Abu Dhabi has emerged as one of the most attractive real estate investment destinations in the world.
With the wide range of properties available in the Abu Dhabi market, people from all over the world prefer owning a property in the majestic emirate.
Given the significant growth in the emirate’s property market, investing in a property makes more sense than putting money in a bank to generate higher RoI.
But you should not jump directly on investing in a property. Instead, make a few calculated steps to ensure that you get a profitable return.
Do not disregard the importance of understanding every nook and corner of the market. You need to have an understanding of not only the current market trends but also the future trends. For example, you should figure out whether or not the area you choose bears the potential to attract tourists and tenants.
These two aspects dictate whether or not your property investment will be profitable in the long run. Ideally, you should look ahead for three years.
If you are a first-time buyer, then you should concentrate on few specific factors, such as:
- Get acquainted with the current and future market conditions. Refer to market reports to understand the trend and prices. Identify the areas where there can be property price drops and entail a good RoI
- Choose the right location. It influences the property value.
- Organize your finances. Purchasing a property calls for spending a good amount of money
With the abundance of Abu Dhabi properties for sale, you can get your dream property quickly in the emirate.
RoI for Properties in Abu Dhabi
The Abu Dhabi property market is growing impressively. And off-plan properties can offer you attractive RoI of over 10 to 11 per cent.
You can choose from residential properties in many places in Abu Dhabi, including Saadiyat Island and Al Raha Beach. Off-plan residential properties in such areas are worth investing in to reap high RoI.
When it comes to the highest RoI from investing in a property in Abu Dhabi, places like Yas Island, Al Reem Island and Khalifa City A. Masdar City come into the picture.
Difference Between Abu Dhabi and Dubai Property Market
It will help if you acquaint yourself with the main differences between the property markets of Abu Dhabi and Dubai.
The main difference between the property markets of Abu Dhabi and Dubai is that the former is more attractive for investors from all over the world due to its cosmopolitan culture. Moreover, Dubai also attracts tourists from all over the world.
But, there is a slight difference with Abu Dhabi. Instead of foreigners’ investment, local investment in properties is rampant. However, the interest of foreigners in the property market of Abu Dhabi is gradually increasing, and there is the likelihood of substantial increment in the foreign segment of property investors.
Given the current situation, the property market in Abu Dhabi is flourishing substantially, and what is more, property prices are decreasing. And it is also the right time to invest in a property in Abu Dhabi.
What are the Types of Property Ownerships?
In Abu Dhabi, foreigners can get two types of ownership–Usufruct and Musataha.
Usufruct is the most common type of property ownership in Abu Dhabi. According to Article 4(1) of the Purchase Law, the usufruct property buyer can have the right to the property for 99 years. Therefore, it will also not be wrong to regard the ownership as a 99-year lease. Notably, this ownership gives the right to the property and not to the land on which the property stands.
Musataha grants the owner the right to the land on which the property stands in addition to the property. According to Article 4(1) of the Property Law, the right lasts for 50 years. The right is renewable and can be extended further up to 50 years.
Residency and Visas
Foreign nationals can buy property in Abu Dhabi. But they are likely to face some limitations in local mortgage options and a few connecting utility issues. Moreover, property purchases in Abu Dhabi cannot guarantee them a visa.
Inheritance and Wills
If you draft a will related to the property you buy in Abu Dhabi, it will operate according to your country’s laws, not on the laws of the UAE.
What You Need Before Starting to Search?
You need to keep your visa and a bank account ready before you start searching for a property in Abu Dhabi.
Moreover, there are few more things to do before you buy a property. First, finalize your budget, determining how much money you can spend on the property. Then, if you want a loan for the property purchase, make sure what amount you can borrow. You should keep ready a lump sum money because you will need at least 30 percent of the property price to get financing and pay other financing dues.
If you want to purchase a property in the city through a bank loan, you should know the bank financing rules in Abu Dhabi.
The UAE Central Bank has mandated that foreigners, who wish to buy properties in Abu Dhabi, has to put up equity of at least:
- Twenty-five percent of the property price if the property value is under AED 5 million.
- Thirty-five percent of the property price if the property’s value exceeds AED 5 million.
- Forty percent of the property price if the property is a second purchase.
However, there is a possibility of banks allowing you to borrow money to finance the equity amount.
Fees and Payments
Your property purchase will entail some payments, such as:
There is a registration fee for you to incur. For example, you should pay two per cent of the purchase price to register the property with the municipality if you buy the property from the secondary market. But, there is no registration fee if you directly purchase the property from a developer.
You need to pay two per cent of the property price as commission to the broker or a property manager if you purchase them.
The property market in Abu Dhabi is growing remarkably, presenting lucrative opportunities for buyers. So if you are mulling over owning a property in the emirate, go ahead!