How to buy property in Abu Dhabi for foreign investors

Each of seven emirates provides their own regulations upon selling/buying properties for foreigners. Abu Dhabi real estate market operates a bit different if compared to overseas investors-oriented Dubai's market. In terms of legal framework for real estate transactions governmental city is only approaching the system, developed in Dubai. That is why it is strongly recommended to employ reputable, certified realtors' services to navigate through local specifics successfully.

Not so long ago, non-UAE and -GCC nationals have had limited rights for properties. Lands under apartments, villas, offices were available for leasehold only. The law, that has been implemented in 2019, scales the opportunities for inward investment to Abu Dhabi properties up massively. It designates a number of special investment areas across the city and ensures title deed issue to the buyers – the document, where full ownership of the estates, located within the zones, is ratified.

Pursuant to the law, now overseas owners may buy, resale properties, take mortgage, transfer properties, own a freehold interest in land, etc. Having such a recognition of the proprietorship on hand it is easier to obtain mortgage in future, as well as to get insured against any legal difficulty, one may fall into.

Successful Beginning Is the Key

Prior to all, make up your mind whether you buy property for personal use or profit taking. There might be absolutely different options, located in different districts, and your broker will be able to offer the most appropriate ones, if you specify your request from the very beginning.
While looking through the adverts narrow your search by indicating the type of property (apartment, villa, townhouse, penthouse) number of bedrooms, preferable location and amenities nearby, like supermarkets, nurseries, schools, clinics, parks, beaches. In desert nation so much time is spent indoors, so if you have children it is crucial to avail space for playing and wandering in the open air. In Abu Dhabi communities with landscaped areas for outdoor activities can be found at the developments in Saadiyat Island, Al Raha Beach and some other.
Next step there will be finding a verified broker, a proven licensed real estate agency. In order to avoid unpleasant mistakes, we advise to pay scrupulous attention to that. Meeting with a broker ask for his/her ID card, it is issued by the municipality. Don't hurry and don't let yourself to be misguided by aggressive advertisement.
Once you have settled on several homes, fix for viewings with an agent. Interesting to know, that in the UAE property can be measured in different ways, so estimate actual sizes after having seen a unit for real. It is also worth noting, that homeowners are not obliged to pay utility bills when a unit stays unoccupied, so you may see a property with electricity and water switched off. The same with private gardens: in the absence of the tenant they are not poured.

Steps of Buying Process

Residential properties in Abu Dhabi may be obtained from the developer directly or via real estate agency on primary and secondary markets.
Non-residents may count on getting mortgage loans from Abu Dhabi banks. Mortgage advisors help to submit relevant papers and pre-approval, which will be valid for 60 days. Loan offer is issied after banking valuation of the property.

Primary Market

It is the scope of brand-new or under construction properties, being built and sold by the development company. The price is fixed and includes all the costs generally. But in current economic situation some major developers offer discounts in the shape reduction or waiving service charges. Keep in mind, that you have the right for checking legitimate grounds for the project by requesting its certificate, issued by the Land Department.
  1. After having selected the property a customer fills in a Reservation Form and pays deposit for booking. The amount varies from 5% to 15%.
  2. Within 4 weeks of the reservation he will receive his copy of Sales and Purchase Agreement, a legal recognition of the transaction. The document will contain floor plan, sizes and payment schedule.
Ideally it would be when installments due to payment plan are bound to construction milestones and money transferred to the developer first goes to escrow accounts before each stage completed.

Secondary Market

Secondary properties stand for pre-owned homes, that are usually acquired with the help of real estate agent. Property value depends on market fluctuations and may go up as well as go down in the long run. Besides, the parties can always negotiate the price. In Abu Dhabi the process of buying secondary units looks as follows:
  1. Memorandum of Understanding is drawn and signed by the seller and the buyer. After that the customer should pay non-refundable deposit, estimating from 2% to 10%
  2. The buyer requests property valuation. It is conducted by the bank and costs about AED 2500 – 3000. If no mortgage confirmed the seller applies for No Objection certificate to prove he owes nothing on the property. If seller has mortgage than he gets liability letter, buyer's bank sells off the loan with seller's bank and seller applies for No Objection certificate.
  3. The participants agree on the date for an official transfer of the property. The period of transfer complete usually lasts for four weeks.
  4. Then the rest of sum is delivered to the seller, commission 2% is paid to the broker, transfer charge 2% of the property price goes to the municipality. Adding to that, new owner should pay service charges to the developer. Title deed is received by the customer on transfer day or next day.Living costs are rather high and as for rental payments, they may eat up to half monthly salary of the expatriates, working in the Emirates capital. In the most cases the compensation package, provided by the employer includes housing allowance. Evidently, investing it to home ownership would be a smart idea rather never see this money again. Some developers have recently introduced so called "rent-to-own" scheme, upon which the installments, fractured as if to be a yearly rent, are converted into to the home equity. The amount is higher than average rental for the same unit, though competitively, but in the result a customer will boast the property to be his own and feel safe that his money all have been invested in proprietorship.Abu Dhabi market is rather liquid, a homeowner can always sell the property in case of leaving the Emirates. On the other hand, a home may be also rented out. Potential rental income is higher than other comparable markets. In most cases, rental income will cover mortgage repayments factoring yields of approximately 6 to 7% in current market conditions.