The efficiency of your investment depends directly on the reputation of the developer. When buying an investment property, it is important to choose a large, financially stable company with a decent business reputation so that you can protect yourself against delays, project freezing, or failure of the building to meet the stated criteria. Currently, the lion's share of the Abu Dhabi property market is occupied by the major national developers
.NBD! The Department of Municipal Affairs (DMA) is in charge of all matters regarding the legal regulation of the emirate's real estate market.
The legal status of investors also needs to be looked at before investment. The experience during the economic downturn in 2007–2008 showed a significant insecurity for expats involved in off-plan projects, a significant proportion of which were delivered late or frozen altogether.
In 2015, Abu Dhabi established the Real Estate Regulatory Act No. 3, which clearly regulated development procedures and the rights and obligations of parties in the event of unforeseen events. In particular, as of 2015, all developers are required to:
- Provide investors with a development plan.
- Obtain a construction permit from the DMA.
- Open an escrow account in which all funds received from investors will be deposited.
In terms of the last point, the escrow account is held in trust by the DMA or an authorised bank. A separate account must be opened for each project. As a rule, payments to contractors and project consultants can be made from this account. The developer's general overhead costs, as well as the funds required to purchase the land plot cannot be paid from the deposited funds. The developer will only have access to the account once the construction phase specified in the contract has been completed. Moreover, the trustee will continue to withhold 5% of the total assets received from the developer for 1 year after the project is commissioned. If the project does not meet the stated standards, these funds will be used to locate and remedy defects in the building or the project.
To choose a reliable developer it is recommended to follow these points:
- Research all the available information – the developer's official website and its current social media accounts. You have to pay attention to customer reviews and comments, how long the company has been operating in the Abu Dhabi real estate market, whether it has been awarded any accolades and who are its partners. Useful information on the pros and cons of the specific real estate developer can also be found in the thematic forums.
- Take a look at the company's portfolio – see how many projects have been completed and how many are still under construction, and check for news on construction delays.
- View one or more completed projects. A tour can be arranged with the help of a licensed real estate agent.