Locked Doors: The Locations Where You Can't Invest in Real Estate

Have you ever dreamt of buying that charming cottage in the countryside, a beachfront bungalow, or a chic city apartment in a foreign land? Well, not so fast! While the idea of owning property in a far-off paradise sounds tempting, in some corners of the world, it's not as easy as packing your bags and signing on the dotted line.

In this article, we're going to spill the beans on those places where foreigners can't just waltz in and snag a piece of the property pie. No, there are boundaries, rules, and sometimes even downright bans that keep non-residents from becoming property owners. So, grab your virtual passport and follow us on this journey to uncover the places where your property ownership dreams may hit a dead-end.

• United Arab Emirates
• Turkey
• Indonesia
• Thailand
• Denmark
• Switzerland
• New Zealand

United Arab Emirates

This entry on the red-zone list is an interesting one. That’s because in the past, expatriates and foreigners generally faced restrictions on property ownership in the UAE, but times have changed. Dubai led the transformation, followed by other emirates like Abu Dhabi, Ajman, Sharjah, and Ras Al Khaimah. Today, expats can own property in Dubai and beyond, but it is still not so clean and cut.

Foreigners are only allowed to own property in the areas designated as freehold. A freehold title means the purchaser owns the property, having full control over it, including the land on which it stands. Non-UAE nationals can also invest in leasehold property, essentially property owned by a third party or the government but allowed to be used for a period of time.

When you buy a leasehold property, you become its owner for a specified period, per the leasehold contract. This type of ownership, however, only grants you rights over the property itself but not the land it's built on.

Foreigners can also have usufructuary rights on property in the UAE. This means you can enjoy the right to use, occupy, and enjoy property (including land) belonging to someone else for up to 99 years. This type of tenure is similar to the leasehold concept and is terminated when the term expires unless the parties to the contract agree to extend it. Other scenarios where the usufructuary rights expire include the misuse of the property by the foreigner or irreparable damage to the property.

Property Ownership Rules in Different Emirates

The property ownership rules for foreigners in the UAE can vary from one emirate to another. Let's delve into the regulations specific to different regions.

Abu Dhabi

In the capital city, Abu Dhabi, expatriates can own property, but there are specific systems in place:

• Musataha: This system allows expat buyers the right to build on land owned by another person for a specific time, usually up to 50 years. Any holder of this right is deemed the owner of all property built on that land during the tenure.
• Long-term Lease: Non-UAE nationals have a right to long-term leases on their property for an initial duration lasting a minimum of 25 years.
  
• Usufruct: This system enables expatriates to use, occupy, and enjoy property and its facilities for over 99 years, so long as there is no damage or misuse.
  
• Freehold: under this system, foreigners can own property and have full control over it, including the land on which it stands.
  

In 2019, amendments to Abu Dhabi's Real Estate Law introduced changes regarding the property rights of foreigners. Those with "musataha" or "usufruct" contracts exceeding 10 years gained more property disposal rights. 

Currently, some of the most promising areas for property ownership in Abu Dhabi include:

• Yas Island
• Al Reem Island
• Saadiyat Island
• Maryah Island
• Al Raha Beach
• Al Reef
• Masdar City

Dubai

In Dubai, foreign property ownership is permitted in designated freehold areas. Expats and foreign buyers can acquire freehold ownership rights, which are not bound by leasehold or usufruct restrictions and can last for up to 99 years. Some popular freehold areas in Dubai are Downtown Dubai, DIFC Dubai, Business Bay, and Discovery Gardens.

Sharjah

The laws for foreign property ownership in Sharjah have recently undergone major changes. In the past, foreign nationals in the UAE did not have the right to own freehold property. Instead, they were limited to the right to usufruct. In 2014, regulations were changed to allow non-Arabs purchase property in designated areas within Sharjah on leasehold tenure of up to 100 years, so long as they held a UAE residency.

Then, in 2022, real estate laws in the Emirate were updated again, allowing all nationalities to buy freehold property in Sharjah without needing a UAE residency visa, with the benefit of transferring ownership by inheritance.

For comprehensive information on the conditions of foreign property ownership in the UAE, we recommend visiting this comprehensive guide to buying real estate. If you're specifically interested in purchasing apartments in Dubai and want to know where to start, you can also explore this guide.

Turkey

The Turkish reciprocity law, which governs property ownership, underwent significant changes in 2020. These changes expanded the list of countries from which citizens can purchase land and property, but they also introduced specific restrictions and conditions.

Today, several conditions apply to non-Turkish nationals aiming to purchase real estate in Turkey. Here's a breakdown of these conditions:

Limits and Restrictions for All Countries

Property owned by foreign nationals within a single town cannot exceed 10% of that town's total area or 30 hectares across Turkey. Special permission is required for purchases exceeding 30 hectares. For such large acquisitions, it’s best to establish a Turkish limited company.

If a foreign national, whether an individual or a corporation, intends to purchase land for development, they must submit their project plans for approval within 2 years of purchase. This regulation prevents land banking without contributing value to the acquired land.

Country Citizens Restricted from Buying Property in Turkey

• Syria
• Armenia
• North Korea
• Cuba
• Nigeria
• Yemen

Country Citizens Allowed to Purchase a Limited Number of Turkish Properties

• China
• Denmark
• East Timor
• Fiji
• Israel
• Jordan

There are special area restrictions for citizens of certain countries as well. Citizens from Russia and Ukraine cannot purchase property on the Black Sea coast of Turkey, while citizens of Greece are restricted from buying on the Black Sea coast and specific Aegean towns of Turkey.

For citizens of Morocco, Egypt, Latvia, Afghanistan, some small African countries, and Albania, there are no restrictions in the purchase of residences and workplaces, but that’s where it ends. They can not buy agricultural or other types of land.

Some other citizens require special permission before they can purchase in Turkey:

• Iran
• China
• Palestine
• India
• Iraq

There are those who are free to conduct real estate business in the country without hassle. Citizens of the following countries are allowed to purchase properties in Turkey without any conditions: Germany, United States, Argentina, Belgium, Belize, Benin, Bosnia and Herzegovina, Brazil, Bulgaria, Burkina Faso, Burundi, Chad, Dominican Republic, Estonia, Republic of Côte d'Ivoire, Finland, France, Gabon, Gambia, Guinea, South Africa, South Korea, Georgia, Croatia, Holland, Canada, Kenya, Northern Cyprus (TRNC), Colombia, Kosovo, Libya, Lebanon, Luxembourg, Mali, Moldova, Monaco, Namibia, Niger, Norway, Poland, Portugal, Peru, Romania, Serbia, Slovakia, Ireland, Spain, Switzerland, Italy, and the United Kingdom.

For the following countries, barriers to real estate activities have recently been removed:

• Saudi Arabia
• The UAE
• Kuwait
• Lebanon
• Turkic states in Central Asia, such as Azerbaijan, Kazakhstan, Turkmenistan, Uzbekistan, and Kyrgyzstan

Foreign nationals from countries with reciprocal agreements can purchase property in Turkey in zones governed by Implemented Development Plans or Local Development Plans for residential or commercial purposes.

In the same vein, Turkish regulation imposes a forbidden status on specific areas. Foreign nationals and commercial companies are prohibited from buying land or property in Turkey's military, strategic, and security zones.

Additional zones, where construction is prohibited for preservation purposes, may be determined by the Council of Ministers. These could include lands of strategic importance for energy, agriculture, mining, history, culture, biology, or environment.

The Land Registry Office (Tapu) will assess whether a property desired by a foreign national falls within these restricted zones. If the military authorities confirm that the property is outside the security and military zones, the application will likely proceed.

Indonesia

Indonesia has strict property ownership laws. These laws primarily grant land and property ownership rights to Indonesian citizens and specific legal entities. There are two key property rights types:

• Hak Milik (Right to Own): Allows indefinite ownership and control of land.
• Hak Guna Bangunan (Right to Build): Grants rights to build and use structures on land owned by others. Both rights are regulated by Indonesian laws and regulations.

Foreign investors can buy property in Indonesia, but they face limitations. They can own specific property types, like apartments or condominiums, for a maximum of 30 years. To be eligible for home ownership, foreigners must present immigrant documentation, such as a passport, residence permit or a visa. Recent pushes for increased foreign direct investment in the country also give incentives like tax exemptions and holidays for would-be foreign owners establishing a company in Indonesia or engaging in business sectors open to foreign investment.

These restrictions aim to limit foreign land acquisition in Indonesia and safeguard the local property market.

Direct land ownership isn't allowed for foreigners. Instead, they can lease land and own buildings on it. Seeking legal advice is advisable to ensure compliance with local regulations and prevent future legal issues.

Foreign investors have several methods to own property in Indonesia:

• Establishing a Company: Foreign investors can form a company in Indonesia, such as a limited liability company. However, foreign land ownership is legally restricted, necessitating partnerships with local entities to acquire property. Lease agreements, extendable for up to 30 years, are also an option.
• Purchasing Property as an Individual: Foreign individuals can acquire property by establishing a foreign-owned company and obtaining government approval. The property should not be in restricted areas, such as near military installations or cultural heritage sites. Ownership is typically limited to 25 years, extendable for an additional 25 years, requiring compliance with relevant laws and regulations.
• Leasehold Rights: Leasehold rights allow foreign investors to possess and use property in Indonesia for a specific period, usually between 25 to 70 years, subject to regulations.
• Using a Nominee or Legal Entity: Foreign investors can employ nominees or legal entities to own property in Indonesia, bypassing restrictions on foreign land ownership. These methods necessitate adherence to Indonesian laws and regulations governing foreign property ownership.

Thailand

Thailand, known for its stunning beaches, rich cultural heritage, and vibrant street markets, is a popular destination for travellers and expatriates alike. However, when it comes to foreigners buying property, there are certain rules and regulations that can create hurdles. Let’s break it down.

Land Ownership

Thai property laws predominantly restrict land ownership to Thai nationals, making it challenging for foreigners to own land there. Violating these land ownership restrictions can result in fines and potential imprisonment, up to 2 years of jail time.

As with almost every regulation, there are exceptions. These include the possibility of foreign ownership under section 96 of the Land Code Act, which allows land ownership of up to 1,600 square metres (or 1 rai*) for residential purposes in specified areas. However, this exemption necessitates a substantial investment of not less than 40 million Baht in BOI-approved Thai bonds and assets, which must benefit the Thai economy and require approval by the Minister of Interior. 

But that’s not all. If granted, foreign ownership of land under this exemption is limited to the life of the person granted the right to own the land and cannot be transferred or inherited. It goes without reason to say that permission for foreign land ownership under the Land Code Act is rarely applied for or granted.

Foreign individuals married to a Thai national cannot own land individually. However, the Land Department permits the transfer of land ownership to the Thai spouse in the event of a joint statement, known as a 'letter of confirmation.' This letter, jointly provided by the couple, affirms that the funds used to purchase the land belong to the Thai spouse as personal property.

For businesses, foreign companies in Thailand have the opportunity to secure special privileges and exemptions for land ownership during their operations in the country. These advantages are granted through the Board of Investment, as outlined in section 27 of the Investment Promotion Act, and also under the provisions of the Industrial Estate Authority of Thailand Act (section 44) or the Petroleum Act (section 65). However, this exemption comes with a caveat in the form of substantial investments and is restricted to the duration of their business activities in the country.

Before May 2006, it was common for foreigners to use Thai-limited companies with a majority of Thai shareholders to purchase land or property beyond foreign ownership limits. The government is now enforcing laws to prevent the misuse of such companies. These laws specify procedures for dealing with partly foreign-owned companies registering land or land rights, ensuring that Thai shareholders are not acting as nominees for foreigners.

*Rai is a unit of land measurement in Thailand. A unit of surface expressed in Rai equals 1600 square metres in metric measurement. An acre is approximately 2.5 Rai.

Condominium Ownership

Foreigners can own condominium units in Thailand under the Condominium Act. However, there is a restriction on foreign ownership within a condominium building, with no more than 49% of all units in a project available for foreign ownership. 

To qualify, foreigners usually need to bring foreign currency equivalent to the total purchase price of the condo into Thailand and provide proof of the currency exchange. Like the land ownership laws, these foreign condominium ownership rights are personal and not transferable unless the new owner also qualifies under section 19 of the Condominium Act.

If freehold condominium units intended for foreign ownership become unavailable, the law allows the remaining 51% of units to be leased to foreigners. The standard property leasing laws apply to these lease agreements for condominiums by foreigners. Notably, there is no distinct legislation governing the lease or rental of condominium units by foreigners, distinct from the regulations for condominium purchases.

Foreign ownership rights apply specifically to condominiums registered and licensed under the Thailand Condominium Act. However, apartment buildings don't follow these rules in Thailand's popular tourist areas. Owners of these buildings can rent them out as they see fit. Sometimes, they sell the units to different people for specific times, almost like sharing the space.

Denmark

In Denmark, the purchase of real estate by foreigners is governed by the Act on Acquisition of Real Property. Foreigners who are not residents of Denmark and haven't previously lived in the country for a cumulative period of five years must seek permission to acquire real estate from the Department of Civil Affairs, as outlined in Section 1(1) of the Act on Acquisition of Real Property.

However, there are exceptions to this law. For instance, citizens of EU/EEA countries have certain privileges. They can acquire real estate in Denmark without requiring permission if they meet specific criteria. These criteria include purchasing the property for year-round residence and being employed in Denmark, another EU/EEA country, having an EU/EEA residence permit, self-employment plans, agency/branch establishment, or sufficient financial means to support their family. In such cases, a simple declaration in the deed suffices.

Foreigners can also acquire real estate in Denmark without Department of Civil Affairs permission in cases of inheritance, retaining undivided possession of an estate, division of joint estates, and gifts to relatives in the ascending and descending line, as stipulated in Section 2 of the Act on Acquisition of Real Property. If you’re getting the property as a partial inheritance or a gift where you still have to make a part-payment, you still need approval from the Department of Civil Affairs permission.

Foreigners need to also pay attention to the terms of approval. If the permit states the property must be used for year-round residence, moving without selling is generally not allowed. The Department of Civil Affairs may order a sale within six months, and non-compliance results in a fine. However, exceptions apply if you've been posted or stationed abroad. There are also no general permits issued. Instead, the Department of Civil Affairs issues authorizations for specific properties only. You must identify the property you want to purchase before applying.

Speaking of property specifics, the rules differ for secondary residences like holiday homes/summer houses. It's possible to obtain an advance commitment from the Department as a foreigner if you have strong ties to Denmark. This commitment is valid for three years. When you find the holiday home you want to buy, you notify the Department, which then prepares the final permit for deed registration.

Switzerland

Not all foreign nationals can purchase property in Switzerland. Some need authorization to become the owner of a house or land. The Federal Law in Switzerland on the Acquisition of Real Estate by Persons Abroad, commonly known as the "Lex Koller," sets the rules and conditions for real estate acquisition by non-residents.

The three conditions for authorization are:

1. Person Abroad: Individuals who do not possess a valid Swiss residence permit (B or C permit) are considered "persons abroad" and must seek permission to purchase private real estate in Switzerland. However, EU and EFTA citizens residing in Switzerland enjoy the same property acquisition rights as Swiss nationals.
2. Type of Property: The acquisition of real estate for business purposes is generally permitted, with some restrictions applying to purposes like trade, construction, or rental accommodation. Foreigners, on the other hand, face limitations when it comes to acquiring residential properties. Buying holiday homes or units in serviced apartment buildings is subject to a national quota system. Presently, this quota allows for the sale of 1,500 such properties to foreign nationals each year, with allocations distributed among the various cantons.
   For certain cantons, like Geneva and Zurich, the sale of this particular type of real estate to foreign nationals is not permitted at all. To find specific information about the quotas in each canton, the Ordinance on the Acquisition of Real Estate by Non-Residents is a great resource.
   Now, if you are living abroad and wish to purchase a second home in Switzerland, there are specific criteria to meet. The property must be located in a designated tourist area, and there are limitations on size, with the living area capped at 200 square metres and the land area at 1,000 square metres. Moreover, the property cannot be rented out year-round; temporary rentals are allowed for holiday homes, and no rentals are permitted for second homes.
   Additionally, foreign nationals are restricted to owning only a single holiday home or second home in Switzerland. Like Swiss citizens, they are also prohibited from constructing a second home in a commune where more than 20% of properties are already designated as second homes. These regulations aim to manage property ownership by foreign nationals carefully, balancing the appeal of owning real estate in Switzerland with the need to preserve the unique character of the country's tourist and residential areas.
   
3. Definition of Acquisition: When the regulations talk about "acquisition," they're not just talking about the formal process of transferring property ownership on paper (like in the land registry). They're also including any kind of arrangement or deal that allows people who don't live in Switzerland to have control over Swiss property, as long as it requires permission beforehand. 
   For real estate transactions that need permission (like those involving non-residents), they can only be officially recorded in the land registry once the buyer has gotten the green light or approval. If the necessary authorization can't be obtained or is taken away, these transactions become invalid, meaning they don't legally count anymore.
   

Despite these strict conditions, some exemptions exist that generally permit real estate acquisition without authorization. These exemptions apply to legal heirs, close relatives, co-owners, condominium exchanges, and secondary residences for cross-border commuters.

New Zealand

New Zealand's property ownership regulations are distinct and hinge on your residential status. They create a clear distinction between those who can buy property without restrictions, those who can do so with consent, and those who are not eligible to purchase property.

For some, buying property in New Zealand is a straightforward process. This includes New Zealand citizens, regardless of their current residence. It also extends to those who hold a New Zealand residence class visa and meet the criterion of being "ordinarily resident" in New Zealand. Additionally, Australian or Singaporean citizens can purchase property, especially those categorised as 'residential' or 'lifestyle.' For those Australian or Singaporean citizens who are "ordinarily resident"* and intend to buy land deemed 'residential and otherwise sensitive,' this option also applies.

For individuals who are not yet considered "ordinarily resident," a New Zealand residence class visa holder, or an Australian or Singaporean permanent resident, the process requires consent. This consent can be sought for the acquisition of a home for living purposes, particularly if it falls under the category of 'residential and otherwise sensitive.' Keep in mind that if consent is granted, there are specific conditions that must be adhered to:

• Use the property as your primary residence.
• Be present in New Zealand for at least 183 days annually.
• Maintain your New Zealand residence class visa or citizenship/PR status.

On the other hand, there are groups of individuals who are not eligible to buy property in New Zealand. This includes overseas persons holding temporary, limited, interim, or transit visas (such as students, workers, or visitors), as well as overseas individuals without any visa. These individuals do not meet the criteria for property ownership in New Zealand.

You can check this tool from Immigration New Zealand to get to know your status.

*Having a residence class visa, residing in New Zealand for at least the last 12 months, being physically present in New Zealand for at least 183 days in the last 12 months, and being a tax resident of New Zealand. Australian or Singaporean citizens typically receive a residence class visa upon arrival in New Zealand.

In a Nutshell

Owning a property in a foreign land is a dream for many, but it's not always easy to make it a reality. 

The countries on our list have strict laws and regulations surrounding foreign property ownership, which can create obstacles for non-residents. It's important to have a thorough understanding of the rules and regulations before investing in a foreign property, as violating the laws can result in penalties and legal issues. 

However, with the right knowledge and guidance, it's still possible to make your property ownership dreams come true in these countries.

Cover photo: Zürich, Switzerland. Tobias Reich (Unsplash)