Stages of buying real estate in Abu Dhabi

Over the past decade, the capital of the United Arab Emirates has become more open to foreigners and, in particular, to potential buyers of real estate. After changing the rules that guarantee foreign citizens the opportunity to purchase real estate in Abu Dhabi, there is a significant increase in demand in the emirate market. There are now several freehold zones in Abu Dhabi, where non-residents are allowed to buy real estate. This will gradually increase more and more over time.

From our material, you will learn about the peculiarities of buying real estate in Abu Dhabi by foreigners.

Features of the Abu Dhabi real estate market

Buying real estate in Abu Dhabi became available to non-residents of the country back in 2005. Consequently, ex-pats were able to purchase real estate in specially designated areas. Over the years, the number of investment zones has increased. There are currently seventeen freehold zones in Abu Dhabi. This opening of the market to non-UAE citizens was the first step toward encouraging ex-pats to invest in Abu Dhabi real estate., The government has made additional changes over the years to simplify the stages of the real estate purchase procedure and make investments more profitable for foreigners.

There are two changes, in particular, that deserve attention: the introduction of ownership documents and the introduction of the right of freehold.

Previously, a foreigner buying real estate in Abu Dhabi was limited to owning real estate under a lease agreement for 99 years. The only proof of ownership was the contract of sale (SPA). This left some buyers feeling insecure.

However, all this is now in the past. The system has moved to free ownership, so foreign investors can now become full owners and receive an authentic ownership document of confirmation. As a result, buying a property in Abu Dhabi has become more secure.

In 2015, the Government of Abu Dhabi issued a new law concerning the regulation of the real estate sector in the emirate, which contributed to the growth of the economy, as well as attracting foreign investment (Law No. 3 of 2015 on the regulation of real estate in Abu Dhabi).

The off-plan housing sector has also changed. Since 2015, developers cannot use the initial payments of investors and invest them in other projects. The funds are stored in escrow accounts and are then transferred to the project only after reaching the benchmarks. In addition to this, there are penalties for late delivery of projects.

The rights of foreigners to purchase real estate

In 2022, to buy a property in Abu Dhabi citizens of any country can. Only citizens of the UAE and residents of the Persian Gulf countries can buy any objects on any territory, while foreigners have access to properties located within the zones of free ownership. In these zones, foreign owners can fully dispose of their real estate: reside, rent, resell, gift, bequeath, etc.

Since 2019, the Golden Visa program has been launched for foreign citizens in the UAE – a residence permit for up to 10 years, including foreign investments in real estate. The main condition is to invest in housing from AED 2,000,000 ($544,500).

Stages of real estate registration in Abu Dhabi

All real estate transactions in Abu Dhabi must be registered with the Land Department of the Emirate (The Abu Dhabi Land Department, LRD). The main obligations for registering the transaction in the LRD are borne by the seller. Transactions that are not registered with the LRD will not be considered enforceable, even if the parties have agreed. The LRD certificate, which identifies ownership, is the main proof of ownership of the real estate.

Before you buy a property in Abu Dhabi, you need to do a comprehensive search:

examine the property and the seller/developer thoroughly;
validate the real estate registration – the transaction must be registered in Abu Dhabi;
contact a lawyer to review your purchase and sale agreement;
calculate the registration fee and the share of the fee that will be paid by both parties;
compare the asking price of real estate with comparable properties in the area;
enquire with the seller regarding the environmental features of the property.

Step-by-step procedure for buying a property in Abu Dhabi

All real estate acquisition procedures in Abu Dhabi can be divided into four main stages.

Preliminary agreement

Before concluding a real estate purchase transaction, the parties sign a preliminary agreement. It is written in Arabic or English and does not require mandatory notarization. Additional conditions are prescribed in the annex to the contract. To ensure the authenticity of the conditions, it is better to use the services of a lawyer.

What should be mandatory in the contract:

the address of the property;
the transaction amount;
the responsibility of the buyer and seller;
the distribution of payments and terms of payment;
the date of completion and transfer of the project to construction – if you are going to buy an apartment in a new building in Abu Dhabi

Sales Agreement/Memorandum of Understanding (MoU)

A Memorandum of Understanding (MoU) is a purchase and sale agreement. At this stage, the buyer backs up his intention to purchase real estate with a pledge. Usually, this is 10% of the value of the purchase, but can occasionally be more. After the successful completion of the transaction, the deposit is then returned to the buyer. If the transaction fails at the initiative of the buyer, the deposit remains with the seller. If the transaction fails at the initiative of the seller, the seller must compensate double the amount. The agreement is valid for 30 days.

Certificate of no objections

The next step is to meet the buyer and seller at the developer's office and apply for a No Objection Certificate (NOC). The certificate indicates the absence of debts from the seller to the developer and the absence of objections to the transfer of ownership rights to the new owner.

Transfer of ownership rights

After receiving the NOC, the parties apply to the Abu Dhabi Land Department for the transfer of the real estate. LRD then issues a payment receipt, and the buyer pays the balance of the amount of the object on the same day. After the amount has been transferred, the buyer then receives the Title Deed – the right of ownership – and becomes the rightful owner.

Purchase of a property under construction

Transactions with real estate under construction are easier since there are no NOC and MoU stages in the procedure. The buyer and the developer sign the Initial Contract of Sale, which is reissued after completion of the construction. The transaction is registered in the temporary register.

On average, the duration of the purchase and sale transactions in Abu Dhabi is one month.

Documents

The purchase and registration of real estate in Abu Dhabi in 2022 requires the following documents:

original passport of the buyer;
visa, based on where he stays in the UAE if the transaction takes place on the spot with personal participation;
power of attorney – in the case of a remote transaction, which is then overseen by the buyer's representative;
Sales Agreement (MoU);
NOC certificate.

Mortage

To get a mortgage loan approved, buyers must provide banks with the following documents:

a pay slip from your employer;
six months bank statements;
a copy of your passport with a photo and the visa page;
a copy of your Emirates ID;
a proof of residence is required for some creditors.

The process with the banks is the same in all emirates. However, the transfer fee differs depending on where it is located. In Abu Dhabi, the transfer fee is 2%.

The mortgage pre-approval stage will take from 5 to 7 days for employees and longer for those who are self-employed.

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