Civil Code (Law No. (5) of 1985) (UAE Civil Code) regulates civil transactions and contains certain provisions that relate to real estate. The UAE Constitution provides that private property shall be protected. Laws relating to real estate ownership are enacted by each Emirate within the UAE (Dubai, Abu Dhabi, Sharjah, Fujairah, Umm al-Quwain, Ras Al Khaimah and Ajman).

Within the Emirates there are also certain "free zones", which are authorised to issue their own laws and regulations. For example, Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM) have real estate laws that differ to the remainder of Dubai and Abu Dhabi, respectively.

This guide will focus on Abu Dhabi and Dubai, which are the main commercial hubs in the UAE and attract the most foreign investment into real estate.

In Dubai, relocations have been the main driver of activity in the corporate occupier sector. This is due in part to business licensing changes, with growing demand for space in free zones offering dual licensing. In Abu Dhabi, there is a sustained demand from occupiers for space in ADGM, with WeWork opening its first location in the MENA region there, and the introduction of freehold ownership of land in Abu Dhabi has simulated interest and activity in the market. The UAE retail market is facing a number of challenges, most notably a maturing e-commerce market. Destination and entertainment-focused shopping malls able to attract footfall without reliance on traditional retail are proving most resilient. The UAE real estate investment market continues to be dominated by domestic and regional players.

There is optimism in the market about the positive impact Expo 2020 will have, particularly in the hospitality and retail sectors, with legacy planning for District 2020 well underway. The Dubai Government's announcement to inter-link Emirates Towers, Dubai World Trade Centre and DIFC under The Dubai Future District is further testament to the Government's commitment to the long-term development of Dubai and DIFC as a regional business hub and economic driver.

Tokenisation, underpinned by blockchain technology, is attracting interest amongst major developers given its potential for increased capital access. The UAE Security and Commodities Authority (the country's market regulator) and its ADGM and DIFC counterparts are each focused on putting regulatory environments in place to encourage crypto fundraising and develop markets for trading within the UAE. This is an exciting space to watch, although it is more likely to be years rather than months before it will have a significant impact on the UAE real estate market. Of more immediate impact, Smart Crowd is the first DFSA-regulated real estate crowdfunding platform in the Middle East and Africa, and is another potentially attractive source of capital to the market for developers.

Furthermore, the Abu Dhabi Department of Urban Planning and Municipalities (DPM) has launched a one-of-a-kind platform, offering the general public, landowners and developers the opportunity to access live data on pending land use via their digital platform.

There is no formal requirement in the UAE to make any proposals for reform public.

In the UAE, there are five main types of property interests that can be held: absolute ownership (freehold), usufruct interest, musataha interest, leasehold interest and granted land.

UAE nationals and UAE-incorporated companies wholly owned by them are unrestricted in the interests that they may hold throughout the UAE.

Absolute Ownership (Freehold)

In Dubai, nationals of Gulf Cooperation Countries (GCC), UAE-incorporated companies wholly owned by them and UAE-listed and public joint stock companies may have absolute ownership of real estate throughout the Emirate. The GCC consists of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE. All other nationalities are only permitted to own real estate in areas designated by the Ruler of Dubai as locations where foreign ownership of real estate is permitted.

In Abu Dhabi, nationals of other GCC Countries (and companies wholly owned by them) may only be granted absolute ownership in one of the designated "investment areas". An amendment to the Abu Dhabi Real Estate law allows for foreigners to own real estate properties in designated "investment areas".

Usufruct and Musataha Interests

Distinguishing a lease from a usufruct or musataha can be difficult, and the substance of the document will determine its nature rather than its form. Relevant authorities are likely to treat longer term arrangements with rights to development or sublet as real rights (to which foreign ownership restrictions can apply) rather than leases.

A usufruct interest is a right in rem in favour of the grantee to use and exploit the property of another, provided the property remains in its original condition. A musataha interest is a type of usufruct that confers upon the grantee the right to build upon the land of another.

In Dubai, both usufructs and musatahas can be held by GCC nationals and UAE-incorporated companies wholly owned by them throughout the Emirate but by non-GCC nationals in designated areas only.

In Abu Dhabi, both usufruct and musataha rights may only be held by UAE nationals and UAE-incorporated companies wholly owned by them (without restriction) throughout the Emirate and by non-UAE nationals in designated investment areas.

In all cases, usufructs are restricted to a maximum term of 99 years and musatahas to a maximum of 50 years (renewable once in Abu Dhabi).

Leasehold Interests

Generally, leasehold interests in the UAE are treated as personal rights between two parties and not real rights.

An exception to this is leases of 25 years or more in Abu Dhabi and leases of ten years or more in Dubai, which are each considered real rights and can be registered as such.

Granted Land

Land may also be "granted" by the Rulers of each Emirate to Emirati citizens or companies owned by Emiratis. The grant of such land can be revoked by the Ruler at any time and is subject to obligations to develop and restrictions on its use and disposal.

The following Federal Laws are relevant:

  • the UAE Civil Code (as amended); and
  • Federal Law No (18) of 1993 on Commercial Transactions.

Each Emirate has its own laws and regulations governing the transfer of title.

In Abu Dhabi, the relevant laws relating to the transfer of title include:

  • Law No (3) of 2005: Concerning the regulation of Property Registration in the Emirate of Abu Dhabi, together with Department of Municipal Affairs Chairman's Decision No (52/1) of 2008 on the issue of an Executive Regulation regarding the Organization of Real Estate Registration in the Emirate of Abu Dhabi;
  • Law No (19) of 2005: Re-organising Real Property in Abu Dhabi (as amended by Law No. (2) of 2007: amending certain provisions concerning Real Estate ownership); and
  • Law No 3 of 2015: Concerning the Regulation of the Real Estate Sector in the Emirate of Abu Dhabi.

In Dubai, the relevant laws relating to the transfer of title include:

  • Dubai Law No (7) of 2013: Concerning the Land Department;
  • Dubai Executive Council Decision No (30) of 2013: Approving Fees of the Land Department;
  • Dubai Decree No (4) of 2010: Regulating the Grant of Title to Allotted Industrial and Commercial Land in the Emirate of Dubai;
  • Dubai Law No (13) of 2008: Regulating the Interim Property Register in the Emirate of Dubai, as amended by Dubai Law No (9) of 2009;
  • Dubai Law No (27) of 2007: Concerning Ownership of Jointly Owned Real Property in the Emirate of Dubai; and
  • Dubai Law No (7) of 2006: Concerning Real Property Registration in the Emirate of Dubai.

The laws do not treat different asset classes differently.

Registration of Transfers

All transfers of land in Dubai and Abu Dhabi must be registered. In Dubai, this is done in person at one of the trustee offices of the Dubai Land Department (DLD), while in Abu Dhabi it is done at the Abu Dhabi Municipality (ADM). The DIFC and ADGM have their own system of land registration and maintain their own registers.

Certain other free zones in Dubai maintain their own register of real estate interests but this does not negate the requirement to register land transactions in those free zones at the DLD.

In order to register a transfer, all parties to the transaction (ie, the buyer, seller and mortgagee, etc) are required to attend the relevant land registration department in person to sign the transfer documentation in the presence of a departmental representative, and to exchange cheques as payment of the purchase price and registration fees. Each land registration department will specify the supporting documentation that is required to effect the transfer. In many cases, this may involve no-objection letters from the master developer or relevant utility and service providers as evidence that there are no outstanding fees recorded against the property.

If a party is unable to attend the land registration department in person, they may appoint a representative by using a power of attorney duly prepared and executed in accordance with UAE law.

Off-plan Sales Contracts

The laws and regulations in Dubai and Abu Dhabi require contracts for the sale of real estate that is in the course of being developed (ie, off-plan) to be registered on an interim register (in Dubai, this is called the "oqood" registration).

Upon completion of the unit, the interim registration is cancelled and full registration occurs. The interim registration is an administrative measure only as it does not create any legal ownership (since the unit does not, at such time, exist).

Public Search of Register

Whilst all transfers are required to be recorded on the real estate register in accordance with law, the register is not publicly searchable. A title certificate for a property may only be obtained by application from the owner of the property or someone with a power of attorney from such owner.

Title Insurance

It is not common for title insurance to be obtained.

Buyers are recommended to carry out detailed due diligence on the real estate interest to be acquired prior to entering into a binding agreement or making any payment. In the UAE, the due diligence process can often be difficult due to the lack of information made publicly available.

Most information and documentation relating to the ownership or particulars of a property (ie, title certificates, affection plan with zoning information, etc) can only be obtained from the relevant governmental departments upon application from (or with the consent or authorisation of) the owner of the property. Some information relating to utility arrangements, community charges, leases or other contracts affecting the land can only be obtained from the owner of the land.

As a result, the due diligence carried out by a buyer's lawyer will typically be reliant upon materials provided by the seller's lawyer (which includes title certificates and searches) and the seller's response to follow-up enquiries made by the buyer.

UAE law implies limited warranties in the sale and purchase of real estate (see 2.5 Typical Representations and Warranties), so it is important that buyers carry out as much due diligence as possible before entering into any agreement to acquire a property interest or making any payment.

The representations and warranties to be contained in a sale and purchase agreement are subject to agreement by the parties, and may vary from contract to contract.

Dubai and Abu Dhabi laws remain largely silent on the representations and warranties that are implied in the sale of property, with the exception of the sale of off-plan units. Under both Dubai and Abu Dhabi law, a developer selling a unit off-plan is required to repair any structural defects in a unit for ten years from the date the completion certificate is issued by the municipality, and is liable for latent defects for a period of one year from the date the completion certificate is issued by the municipality.

If a seller makes a misrepresentation, then the buyer's primary remedies will be as specified under the sale and purchase agreement (ie, typically termination of the contract and damages for breach of contract). However, depending on the nature of the misrepresentation, there may be a claim of unjust enrichment or fraud.

When considering acquiring real estate, an investor should pay particular attention to the planning, zoning, construction, environmental and health and safety laws that may apply to the property, and obtain assurances that all requisite approvals have been obtained prior to the building having been constructed.

Non-UAE nationals should carefully consider whether the property is in an area in which the buyer is legally permitted to hold the interest that they plan to buy.

Environmental laws in the UAE are comprised of Federal and Emirate level laws. The Federal laws primarily aim to control all forms of major pollution and will apply to the principal polluter (developer, industrial organisation, etc). There is a possibility that environmental liabilities can pass with land, particularly if the breach of environmental laws continues after the purchase by the buyer. Any liabilities will depend on complaints raised to or investigated by the Federal Environment Agency or any other local authority that has been created to specifically legislate or monitor the particular environmental protection sought. In Abu Dhabi, the main authority to investigate environmental issues is the Environment Agency – Abu Dhabi; in Dubai it is the Environment Department of Dubai Municipality.

The Abu Dhabi Department of Urban Planning and Municipalities (DPM) and the Dubai Municipality (DM) are responsible for the zoning of land in their respective Emirates. The DPM and the DM each issue affection plans in respect of plots of land, which state the zoning for such land and some details regarding the size of the building permitted to be built on such land.

A developer will be required to obtain the consent of the relevant governmental departments and utility and service providers in order to subdivide and develop the land and obtain the requisite building permits.

Each of the statutory utility providers, telecoms providers and district cooling companies have their own standard form agreements, which a developer will be required to negotiate in order to obtain utilities, etc, to service the site.

Expropriation of land is possible in both Abu Dhabi and Dubai. The UAE Constitution and UAE Civil Code, however, restrict the right of a public authority to expropriate land unless such expropriation is for a public benefit, and compensation will be paid to the party being disadvantaged by such expropriation.

There is no formal statutory process, although typically for large-scale expropriations a committee will be formed to co-ordinate dealings with affected parties and determine compensation.

Asset Deals

In Abu Dhabi, the seller and buyer are required to pay registration fees of between 1% and 4% of the purchase price/returns under the contract, which is split equally between the parties unless otherwise agreed. In the case of off-plan sales, the fees for registration on the interim register are 2% of the purchase price, subject to a cap of AED2 million per transaction.

In Dubai, the seller and buyer are required to pay registration fees of 4% of the purchase price, which is split equally between the parties unless otherwise agreed. In practice, it is common for the buyer to pay the full 4% transfer fee.


If the buyer is granting a mortgage over the property, then the mortgage must also be registered and a registration fee applies.

In Dubai, the mortgage registration fee is 0.25% of the mortgaged amount (up to a maximum of AED1.5 million). In Abu Dhabi, the relevant fee is 0.001% of the mortgaged amount (up to a maximum of AED2 million for off-plan units and AED1 million for all other assets).

Share Deals

Nominal fees will be payable to the relevant company regulator to register the transfer of shares in a company.

In Dubai, the DLD requires notification of any changes in shareholding of real estate-owning companies, and a proportionate transfer fee will be applied. Failure to inform the DLD can result in a fine.


VAT is applied to the sale of real estate assets at the following rates:

  • sale of commercial property: 5% standard rates;
  • first sale of new residential property: 0% (zero rated);
  • subsequent sale of existing residential property: exempt (no VAT); and
  • sale of bare land: exempt (no VAT).

The sale of an investment property may be exempt from VAT if it is classified as a "transfer of a going concern".

There are legal restrictions on foreign investors acquiring real estate – please see 2.1 Categories of Property Rights.

Financing of the Acquisition (or Development) of Real Estate Through Loans from Licensed Banks

It is quite common for the acquisition (or development) of real estate in the UAE to be financed by way of the borrower obtaining a loan (often with a mortgage as security for repayment). The duration and conditions of such a loan will differ depending on the borrower, the nature of the underlying real estate asset(s), and the loan-to-value ratio, etc.

A loan can be provided either on a bilateral basis (a single lender providing the entire facility) or on a syndicated or club basis (multiple lenders, each providing parts of the overall facility). Syndicated facilities by their nature involve more parties (such as agents that fulfil certain roles for the finance parties), and are often highly structured with more complex documentation. Larger financings will typically be done on a syndicated basis.

A loan can be either secured, unsecured or guaranteed. Typically, in the context of the acquisition or development of real estate, the creditor providing the financing would require a mortgage over the underlying real estate. In this respect, it is important to note that only banks licensed by the UAE Central Bank are eligible to be mortgagees of record for real estate in the UAE. In addition, it is important to note that there may be subtle procedural differences in how mortgages are taken between the different Emirates and the various free zones in the UAE.

Islamic Finance Structures

Apart from obtaining conventional loans (as described above), another popular way of financing the acquisition of real estate in the UAE is through Islamic financing. Islamic banking and finance transactions are based on Islamic principles and jurisprudence (together referred to as Shari’a or Islamic law) derived from a number of sources, including the Qu'ran. Islamic finance structures and techniques have developed in accordance with Shari’a principles, and these principles must be adhered to when deciding whether a proposed financing structure or product is Islamically acceptable. One of the key principles is that the payment and receipt of interest (riba) is prohibited under Islamic law (and any obligation to pay interest is considered to be void).

However, Islamic principles do not prohibit a financier in an Islamic finance transaction from making a profit, rental or other return on its asset or investment. To that end, a number of contemporary structuring techniques (or Islamic contracts) have developed, which allow Islamic bankers to structure transactions and products in a way that complies with Islamic principles while also replicating the economics of conventional loans and products. The way an Islamic real estate financing is structured will often depend on the nature of the real estate itself: whether it is a real estate development or a completed property, the type of restrictions in relation to ownership, as well as the registration and other costs involved.

Completed and existing real estate property can sometimes be financed through sale and leaseback arrangements (ijara), where the company (ie, the borrower) sells the real estate to the Islamic financier and subsequently leases it back from the Islamic financier in exchange for paying rentals. The essential features of a conventional loan (such as the applicable margin on each repayment amount) are reflected in the leaseback arrangements. However, this kind of arrangement may attract registration and other costs, which can make a leasing/ijara structure economically unviable.

By contrast, commodity murabaha (also known as tawaruq) financing structures rely upon underlying commodities trades in order to create debt-based obligations (akin to those you would see on a conventional loan). This particular structure does not involve any additional transfers in respect of the underlying real estate asset, and it can also be structured on a bilateral or syndicated/club basis in the same way as for a conventional loan. These kind of commodity murabaha structures can also be secured using a mortgage over the underlying real estate, as well as other security (discussed later in this guide).

A number of other Islamic financing structures also exist (such as wakala, istisna'a, mudaraba and musharaka), but are less frequently used for the acquisition of real estate assets.

Other Financing Structures

There is a general trend towards the establishment of real estate funds/real investment trusts (REITs) whereby stakeholders inject capital into a fund where the principal objective is to invest in strategic real estate in the UAE (and/or the wider GCC area) and to grow a real estate portfolio for the fund's investors. Whilst the UAE is not traditionally recognised as a funds jurisdiction (in the way that, for instance, the Cayman Islands or Luxembourg may be), the development of offshore jurisdictions such as DIFC and the ADGM with evolving legislation aimed towards the development of a funds market has made these financial free zones a more attractive jurisdiction for the establishment of such real estate funds. Typically, the funds would structure the acquisition of real estate (whether conventional or Islamic) in a way that maximises the benefits for investors – including the use of leverage. These kind of fund structures may be more attractive for the purposes of the acquisitions of large real estate portfolios or companies holding real estate.

Another alternative is to access the debt capital markets, through either bonds or sukuk (also known as Islamic bonds). There are a number of UAE-based issuers (or obligors) who are real estate developers that have issued into the debt capital markets in this way, although the majority of those deals have been for general corporate purposes and general growth plans (as opposed to the funding of specific acquisitions).

Real Estate

Security over real estate and real estate interests (such as usufruct or musataha) can be taken by way of a mortgage that is registered at the relevant land department. Some of the Emirates (and free zones) have specific laws dealing with mortgages but, in the absence of legislation, mortgages are generally governed by the UAE Civil Code. Although the practices of the relevant registrars may differ (and the practice at a particular registrar might evolve as well), generally speaking mortgages over real estate may only be granted in favour of a bank that is licensed by the UAE Central Bank. A mortgage also needs to be translated into Arabic and notarised prior to its registration, which can add time and cost to a real estate transaction.

The purchaser of an off-plan unit in the Emirate of Abu Dhabi may finance the acquisition of the unit by obtaining a mortgage over its interest registered in the Interim Register (the register established by the Department of Municipal Affairs for the registration of all off-plan sales), provided that the mortgage monies are paid directly into the project escrow account which the developer is obliged to establish for the particular development. In Dubai (under similar rules), mortgages can be noted on the "oqood" interim registration for off-plan property but this does not create a legal mortgage as the property does not exist at such time; it only becomes a legal mortgage when the unit is completed and the registration is completed at the Dubai Land Department.

The UAE Central Bank has issued detailed regulations on mortgage lending, which define the eligibility of various categories of borrowers based on a loan-to-value ratio (LTV). The primary aim of those regulations is to ensure that banks, finance companies and other financial institutions providing mortgage loans do so in accordance with prudent practices and have control frameworks in place. The regulations also apply to banks and institutions providing Shari'a-compliant loans for the purchase of properties. The UAE Central Bank is keen to regulate borrowing in the market by reducing the level of leverage currently available to borrowers and increasing equity in real estate investments.

Movable Property

In relation to movable property, security was historically taken by way of a possessory pledge, and it was a fundamental element of this security that the beneficiary of the security can demonstrate either possession or control of the secured property. The view previously was that it is generally not possible to take security over future property or an asset that is not certain at the date of creation, which has meant that taking a security assignment over future contracts or over an onshore bank account with a fluctuating balance was problematic. However, the UAE issued Federal Law No. 20 of 2016 on Mortgaging Moveable Properties as Surety for Debts (the "New Mortgage Law"), which provides that a wide variety of assets (such as accounts, trade payables or receivables and equipment including future property) can be secured without demonstrating possession – provided that the security is registered on the “Emirates Moveable Collateral Registry”. The implementation of the New Mortgage Law therefore enables additional security over accounts and receivables to be taken, with a greater level of certainty in the context of real estate financing transactions, and also enables security to be taken over movable property that is similar in effect to a debenture or “floating charge” (provided that the provisions of the New Mortgage Law are complied with).

Security Over Shares

Where a special purpose company (SPC) has been established for the purposes of a real estate investment or development, it may be possible for the financiers to take security over the shares of that SPC. As a general rule, it is possible to take security over the shares in a company, including onshore LLCs. However, there are restrictions on which entities can own real estate (as discussed elsewhere in this guide), and it should also be noted that the process for share pledges can differ depending on where exactly a company is registered. Accordingly, the process for taking security over pledges of shares should be checked on a case-by-case basis. Furthermore, the general practice is that this kind of security may only be granted in favour of a bank licensed to carry out business in the UAE, and a share pledge will typically be subject to notarisation requirements prior to its registration.


Guarantees are common in the UAE and it is not unusual to see corporate and/or personal guarantees given in relation to a real estate financing. These kind of guarantees are specifically codified in the UAE Civil Code. It is also worth noting that a separate set of rules applies to bank guarantees (which often take the form of a bond) under the UAE Commercial Code.

This area is governed by the rules and regulations prepared by the UAE Central Bank, under which a party wishing to hold security must be a bank, company or financial institution that is licensed by the UAE Central Bank to provide property finance. A limited number of international banks hold such a licence. Foreign (unlicensed) lenders will often appoint a locally licensed security agent to act on their behalf in relation to security over real estate assets.

There are currently no restrictions on repayments being made to a foreign lender under a security document or loan agreement, other than in relation to the following areas:

  • UAE Central Bank restrictions or measures that are designed to counteract money laundering and/or the funding of terrorist activities; and
  • transactions involving certain sanctioned countries or blacklisted entities.

However, the Central Bank of the UAE has the right to impose additional restrictions from time to time.

In the UAE, the following fees are payable in relation to granting and enforcing security:

  • a bank property valuation fee;
  • notarial fees for documents that must be notarised prior to granting/taking the mortgage;
  • a real property mortgage registration fee payable to the applicable land registry;
  • notarial fees to give notice of default (applicable to Dubai);
  • a publication fee in relation to the auction, pursuant to which the secured asset may be sold;
  • a public auction fee if a secured asset is sold by public auction; and
  • court fees as prescribed by the relevant court, for enforcement of a security interest.

Under the UAE Companies Law, it is not possible for a joint stock company (JSC) target, or any of its subsidiaries, to provide any financial aid (such as loans, security and guarantees) that will assist a purchaser in acquiring its shares. However, limited liability companies are exempt from such restrictions under a Ministerial Resolution of 2016. In any event, as a matter of good practice, all companies would be advised to demonstrate that there is a corporate benefit to the company granting any security.

Abu Dhabi

There are certain procedures set out in the UAE Civil Code and the Civil Procedures Law, as well as the Abu Dhabi Real Estate Law No. 3 of 2015, that must be followed before a lender is able to enforce its security over real estate. The UAE courts generally give a debtor every opportunity to pay any outstanding debts before allowing the real estate to be sold.

The first step is to ensure that the lender's rights are registered at the relevant authority in order to enforce its legal rights.

The lender must send a written notification to the debtor and any guarantor by registered mail, demanding full and final settlement of the outstanding debt within a period of no less than 30 days from the date of notification.

If the debtor or its guarantor has not settled the outstanding debt or has not reached an agreement with the lender within the time period set out in the written notification, the magistrate of summary justice shall issue, at the request of the lender, a decision to sell the mortgaged property in public auction. The debtor may request postponement of the sale of the property by auction. The court may postpone the sale of the property for a period of up to 60 days if it is of the opinion that the mortgagor may be able to settle the debt within this period, or if the sale of the property would cause serious damage to the mortgagor. If the court does eventually order the sale of property to proceed, then a public auction of the property will occur, in accordance with the procedures applicable at the relevant court.

If the real estate is insufficient to satisfy the debt, the mortgagee may have recourse against the mortgagor's other assets as an ordinary creditor. The mortgagee must follow the statutory procedure, and provisions in the mortgage document attempting to circumvent this procedure would be held to be void.


A lender is entitled to satisfy the debt from the mortgaged property when the debt falls due, provided that the mortgage has been registered at the DLD. Failure to register a mortgage renders it void, pursuant to Law No. 14 of 2008 Concerning Mortgages in the Emirate of Dubai (the "Mortgage Law").

If the value of the property is insufficient to satisfy the debt, the lender may have recourse to the borrower's other assets as an ordinary creditor, but it must look to enforce its rights against the property first. The lender must follow the legal procedure, and provisions in the mortgage document attempting to circumvent this procedure would be held to be void.

The Mortgage Law sets out the enforcement procedure for mortgages. Upon a default in payment by the borrower, the lender must give 30 days' notice through a Notary Public before commencing execution proceedings.

If the payment is not made within such 30-day period, an execution judge shall, upon the request of the lender, order an attachment against the mortgaged property, enabling it to be sold at public auction in accordance with the DLD's auction rules.

The execution judge may decide to postpone the sale by public auction for up to 60 days (such postponement can only be made once) if he finds that the borrower will be able to repay the debt during this time or if the sale would cause the borrower "substantial damage". It is not clear exactly what would constitute substantial damage in this context.

If a security interest is required to be registered, then the date of registration determines its ranking in both Dubai and Abu Dhabi. If it is not registrable, then it will rank in order of the date of creation (noting, however, that the laws relating to priority are largely untested in the UAE). If two or more applications to register a mortgage against the same property are made at the same time, then the mortgages are registered together and rank equally in the distribution of auction proceeds.

A lender may assign the ranking of its mortgage to another creditor that has a security interest in the same property. This is typically done contractually through intercreditor or subordination agreements that are entered into between creditors.

A lender would not be liable. Environmental laws in the UAE are not particularly detailed, but the relevant authorities are likely to pursue the party responsible for causing the environmental harm, which may or may not be the mortgagor. If there are any remedial costs associated with rectifying the damage, the law provides that the lender may "take whatever legal action is necessary to protect its rights and recover the costs from the mortgagor." In addition, the mortgage will typically contain indemnities in favour of the lender in the case of pollution or other acts caused by the mortgagor that are harmful to the environment.

The relevant provisions concerning the lender's security interests if a borrower becomes insolvent are contained in Federal Decree Law No. 9 of 2016 (the "Bankruptcy Law"). The Bankruptcy Law came into effect on 29 December 2016, but there remains a degree of uncertainty as to the correct application of the new law (or its supplementary regulations). The Bankruptcy Law provides that a declaration of insolvency will not result in the dissolution of contracts that are binding on both parties, unless the services are "personal" in nature.

If a borrower declares insolvency, the lender's security interests will not be extinguished to the extent that such security is not challengeable on an antecedent transaction.

It is possible to challenge certain types of "preferential" contracts that are entered into during the requisite period (ie, the date from when the court deems cessation of payments to have occurred, with such date not being more than two years prior to the declaration of bankruptcy), but it is generally understood that such a challenge is a lot more difficult where a transaction is a genuine commercial transaction between the parties on arms-length terms which forms a defence to an application to reverse a transaction. However, the consent of the court will be required prior to commencing any action to enforce such security.

It should also be noted that any documents submitted to the government authorities or the courts in the UAE should be in Arabic. Accordingly, in the event of a dispute, the transaction documentation should be translated into Arabic prior to its submission to the competent courts. As a matter of practice, it would be rare to translate documents into Arabic at the time of signing, unless notarisation or registration is required (which specially requires Arabic translations).

The obligations of a UAE company are subject to limitations arising from bankruptcy, liquidation, composition and all other laws and general principles affecting the rights of creditors generally. It is not possible to confirm a UAE company's solvency because there is no practical or effective way of determining whether a petition for bankruptcy, liquidation, composition or other similar insolvency event has been filed in the UAE.

The Emirates Inter Bank Offered Rate (EIBOR) is often used as a benchmark for variable rate lending (in local currency, being the dirham or AED) in the UAE real estate sector. It is also used by a number of Islamic banks as a benchmark for determining the variable rental rate for special leasing agreements such as Ijara. However, given the prevalence of US dollar lending in the UAE banking market (and the local currency peg), the discontinuance of LIBOR will also have a significant impact on banks operating in the UAE, although it is likely that the UAE banking sector will (to a large extent) adopt the most appropriate approach (going forwards) based on practices that develop in London and the US markets for rate-setting in US dollars.

Abu Dhabi

In Abu Dhabi, the planning powers are vested in the DPM.

Major developments are subject to a review process, established by the DPM, which itself forms part of a longer-term strategy for Abu Dhabi's urban development. The DPM has established a streamlined process to review development proposals, depending on the nature of the development.

Step 1: The information meeting

The DPM will hold an initial meeting as soon as a development site has been acquired, where it will explain plans and policies that will determine site development potential and outline the upcoming development review. It also helps set the parameters for supportable development, and alerts the applicant to the documents/agencies that should be consulted.

Step 2: Preliminary development options

The applicant will then prepare a site analysis (including elements such as transportation, habitat, climate and infrastructure) to prepare preliminary development options for the site. Two options for general land use and site layout must be provided.

The DPM shall review this to check compliance with the Emirate's urban planning policies (eg, Capital 2030, land uses, densities and Estidama (an environmental concept/plan)).

The applicant and the DPM select the preferred option and work together to prepare a complete concept review application.

Step 3: The concept plan

This application covers all of the systems-level components of a development consent. It will include site and massing plans, and a comprehensive approach to open space and community facilities. The DPM and up to 20 other review agencies evaluate the plan to check it complies with other plans and polices, and agree on the seven key elements of the plan, which include land use; density; building form; site layout/design; services; strategies; and phasing.

Step 4: The detailed plan

Applicants with small and medium-sized projects shall prepare and submit detailed site and building plans for review. This step also confirms that any conditions of approval have been met.

For large projects, this stage of the process is aimed at helping applicants translate concept masterplans into detailed regulations and guidelines.

For small and medium-sized projects, the planning review process ends once these steps have been satisfactorily carried out, and they can move on to apply for municipal building permits from the relevant municipality. Additional developer and DPM/municipal review shall be required for large projects, to ensure compliance with DPM-approved regulations and guidelines before they can apply for building permits.


Currently in the Emirate of Dubai there is no published legislation in relation to the process and procedures of obtaining planning and zoning permission. As the process is not clearly stated in legislation, much of the process is based on practice and custom. The general process that applies across Dubai is set out below.

An owner or developer obtains an "affection plan" from Dubai Municipality. The affection plan is a high-level general site plan that is issued with basic information containing the plot number, the land use classification and any other particular zoning requirements that are required by Dubai Municipality.

The plan will state the height allowance, the usage, any setback requirements and whether parking must be included. The affection plan will also state what permissions from the particular government authorities or third parties will need to be obtained prior to approval. There are no general rules regarding the requisite authorisations, as each affection plan is issued on a plot-by-plot basis. Depending on the location of the plot, additional approvals may need to be obtained, including approvals from Dubai Electricity and Water Authority, Civil Defence, Etisalat, the master developer (if applicable), the Environmental Department of Dubai Municipality and any other authorities or agencies that are listed on the affection plan.

In 2019, Dubai formed a Supreme Committee for Real Estate Planning, headed by Dubai's Ruler and including members from the Executive Council, DLD and DM. The committee aims to develop a strategic plan for all major real estate projects in Dubai over the next ten years.

Abu Dhabi

To assist in regulating the design, appearance and method of construction of new buildings, the Abu Dhabi Municipality has adopted the International Codes of the International Code Council, which include:

  • the International Building Code;
  • the International Fire Code;
  • the International Plumbing Code;
  • the International Energy Conservation Code;
  • the International Mechanical Code;
  • the International Fuel Gas Code; and
  • the International Private Sewage Disposal Code.

In addition, the Abu Dhabi Environmental Health & Safety Management System (AD EHSMS) has also been adopted. This system requires nominated entities to create an Environmental Health & Safety Management System to comply with the AD EHSMS.

Any development must also comply with the statutory requirements of other government agencies, such as the Department of Transport, Abu Dhabi Police, Abu Dhabi Education Council and Abu Dhabi Waste Management Control, amongst others.


Dubai Administrative Resolution No. 125 of 2001 concerning the adoption of Building Regulations and Standards provides the public law control for the technical aspects of the detailed design, as well as the restrictions for aesthetic and heritage areas.

Numerous technical guidelines and circulars issued by Dubai Municipality also regulate the detailed design. These need to be examined on a case-by-case basis to ensure that the detailed design is compliant with the relevant regulations for the area where the building is being constructed.

In Abu Dhabi, the DPM is the main body responsible for regulating the development and designated use of land. In Dubai, the main authority responsible for regulating the development and designated use of land is DM, with responsibilities devolved to Dubai Development Authority and Trakhees for Tecom and Nakheel master communities respectively.

Abu Dhabi

In Abu Dhabi, the DPM has established a streamlined process to review development proposals, depending on the nature of the development; see 4.1 Legislative and Government Controls Applicable to Strategic Planning and Zoning for the relevant steps. There is no formal objection process to challenge a planning decision made by the DPM or municipalities. Generally, there are no formal consultation processes involving third parties.


Before any refurbishment works can be carried out, a building permit needs to be obtained from DM if the nature of the works necessitates this. This is done by submitting the proposed drawings to DM.

In Dubai and Abu Dhabi, if the property being refurbished is within a master community, then the master developer will have its own procedures for approval, which must also be followed.

There is no right or formal process to appeal a decision of a relevant authority in either Abu Dhabi or Dubai.

In Abu Dhabi, the decision of a governmental authority may be reviewed by the Ruler of the Crown Prince's Office by direct application, and in Dubai it is possible to apply to the Ruler's Court. In both cases, the power to intervene in such decisions is entirely discretionary.

Non-binding Memoranda of Understanding are common between master developers and statutory utility suppliers. Binding agreements are common with providers of district cooling services, which are sometimes project financed. Formal agreements with local authorities are rare.

The DPM (Abu Dhabi) or the DM (Dubai) can order a contractor to stop work and, in extreme cases, demolish unapproved structures. This is likely to be established during an inspection prior to the grant of a completion certificate.

A building completion certificate will not be issued if the building permit has not been complied with. The building completion certificate is required in order for occupation of the building to be allowed.

Various types of corporate vehicles are capable of holding real estate assets in the UAE, including limited liability companies, public joint stock companies and private joint stock companies.

If the holding company of a real estate asset has foreign shareholders, then the company may only hold the real estate asset within a designated investment area.

Limited Liability Company (LLC)

This is a company in which the shareholders are limited in their liability to the amount of their contribution to the share capital. In general terms, an LLC must have between two and 50 shareholders, and UAE nationals must own at least 51% of the shares. Despite this requirement, a GCC individual or a company owned by GCC nationals is permitted to own 100% of the shares without the need for a second shareholder.

Foreign investment in a mainland company is restricted to 49%, so will necessitate the involvement of a 51% shareholder that is either a UAE national individual or a company wholly owned by UAE nationals. There are companies in the UAE which provide services for acting as nominee shareholders, but this entails payment of an annual fee.

The recent introduction of the Foreign Direct Investment Law (FDIL) aims to relax this rule and permit up to 100% foreign ownership; however, activities relating to real estate have not been included within the scope of the FDIL at this stage.

An alternative route outside of the FDIL is offered in Dubai by the Department of Economic Development, whereby up to 100% foreign investment may be permitted in instances where there is significant capitalisation and other requirements. This approach is largely untested, especially with regard to real estate activities, and may be subject to restrictions imposed by the relevant regulator.

JAFZA Offshore Companies

In Dubai, it is possible for real estate to be owned by a JAFZA offshore company (regulated by the Jebel Ali Free Zone Authority in Dubai). Such a company can be fully owned by non-GCC nationals or companies owned by them, and therefore it is common for real estate in designated areas in Dubai to be held by a JAFZA offshore company. The minimum number of shareholders in a JAFZA offshore company is one.

Public Joint Stock Company (PJSC)

This is a company whose capital is divided into negotiable shares of equal value, and the minimum share capital for a PJSC is AED30,000,000. The nominal value of each share cannot be less than AED1, nor more than AED100. Shareholders have limited liability to the value of their shares.

UAE nationals must own at least 51% of the shares in the PJSC, and the founding members must subscribe for between 30% and 70% of the issued share capital. A PJSC must have at least five founder members.

Private Joint Stock Company (Private JSC)

A private JSC is similar to a PJSC but with certain differences, including:

  • the minimum share capital is AED5,000,000;
  • the shares cannot be offered publicly; and
  • only two founder members are required.

The UAE Companies Law (No. 2 of 2015, as amended) ("Companies Law") provides that, unless specifically stated, all requirements that apply to a PJSC apply to a private JSC as well, other than the points noted above.

Limited Liability Company (LLC)

The Companies Law does not prescribe a minimum capital amount for an LLC but the share capital must be adequate. This can be decided by the shareholders, and there is no published guidance in this regard. In practice, a notary public currently accepts a minimum share capital of AED100,000-150,000, divided into equal shares with a minimum value of AED1,000. Share capital must be paid up in full.

JAFZA Offshore Companies

The minimum share capital for a JAFZA offshore company is AED1,000, and shares must have a minimum value of AED1 each.

Public Joint Stock Company (PJSC)

The minimum share capital requirement is AED30,000,000 for a general company, and this amount increases in the case of banks and insurance companies.

Given the substantial capital requirement and the fairly restrictive rules of establishment and management, it is often not a suitable corporate vehicle for overseas investors wishing to establish a vehicle for investment purposes.

Private Joint Stock Company (Private JSC)

The minimum share capital required is AED5,000,000.

Limited Liability Company (LLC)

An LLC must appoint a general manager to manage the company. The general manager can be of any nationality but, in practice, rejection of a proposed general manager does occur without reason from time to time. An LLC must also appoint a UAE-certified financial auditor before the end of its first year of business, and the company accounts must be certified by such auditor each fiscal year. A general assembly (shareholders' meeting) must also be held each year for all shareholders.

JAFZA Offshore Companies

It is necessary for a JAFZA offshore company to appoint a registered agent, to whom notices are served. It must also have at least two directors, a general manager and a company secretary at all times, and such individuals do not need to be resident in the UAE.

Public Joint Stock Company (PJSC)

There are greater corporate governance requirements with a PJSC compared to an LLC. Since a PJSC is required to be listed, it has to comply with the governance requirements of the relevant stock exchange, which include various disclosure requirements to be met and the publication of accounts and other statements. The Emirates Securities and Commodities Authority (ESCA) has also issued a corporate governance code, adherence to which is mandatory for PJSCs.

Additionally, if new shares are offered, the existing shareholders have a pre-emption right before they are offered to the public, unless such new shares are being issued to "strategic investors" that make the issue fall outside of the pre-emption requirements.

Private Joint Stock Company (Private JSC)

A private JSC must have a board of directors consisting of between three and 12 directors, and each director's term is no more than three years (subject to re-election). From the directors, there must be a chairman and such chairman must usually be a UAE national.

The corporate governance requirements for a private JSC are less strict than a PJSC. Since private JSCs are not listed entities they are not bound by the same disclosure requirements as PJSCs, unless the private JSC voluntarily chooses to adhere to the corporate governance code that is mandatory for PJSCs.

The annual compliance costs for an entity investing in real estate are commensurate with the needs of each individual company and therefore will vary.

In the UAE, a lease is deemed a personal right rather than an interest in land. Non-UAE nationals (and companies owned in whole or part by non-UAE nationals) may only be granted long leases within one of the investment areas in Abu Dhabi or one of the designated areas in Dubai.

Alternative rights of occupancy that do create rights in property are usufructuary and musataha rights. These are subject to the same geographical foreign ownership restrictions as leases.

Abu Dhabi law does not provide a clear distinction between a lease (a personal right) and a usufruct (a right in rem). The law does state that long leases (ie, those with a term of 25 years or more) are property rights, but it does not clearly define the characteristics of leases with terms shorter than this. In practice, ADM have deemed leases for a term of more than four years granted in favour of a non-UAE national (or a company owned in whole or part by a non-UAE national) in relation to land outside an investment zone and which contain rights to sublet to be usufructuary rights (and therefore not capable of being granted to a non-UAE national outside an investment zone).

In Dubai, a long lease is one with a term of ten years or more, and these require registration at the DLD. For leases of less than ten years, registration is still required but at a nominal cost on the "ejari" system.

For leases of less than ten years required to be registered on the "ejari" system in Dubai, the DLD requires parties to use a mandatory form of lease that records key provisions (eg, parties, premises, rent and term, etc). It is common for parties to attach supplemental (and often more comprehensive) terms to this mandatory form.

The form of lease is not mandated by law in Abu Dhabi but certain key provisions must be included – eg, parties, property description, rent and term.

Rent in the UAE may be freely negotiated between the parties to the lease.

In Abu Dhabi, Abu Dhabi Executive Council Resolution No 14 of 2016 on Lease Agreements of Premises prohibits rental increases of greater than 5% per annum.

In Dubai, Decree No. 43 of 2013 concerning the percentages of maximum property rent provides for the average market rent to be set according to the Rent Index for the Emirate of Dubai as approved by the Dubai Real Estate Regulatory Agency (RERA). The percentage of the maximum increase in the real estate rents in Dubai is determined on renewal according to the current annual rent amount compared with the average rent for a similar property. Whilst these restrictions apply to both residential and commercial property, in practice, for commercial property, alternative terms (such as fixed increases) agreed are likely to be respected.

The terms of a lease may be freely negotiated between the parties, provided that the contents of the lease agreement do not contravene law.

Both the Abu Dhabi and Dubai landlord and tenant laws include provisions in relation to the repair and maintenance, termination and term of leases where the lease agreement remains silent on such topics, although in practice most contracts will contain express terms on those matters.

The rent payable under a lease must be specified in the lease agreement and is generally subject to fixed or index-linked increases at regular intervals. In addition to a base rent, turnover rents are common in retail lettings.

Market rent review provisions are also included in some leases, but these clauses are not used as frequently as they are used in more developed real estate markets because reliable comparable transactions can be difficult to establish due to the lack of publicly available market data. Please see 6.3 Regulation of Rents or Lease Terms regarding the restrictions on rent review.

Revised rents may be determined by applying a fixed or index-linked percentage increase, or by determining the open market rent. Please see 6.3 Regulation of Rents or Lease Terms regarding the restrictions on rent review.

VAT applies to rent payable for a commercial property, at the standard rate of 5%.

A tenant's liability for upfront costs should be set out in the lease agreement.

The parties to a lease commonly agree that the tenant will be responsible for paying the registration fees associated with registration of the lease at the relevant land department. Tenants are also generally responsible for the cost of opening an account for utilities and telecommunications, and for paying for meters and connections in new properties.

A tenant may also be responsible for the payment of a service charge if such charges are levied contractually or, in the case of long leases, in accordance with the jointly owned property laws and specified in the master community declaration.

A tenant may also be liable for the fees of any agent involved in the transaction.

A commercial lease agreement may impose an obligation on the tenant to pay a service charge to the landlord to be used for the maintenance and repair of the common property. Residential leases are more likely to provide for an all-inclusive rent.

A premises occupied by a tenant will usually be individually metered. In such cases, the tenant will usually purchase services such as electricity or water directly from suppliers.

Where the tenant is liable to pay a service charge for the maintenance, repair and use of the common areas or shared facilities, the tenant will need to pay such service charge directly to the landlord.

A landlord will typically pay for building insurance (where the building is occupied by more than one tenant) and a tenant will pay for its own contents insurance. A landlord operating a service charge will then recover the costs of the building insurance through the service charge.

Under UAE law, there is automatic rent cesser following damage or destruction of the property.

Leases normally specify the permitted use. If the lease is silent on this matter, the use should be consistent with zoning authorised for such property and the licensed activities of the tenant company.

Both Abu Dhabi and Dubai law requires the tenant to obtain the consent of the landlord to all proposed works. The terms of a lease may also set out what kinds of works the tenant is permitted to carry out, when the landlord's consent should be sought for such works and whether any types of works (eg, structural) are absolutely prohibited.

Certain works require the consent of government authorities, such as the relevant municipality. In order to obtain such consents, these government authorities will require evidence of the landlord's consent to such works.

Abu Dhabi


There are specific rules relating to residential leases, such as a maximum numbers of lessees who are permitted to occupy a single dwelling, which varies depending on whether the property is a villa or an apartment, and depending on the number of rooms in the dwelling.

Two months' notice for renewal or termination is required for residential leases.


Commercial leases have similar rules to those applicable to residential leases, with minor exceptions such as the absence of rules concerning the maximum number of individuals who can occupy the leased premises.

Three months' notice for renewal or termination is required for commercial leases.


The number of villas that can be used as offices is restricted. Evidence that the villa can be used for office purposes should be obtained (in the form of a certificate from the Abu Dhabi Municipality). If this cannot be produced, the Abu Dhabi Municipality could take enforcement action during the term (and a rent refund might not be available).

Three months' notice for renewal or termination is required for office leases.


Leases of hotels are not common but to the extent such leases exist, there are no specific provisions that apply to them.

Furnished apartments

These also do not fall within the ambit of landlord and tenant legislation, and regulations specific to furnished apartments are awaited.


The same laws currently apply to residential, industrial, office and retail leases. The exception to this is accommodation provided by an employer to an employee. The DIFC Leasing Law 2020 draws a distinction between leases of commercial and residential premises, with enhanced protections afforded to lessees of residential premises.

If a tenant ceases to pay rent, court proceedings are often taken to terminate the lease and for the landlord to be awarded damages. Please note that the insolvency law applies only to commercial companies so if a tenant is insolvent and is not a commercial company then the regular laws of landlord and tenant would apply, which would be the remedies for failure to pay rent. There are no provisions specific to insolvency in the landlord and tenant laws.

Under the insolvency law, the debtor has to first apply to the courts for (i) a preventative composition, in which case it is the debtor's duty to inform the courts within 30 days of doing so of all and any creditors' rights against the debtor, or (ii) bankruptcy, in which case any ordinary creditors of ordinary debt under AED100,000 can apply to the Court to open proceedings, as long as the creditor has warned the debtor to settle in writing and this has not been done within 30 days of the written notice to settle.

The parties to a lease agreement are able to agree the form of security to be provided by a tenant. Typically, a landlord may ask for a security deposit, bank guarantee and/or parent company guarantee.

Although it is common for a landlord to take a security deposit from a tenant, the Dubai and Abu Dhabi landlord and tenant laws do not provide detailed provisions on how such deposits must be held, when they can be utilised and when they must be returned. It is important, therefore, to ensure that a lease contains detailed provisions on dealing with the security deposit. Some provisions relating to the concept of a bailment under the Civil Code apply to security deposits. As a result, the wording in a lease should be clear that a tenant consents to the landlord investing such monies and retaining the interest, otherwise Article 973 of the UAE Civil Code provides that the holder of the bailment should return the "profits and fruits of the thing bailed to the bailor". The UAE Civil Code also provides that monies must be held for safekeeping, and the landlord would need to take reasonable care of the funds.

Under both Abu Dhabi and Dubai law, if a lease term expires and the tenant remains in the property with the landlord's knowledge and without any objection by the landlord, then the lease shall be (in Abu Dhabi) renewed for a similar term and on the same conditions, or (in Dubai) renewed for a similar term or a period of one year (whichever is less) on the same terms.

A well-managed property will have an owner who agrees the precise arrangements for vacating the property in advance with the tenant. However, if the lease agreement does not specify the terms of renewal then the Abu Dhabi and Dubai landlord and tenant laws set out a standard position to be implied into the contract. Under the landlord and tenant laws, if a party does not wish to renew or wishes to re-negotiate the terms of the lease, not less than three months' notice is required for commercial property.

In Abu Dhabi and Dubai, a tenant may only assign the use of or sublease all or part of the leased premises with the written consent of the landlord. Unless otherwise agreed, the landlord may withhold or grant its consent in its sole discretion. For commercial subleases of part, the premises will need to be physically partitioned for business licensing purposes.

In Abu Dhabi, tenants have a statutory right to request the Lease Dispute Resolution Committee to terminate a lease where the landlord hands over the property in such a poor condition that it cannot be used for its intended purpose.

Article 271 of the UAE Civil Code allows parties to an agreement to agree to an early termination. In exercising such right, the parties must comply with any notice period set out in their agreement for such termination.

It is common to see break rights included in longer term leases to provide the tenant with greater flexibility. Landlord break rights are less common and may not be effective in Abu Dhabi unless the landlord can also establish a ground for termination (see below).

Abu Dhabi

Registration is a mandatory requirement for leases of less than four years, and this is done by the landlord or property management company in the Tawtheeq system.

For leases with a term of more than four years but less than 25, a 4% fee of the entire value of the consideration applies.


For leases of less than ten years required to be registered on the "ejari" system in Dubai, the DLD requires parties to use a mandatory form of lease. A nominal registration fee is payable.

Leases with a term of ten years or more require registration on the full register at the DLD. A registration fee equal to 4% of the total rental value of the lease is payable in equal proportion by the landlord and tenant, unless agreed otherwise.

Abu Dhabi

Under Article 23 of Abu Dhabi Law No 20 of 2006 concerning the Letting of Property and Regulation of the Letting Relationship between Lessors and Lessees, the landlord may ask the tenant to vacate the premises only for the following reasons:

  • if the lessee fails to pay the rent due within the periods fixed in Article 11 (a period not exceeding 21 days from the due date agreed in writing if the property is let for residential purposes unless otherwise agreed, or 30 days from the due date agreed in writing if the premises is let for commercial, industrial or vocational purpose) against a receipt indicating payment, unless otherwise agreed;
  • if the lessee assigns or sublets all or some of the premises, except with the permission or authorisation of the lessor;
  • if the lessee or the sublessee allows more than the generally accepted level of occupancy;
  • if the lessee uses or permits the premises to be used in a manner contrary to the tenancy contract conditions or which impairs the lessor's interest, or uses the premises for purposes other than those for which it is let;
  • if the lessee uses or permits the premises to be used in a way that is detrimental to health, or constitutes a disturbance or is contrary to public order or manners;
  • if the lessor wishes to demolish the premises for rebuilding, an increase in height, additions or alterations (subject to a number of conditions); or
  • if the lessor wishes to occupy the premises for his own purposes, provided that he does not own another habitable property within the jurisdiction of the municipality in which the premises are located, subject to:
    1. serving the lessee a notice six months prior to the expiration of the tenancy contract; and
    2. the lessor occupying the premises for one uninterrupted year after they are vacated by the lessee. If the lessor fails to reoccupy the premises without acceptable reasons within three months from the vacation date or occupies the premises for less than one year or lets the premises to another lessee, the original lessee can obtain an order allowing him to re-occupy and/or be paid compensation. The Lease Disputes Resolution Committee (LDRC) may determine the appropriate compensation, provided that it does not exceed one year's rental.

In all cases, the LDRC may give the lessee a suitable respite before he must vacate, provided that it does not exceed six months.

There are no guidelines as to how long the process would take.


There are certain circumstances in which a lessee can be required by the lessor to vacate the leased premises prior to the end of the term. These circumstances are set out in Article 25 of Law No (26) of 2007, as amended, and are as follows:

  • if the lessee fails to pay the rent, in whole or part, within 30 days of the lessor notifying the lessee that payment is due (unless the parties agree otherwise);
  • if the lessee subleases the premises in whole or part without the landlord's written approval. In such a case, the subtenant is also evicted and may seek compensation from the lessee;
  • if the lessee uses the premises for illegal or immoral purposes;
  • if the premises are a commercial shop and the lessee has not occupied it for 30 consecutive days or 90 non-consecutive days in a year (unless the parties agree otherwise);
  • if the lessee makes changes to the premises that endanger the safety of the premises such that it cannot be restored to its original condition, or if the lessee intentionally or due to gross negligence causes damage to the premises or allows others to cause such damage;
  • if the lessee uses the premises for purposes other than those for which it was leased, or in a way that violates planning, building and land use regulations;
  • if the premises are in danger of collapse (the lessor must provide the lessee with a technical report evidencing this issued by Dubai Municipality or accredited by it);
  • if the lessee fails to observe legal obligations or comply with the lease covenants, within 30 days of the lessor notifying the lessee that it is in breach of the same; or
  • if development requirements in Dubai require demolition of the premises in accordance with the instructions of government authorities.

In all the above cases, the lessor must notify the lessee through the Notary Public or by registered mail.

If the lessee disputed the grounds for early termination of the lease, it would be able to lodge a case at the Rent Disputes Settlement Centre, which determines landlord and tenant disputes in Dubai, provided that the lease has been registered in the ejari system operated by the RERA.

Under the UAE Civil Code, property can be appropriated by the Government for the public benefit. In such circumstances, "just compensation" must be paid. Whether and to what extent the compensation would cover any tenant's interests in the property is dealt with on a case-by-case basis.

The most common pricing structures are:

  • lump sum – a pre-agreed "fixed" price for the works subject to adjustment for variations to the scope of works and/or events entitling the contractor to claim loss and expenses in accordance with the terms of the contract; and
  • measurement or unit price – the parties agree on the amount to be paid per unit of construction so that the work can be quantified and valued on the basis of a bill of quantities.

Payment is usually made against the certification of completed works by an engineer appointed by the employer. The inspection and certification of completed works is typically made on a periodic basis (usually monthly) or a milestone basis (at pre-agreed specific milestones or stages).

The majority of construction contracts for major projects in the UAE are based on the industry standard form contracts published by FIDIC, and as such responsibility for design and construction is allocated contractually in accordance with standard international practice.

The most common procurement structures for construction projects in the UAE are:

  • traditional "construct only" procurement, under which the contractor assumes responsibility for the construction of the works but not the design (with the responsibilities of the parties for design and construction allocated on the basis of the FIDIC Red Book); and
  • design and build (D&B) procurement, where the contractor assumes responsibility for both the design and construction of the works (with the responsibilities of the parties for design and construction allocated on the basis of the FIDIC Yellow Book). It is uncommon on UAE D&B projects for the employer to appoint the design team and novate the design consultant appointments to a D&B contractor.

Alternative methods of procurement such as construction management, management contracting, partnering and alliancing remain uncommon in the UAE.

The contractual devices included in the FIDIC forms of contract are typically used to manage risk allocation in the context of a construction project (however, the standard FIDIC Conditions of Contract are often amended by employers to transfer additional risk to the contractor). Whilst the majority of the standard FIDIC provisions are generally viewed as being enforceable under UAE law, the UAE Civil Code provides that an agreement or a contractual provision will be unenforceable if:

  • it conflicts with a mandatory provision of the law;
  • it is contrary to public order or morals;
  • it is performed in bad faith; or
  • a right is exercised in an unlawful manner (including where the benefit realised is disproportionate to the harm suffered by others, or where the interests sought to be realised conflict with Islamic Shari'a law).

Relevant mandatory provisions of the Civil Code in the context of construction contracts include:

  • Article 248, pursuant to which the UAE courts may, upon application by a party, vary unfair contractual provisions or exempt a party from compliance with such provisions;
  • Article 249, which allows the UAE courts to adjust the effect of a contract if exceptional and unforeseeable circumstances occur that make performance of an obligation "oppressive";
  • Article 296, which provides that liability for harmful (tortious) acts may not be excluded;
  • Article 383, which provides that liability for fraud or for wilful or gross mistake may not be excluded;
  • Article 390, which allows the UAE courts to adjust the award of damages due to a party if the actual loss suffered differs from a contractually pre-agreed amount of damages; and
  • Article 880 to 882, which provides that liability for structural failure or defects resulting in partial or total collapse of a structure or threatening the stability or safety of a structure within ten years of handover is imposed jointly and severally on the main contractor and lead design consultant (regardless of fault or breach of contract). This "decennial liability" may not be excluded.

Any parts of an agreement that conflict with or are inconsistent with such mandatory provisions will either be rendered automatically void, or will provide the courts with the power to adjust the agreement to ensure consistency with mandatory provisions.

Schedule-related risk is generally managed in accordance with FIDIC principles. Virtually all construction contracts in the UAE require works to be completed by a specified date. Instead of the employer bringing a claim for general damages (compensation) for late completion of the works by the contractor (which may be difficult to quantify), it is standard practice to require the contractor to pay "liquidated damages" (LDs) for delay.

LDs are damages that are fixed and the quantum is agreed by the parties in advance. A typical LD clause requires the contractor to pay or allow the employer to deduct LDs at a rate per day or week of delay in the completion of the works.

Article 390 of the UAE Civil Code provides that the parties can pre-agree an amount for damages, including for delay. However, although the liquidated damages rate chosen by the parties may be a strong indicator as to what the actual rate will be, either party may apply to a court or arbitrator to vary the agreed rate of liquidated damages so that the compensation awarded reflects actual loss suffered, and there is no express prohibition in UAE law on penalties and no requirement that LDs be a genuine pre-estimate of loss. Any attempt to distinguish between "penalty", "liquidated damages" and "compensation" is likely to fail under UAE law as the words are used interchangeably within the Civil Code, in other UAE laws, and as a matter of commercial custom.

Accordingly, the UAE law position as regards LDs is different from the English law position, insofar as the Civil Code allows the liquidated damages regime to be altered by a court having regard to the losses actually suffered by the innocent party. The court's power to vary the agreed level of LDs is discretionary, and the party seeking to have the LDs reassessed must be able to demonstrate that the rate of LDs should be adjusted.

Construction contracts in the UAE typically provide for:

  • an "on demand" performance bond for 10% of the contract price;
  • an "on demand" advance payment guarantee securing the employer's advance payments under the contract; and
  • retention of 10% from each interim payment as security for the contractor's obligations to remedy defects during the defects notification period (or occasionally a bond in lieu of such retention).

Company guarantees from a contractor's parent or group company in favour of the employer are also fairly common, especially where the contracting entity is a special purpose vehicle.

Contractual payment security mechanisms, whether by way of a payment bond, parent company guarantee from the employer, or escrow and project bank account arrangements are unusual in the UAE, though this is more as a result of commercial custom than any legal restrictions on such forms of security.

Article 879(1) of the Civil Code provides a contractor or consultant with the potential remedy of a statutory lien over property in circumstances where the contractor or consultant's work has produced a beneficial effect on the property but the employer has failed to pay for such work. This entitles the contractor or consultant to retain (and not hand over) the property he has improved pending payment for such work by the employer. However, this mechanism remains relatively untested, and contractors and consultants typically rely on contractual remedies for non-payment.

There are no express requirements to be satisfied under UAE law before a building may be inhabited or used, other than the issue of the "completion certificate", but the law is unclear as to whether this requirement relates to the completion certificate from the relevant authority confirming that construction is complete, or to the completion certificate issued by the engineer under the construction contract.

In practice, a building completion certificate from the relevant municipality (following inspections of the works by the relevant authorities and civil defence) is usually stipulated as a contractual requirement before construction works can be used and occupied.

Since 1 January 2018, VAT at the standard rate (5%) applies to the sale of commercial property (whether such property is newly constructed or not). If the transaction can be treated as a "transfer of a going concern", then the transfer shall not be considered a supply for VAT purposes (hence no VAT will arise).

No methods are currently used to mitigate transfer, recordation, stamp or other similar tax liability on acquisitions of large real estate portfolios.

In Dubai there is a municipality fee payable on the occupation of property and this is calculated as 5% of the annual rent or 0.05% of the value of the property (in the case of ownership). Value is generally treated as the amount for which the current occupier bought the property.

There is no income tax applicable on rental income and no capital gains tax at present.

There are no tax benefits from owning real estate.

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