Some suggest that commercial property will benefit more in the initial stage due to the shortage of supply of quality office space in the city due to high demand.
On Sunday, DLD announced that all private property owners from the Trade Centre Roundabout to the Water Canal on Sheikh Zayed Road and the Al Jaddaf area can now convert their ownership status to freehold.
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A total of 457 plots, 128 along Sheikh Zayed Road and 329 in Al Jaddaf, are eligible for conversion to freehold. A conversion fee of 30 per cent of the property's valuation (based on gross floor area) will be applicable. Once payment is processed, a map and freehold ownership title deed will be issued for the converted property.
Farooq Syed, CEO of Springfield Properties, said the decision to allow freehold ownership in the two neighbourhoods is expected to significantly boost demand and will attract a broad spectrum of investors seeking ownership in one of Dubai's most prominent corridors.
He noted that substantial opportunities will emerge for the redevelopment of older single-owned hotels and other properties.
Farooq Syed
Property values in the two neighbourhoods are projected to rise by approximately 50 per cent, driven by the shift to freehold ownership and redevelopment opportunities, he added.
“Additionally, rental yields are expected to strengthen, supported by enhanced investor confidence,” he added.
“We forecast that redeveloping and modernising these assets will unlock significant value. For example, villas in Al Wasl District have seen prices increase to over Dh4,500 per sqft since becoming freehold, compared to nearly half this value when it was a leasehold area,” added Syed.
Alois Kugendran, CEO of Amaya & Co Real Estate, said the new freehold designation is likely to push prices and rents up as demand from expats and foreign investors increases.
Alois Kugendran
Easy buying and selling
Ayman Youssef, managing director of Coldwell Banker, said the freehold facility offers building owners, particularly those managing properties with large built-up areas, an advantageous exit strategy.“Historically, selling such buildings has been a complex process, but the introduction of freehold ownership simplifies this challenge. The government's provision to charge a 30 per cent fee adds a structured framework, making the process more accessible and appealing to property owners. This policy is expected to generate considerable revenue for Dubai. I estimate that it could contribute around Dh500 million,” added Youssef.
Ayman Youssef
Mortgage facility
He noted that both residential and commercial property owners stand to benefit, but residential property owners are likely to see the most significant advantages.“Freehold ownership allows them to raise mortgages, thereby unlocking additional financial flexibility. Moreover, it enhances the overall value of their buildings, benefitting both owners and prospective buyers. On the commercial side, the decision presents exciting opportunities for investors seeking high-yield assets,” he said, adding that Sheikh Zayed Road, a highly developed and strategically located area, offers accessibility to malls, dining destinations, tourist attractions, and healthcare facilities, making it an ideal location for both residential and commercial investments.
“For Al Jaddaf, the policy comes at a critical juncture in its development. As a growing area with a strong emphasis on commercial projects, this decision will stimulate further development and attract businesses looking to establish a foothold in Dubai.”
Commercial property to benefit first?
Rohit Bachani, co-founder of Merlin Real Estate, said this move is expected to release considerable equity for GCC landlords, potentially opening up more opportunities for freehold ownership.
“In the early stages, commercial property owners along Sheikh Zayed Road may see more immediate benefits due to the current shortage of commercial space. The release of additional inventory could offer more options for freehold commercial offices although we might see an increase in prices for ownership, with private landlords possibly adjusting rents to current market levels. However, as market forces play out, older buildings may experience more stable or even slightly reduced rents, while demand for high-quality, A+ buildings could drive rental prices higher,” said Bachani.
Rohit Bachani
Alois Kugendran said freehold ownership offers full property rights, boosts market activity, increases property values, and solidifies these areas as key players in Dubai's real estate market.
“Residential properties in these areas are likely to see increased demand and value, appealing to expatriates and investors due to full ownership rights. Commercial properties, particularly along Sheikh Zayed Road, stand to attract international businesses,” he added.