Buying property in Abu Dhabi – new regulations for foreign investors
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New regulations for foreign investors
The President of the United Arab Emirates, his Highness Sheikh Khalifa bin Zayed al Nahyan, issued a law amending the provisions of Law No. 19 of 2005 concerning the real estate sector in Abu Dhabi.On April 17, 2019, the government of Abu Dhabi announced that all foreigners now have the rights to own land and real estate in the capital's investment zones. The UAE does not levy tax on purchase property.
Previously, this was only allowed for citizens of the UAE and the Arabian Gulf countries, while foreign investors usually received a 99-year lease.
Investment zones or freehold areas where foreigners are allowed to own real estate include Al Raha Beach, AL Reem Island, Al Reef Lulu Island, Saadiyat Island, Yas Island, Saih As Sidirah, Masdar City, Al Maryah Island, Al Falah, Fahed Island, Hiid Al Saadiyat, Al Jurf, Ghantoot, Nurai Island, Jubail Island, Al Shamkha, Palace Breakwate.
The UAE does not levy tax on purchase property. Mortgage lending in the UAE has become available also for non-residents of the Emirates. For those who want to get their own real estate in the country, a mortgage is a reasonable alternative. But for expatriates other conditions may apply. For example, foreign investors can be expected to pay a minimum down payment from 20% to 25% of the mortgage price in addition to the associated costs. Mostly it depends on the Bank and the project which is supposed to be approved by the Bank.
With the new rights to own real estate properties, foreign investors got the possibilities to obtain a residence visa. After the new rules passed, Abu Dhabi began granting visas to foreigners who made real estate investments. That means that those who may have been reluctant to invest now have the opportunity for a long-term stay in the emirate. The minimum investment cost in this case should be not less than 5 million dirhams for obtaining a 5-year resident visa. This applies to the main applicant and their dependents.
Other possibilities were open for retired foreign citizens. People over the age of 55 can get a long-term resident visa for a period of 5 years. The visa can be extended if the eligibility criteria are met.
In order for a retiree to be eligible for a 5-year renewable pension visa, they must meet one of the following criteria:
- invest in real estate worth AED 2M
- have financial savings of at least AED 1M
- have an active income of at least AED 20K per month.
Setup own company
Moreover, expatriate entrepreneurs are allowed to fully own the company (100% of the shares) without entering into a partnership with a UAE citizen. The government encourages the creation of companies in the free zones of Abu Dhabi to facilitate and encourage foreign investment, so the procedure for creating a business is simple, clear, less time-consuming and free from bureaucratic barriers. The process of creating a business in the Abu Dhabi free zone is not complicated at all since free zones are created as independent jurisdictions that act as a single window of administration with an independent government agency that issues licenses to operate in the free zone, registers non-resident companies, and helps companies establish their businesses.
Market trends in freehold areas
Despite the difficult situation with global pandemic caused by fast spreading of coronavirus infection, the first 3 months of 2020 Abu Dhabi continues to attract investors and buyers with competitive property prices, a wide type of property and projects, high ROI and good infrastructure.
Since the United Arabian Emirates became more open and involved in the world economy, and many local companies started playing important roles on the world market, a large number of foreign specialists with their families have moved to the Emirates. Many of them rented housing, but there were also those who did not mind buying their own property. Since the government gave this chance, the demand for real estate has increased very fast and 2019 was marked by a large number of real estate transactions in freehold areas.The real estate transactions worth 31 billion dirhams were completed in Abu Dhabi in only the first half of 2019.
The most popular areas for purchase residential units among expatriates are Al Reem Island, Al Raha Beach, Saadiyat Island and Yas Island. These island communities hold the attention of buyers in the primary market as well as in the secondary.
Al Reem Island is the top area for buying apartments in Abu Dhabi. The constant demand for apartments on Al Reem island is also affected by the medium price per square metre in the area, which has only slightly decreased to 2% down compared with the end of 2019. The average prices for apartments on the Al Reem island also stay competitive, amounting to AED 559K for studio, AED 843K for 1-bedroom apartments and AED1.35M for 2-bedroom units. The average ROI on the island is 7.2%, which attracts investors who want to benefit from high rental returns.
When it comes to buying villas, Al Reef development is a perfect match. Well-located close to the airport with easy access to the E11 highway, the project offers friendly prices and high-standard quality. The average price per square metre for villas increased to 1.1 % in the Q1 of 2020. Average house prices for buying villas in Al Reef are on average AED 1.37M for 3-bedroom villa, AED 1.93M for 4-bedroom villas and AED 2.14M for 5-bedroom apartments. Moreover, villas in Al Reef offer the best rental return in Abu Dhabi.
Moreover, Abu Dhabi has its own style of residential communities; each of them has its own advantages and special conditions. You can choose a community for young families with kids, or a pet-friendly project, or buy a plot to create a house of your dreams. Definitely, there is something for everyone in Abu Dhabi, for all ages and tastes.
1. Since 2019 non-residents of the Emirates are allowed to to own real estate property in Abu Dhabi.
2. Expatries are allowed purchase real estate property in freehold zones.
3. Expatriate entrepreneurs are allowed to fully own the company (100% of the shares) without entering into a partnership with a UAE citizen.
4. Foreign owners of a property in Abu Dhabi may obtain for a long-term residence visa.
5. People over the age of 55 can get a long-term resident visa for a period of 5 years.
6. Prices for housing are quite affordable in freehold zones.
7. Mortgage lending in the UAE is available for expatriates.