REAL ESTATE INVESTMENT IN ABU DHABI
|PLANNING TO PURCHASE A PROPERTY?
|Things to Know
|Conduct due diligence on both, the seller and the property before signing the documents.
|Verify the details of the property at the Abu Dhabi Municipality.
|Consult a property or real estate lawyer to review the paperwork and advise you on the structure of your transaction.
|Contrast the price of the specific property with other properties in the locality
|Compute the final registration fee of the property and decide the exact percentage of each party
|Make sure that the property is free of any debts and is not any form of collateral.
|Visit a property lawyer and understand the rights and obligations of the parties in case of a renovation and maintenance of leasehold properties.
|Check whether the property is prone to any environmental hazards.
the property is likely to any environmental hazards
Confirm the applicability of value-added tax (VAT) in the transaction involving the property.
The math is lucid and co-related. A higher number of expatriates flooding into the region leads to a linear rise in the demand for property (for leasehold and freehold). But this demand for the property does not only refer to residential units. The number of commercial towers in the Emirate of Abu Dhabi has increased over the past decade, thanks to the investor-friendly regulations and dynamic corporate culture. The Abu Dhabi Government established the UPC or the Urban Planning Council of Abu Dhabi with the sole perspective of strategizing a plan for the Emirate of Abu Dhabi in line with Vision 2030.
This plan was simple and lucid – develop progression by increasing the standard of living, embracing the Emirate's socio-economic culture, protect and preserve the region's traditions, invest in diverse projects to boost the overall economy of Abu Dhabi and meet the growing demand. Ultimately, this was to create a framework that would simultaneously, mold the Emirate's social structure and economic strategy
The ADGM or Abu Dhabi Global Market came into existence in 2013 as premier and international financial center that would supply and meet the requirements of the stemming investors in the financial sector of the UAE. Therefore, the ADGM was a financial freezone that houses its dedicated courts and legal framework to back up its international clientele. Over this short span of time, the ADGM has become renowned in the region due to their high-end infrastructure and more over the English law system. Since its inception, this financial free zone was working towards establishing themselves as the dominant free zone in the region with a dedicated dispute resolution regime and jurisdictional override. The ADGM has their own civil and commercial laws that apply to entities and transactions within the free zone, outlined by the English common law system.
In this real estate guide, our property lawyers in Abu Dhabi aim to outline and elucidate the provisions of the (the New Law) novel Law Number 3 of 2015 regarding the Regulation of Real Estate in the Emirate of Abu Dhabi and the rules governing real estate transactions and laws in the ADGM. The lawmakers of Abu Dhabi had enforced the new law, in line with the existing property laws in Dubai, to attract foreign investors and real estate investments into the Emirate. This New Law has touched all the major issues surrounding the real estate sector in Abu Dhabi (including, property registration, purchase, and sale of off-plan properties, licensing of parties in the real estate sector, mortgages and likewise.
STA Law Firms is one of the leading law firms in the region with two (2) offices in the Emirate of Abu Dhabi. Our team of real estate lawyers in Abu Dhabi allocates proportionate and appropriate time into researching the background of the real estate and property market and status of real estate developers and brokers as a ground for due diligence reports. At STA, we render legal advice that is timely, practical and individually tailored to meet specific requirements of the clients.
Your Ultimate Guide to Real Estate Investments in the Emirate of Abu Dhabi
- Ownership of Real
1.1. Freehold Property
1.2. Leased Ownership
1.3. Jointly owned Real Estate property
- Acquisition of Ownership
2.1. Formal requirements
2.2. Registration Fee
2.3. Share Deals
2.4. Public Auctions
- Other Rights to Property
3.1. Mortgages and Charges
3.3. Other Un-Registrable Rights
4.1. Duration and Rent
4.2. Operating Expenses
4.3. Maintenance, Repair, and Renovation
4.4. Subleases and Termination
5.1. Transfer Taxes
5.2. Value-Added Taxes
5.3. Other charges arising from the occupation of real estate
- Real Estate Finance
6.1. Real Estate Investment Trusts (REITs)
- Dispute Resolution
- Environmental Aspects
Similar to the Dubai Land Department (the DLD) in functionality, THE Abu Dhabi Land Department (the LRD) is the central regulatory authority that overlooks the real estate sector of the Emirate. Although it has an uncanny similarity to the DLD in functionality, the Abu Dhabi Municipality is responsible for recording and registering real estate transactions in the Emirate of Abu Dhabi.
The rule of thumb in real estate transactions is that the seller should register the deal with the regulatory authority and non-compliance to this rule may mean that the specific agreement is not valid under the law. In this regard, the LRD issues an ownership certificate for each property transaction and this piece of document is one of the primary evidence that the court takes into consideration while deciding a dispute concerning the ownership of the property. In the United Arab Emirates, parties can invest in real estate in the following forms: -
- Freehold ownership;
- Leasehold ownership;
- Jointly owned property
1.1 Freehold ownership (Mainland)
The owner, be it an individual or a corporate entity, of a freehold property, receives extensive benefits from the property, contingent upon their nationality and place of registration. Below is the classification of population in UAE that is likely to possess property in Abu Dhabi mainland:
- Individuals having UAE nationality, and companies wholly owned by UAE nationals;
- The Federal Government of UAE, the government of specific Emirate or their companies;
- Companies wholly owned by Abu Dhabi government; and
- Expatriates or entities which do not fall under the categories above.
The property Law of Abu Dhabi does not restrict the individuals having UAE nationality or organizations within UAE from holding property in the concerned Emirate. The residents of several Gulf Countries including Bahrain, Oman, Saudi Arabia, Kuwait are allowed to retain ownership of land or properties in specifically assigned investment zones within the Emirate of Abu Dhabi. On the contrary, foreign investors are just permitted, within the designated zones commonly known as Investment Zones, to purchase, sell, mortgage or lease out the property. The investment zones in Abu Dhabi are regions wherein the expatriates and GCC nationals can hold ownership rights. Importantly, non-UAE citizens are permitted to own apartments and entire floors inside the Investment Zone, or by usufruct or musataha rights. However, this reason does not grant an authorization to the owner of a particular portion of the original land on which the building is constructed. Following is the list of Investment Zones in Abu Dhabi:
- Al Reef
- Golf Gardens
- Mangrove Village
- Al Manara
- Raha Beach
- Al Bandar
- Al Reem Island
- Al Zeina
As mentioned above non-UAE nationals have the authority to purchase property in Abu Dhabi Investment Zone and not outside under following conditions:
- Usufruct for 99 years (Interest in Land)
- Musataha for 50 years and renewable
- Ownership title of floors within the building
- Interest in the land for a lease agreement for a maximum period of 25 years
Thus, the law states that foreign investors can hold the interest in property either individually or jointly with other party mentioned as follows:
- Discrete owner: This kind of ownership is most popular method amongst expatriates wherein, the individual purchases and register the property under his name.
- Cooperative Ownership: This permits two or more individuals to hold the property jointly. Under this arrangement, the property will be registered under the name of all the owners with their specific position in the title deed.
Abu Dhabi Global Markets (ADGM)
The Abu Dhabi Global Market, an international financial free zone, has laid down its distinct rules and regulations pertaining to ownership of real estate within ADGM, which includes property regulations and strata regulations. The rules regulations of ADGM is only applicable to the properties situates on Al Maryah Island. ADGM permits UAE or GCC nations and corporations wholly owned by the concerned nationals to possess the land, apartments, floors or even units within the jurisdiction of ADGM on a freehold premise. In any case, considering the New Law, non-UAE nationals, individual or corporate entities, are restricted to freehold property in ADGM of land as it is reserved for UAE and GCC nationals. As aforementioned, expatriates (individual or company) are free to own title by acquiring floors or units in a specific building in ADGM. Additionally, ADGM perceives the joint ownership wherein, at least two (2) proprietors can claim the ownership of land.
Pursuant to ADGM rules and regulations, ADGM has established its separate property registration Department, ADGM Land Register which has set out a rundown real estate transaction that is to be enlisted with them. In ADGM, the commitment to guarantee that the exchange of title or the specific details of property exchange transactions to be recorded is on the individual or corporation that is offering or leasing the specific property. However, agreements pertaining to these property exchanges entered into by the relevant parties are enforceable pursuant to the provisions of the conveyance report regardless of whether the same is a non-enrolled with the ADGM Land Register.The Land Register records all reports identifying with the creation or exchange of property rights in ADGM. Moreover, ADGM will establish its separate courts (ADGM Court) for hearing any issues emerging from the Property Regulations and the Strata regulations
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.