Abu Dhabi, UAESunday 21 July 2019

Abu Dhabi's new foreign property ownership laws a boon for developers and investors

New ruling puts the emirate on the global map as a real estate investment destination

A sales representative guides a Cityscape attendee over the IMKAN model in Abu Dhabi. Victor Besa / The National
A sales representative guides a Cityscape attendee over the IMKAN model in Abu Dhabi. Victor Besa / The National

The Abu Dhabi government’s move to change a real estate rule to allow foreigners to own freehold property in designated zones is a step in the right direction to put the capital’s property market on the global map and a boon for private developers and investors alike, market analysts and property developers say.

Foreign investors in Abu Dhabi’s real estate market were previously granted leasehold arrangements with a maximum 99-year time period, but the government on Wednesday amended the rule through a royal decree, a move aimed at supporting the capital’s real estate market, boosting foreign direct investment and strengthening its economy.

Until the changes, freehold ownership of property was only allowed for UAE and GCC nationals. Residential units in special designated investments zones, such as a designated area close to the international airport, will now be registered under Abu Dhabi’s freehold law, with property ownership deeds issued to buyers of property in the emirate.

“The modernisation of the real estate law reflects the government vision to support and develop the business environment in Abu Dhabi, along with the development of investor services and procedures,” Sheikh Mohamed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, said.

The legal changes will also help to level the playing field between Abu Dhabi and Dubai, where foreigners are already allowed to buy freehold property in investment zones. The changes were enacted after a government study to examine the needs of the real estate sector, including meetings with investors, developers and others, according to the Abu Dhabi Executive Council.

Mounir Haidar, managing director of Jubail Island Investment Company

Mounir Haidar. Victor Besa / The National
Mounir Haidar. Victor Besa / The National

"The announcement by the Abu Dhabi government to amend the real estate law is a significant step towards achieving the economic diversification and sustainable development objectives outlined by the UAE Vision 2021 and Abu Dhabi Economic Vision 2030. The change is in keeping with the wide-ranging initiatives of the Tomorrow 2021 reforms – boosting the capital’s business environment and competitiveness.

"In addition to enhancing Abu Dhabi’s strong investment appeal, the amended law will play a key role in stimulating the real estate market, boosting business opportunities, driving economic growth and will attract foreign direct investment.”

Farhad Azizi, chief executive of Dubai-based Azizi Developments

"When things [rules] are in black and white it makes it so much more attractive for us, or for that matter, any other private developer. We are very happy with the way Dubai did it and Abu Dhabi is doing it as well. Dubai has been ahead in terms of some of the regulations and Abu Dhabi is catching up and they are doing a great job.

"Now you go anywhere in the world, Dubai and Abu Dhabi are standing out as property markets, while previously it was only Dubai. Abu Dhabi is certainly picking up and now everybody knows Abu Dhabi and they want to go there."

Sameh Muhtadi, chief executive of Bloom Holding

Sameh Muhtadi, chief executive of Bloom Holding. The developer saw low single-digit growth in revenues in the past year, mainly driven by hospitality assets. Victor Besa / The National
Sameh Muhtadi, CEO of Bloom Holding. Victor Besa / The National

“It’s a very encouraging move and will make a tremendous difference in terms of widening market demand. Historically, property investors in Abu Dhabi have mainly been local [Emiratis], whereas the new law will allow for greater participation of foreign investors – whether from overseas, or living in the UAE – something that is badly needed."

“The logical next step will be to see some additions to the existing portfolio of investments zones, which are currently quite saturated.”

Sameer Barakat, executive director estate management at Provis, a fully owned subsidiary of Aldar Properties

Sameer Barakat, Executive Director Estate Management, PROVIS. Victor Besa / The National
Sameer Barakat, Executive Director Estate Management, PROVIS. Victor Besa / The National

“In a few words, it’s a boost to the economy and encouragement for the investors, especially the foreign investors to look at Abu Dhabi as potential investment zone for them. The investment zones are basically centralised in the most prominent development, such as Yas and Saadiyat Islands and known to everyone.

“On the last day of Cityscape we see more people coming to look for their future houses or the plots that they want to build their homes on. It is an encouraging thing. If you come to Cityscape today, you will see the difference, although normally it should slow down [being the third day of the event]."

Abu Dhabi is known for its leisure and entertainment facilities globally and “the legislation is putting Abu Dhabi [further] on the global map and it will encourage the investor to look at the market seriously to invest. The investors are both sub-developers and individual [property buyers]. Sub-developers will now look into buying plots and redeveloping them into new smaller developments. All-in-all, it is going to be a boost for the economy and real estate market of the capital”.

Edward Carnegy, director, head of Abu Dhabi office, Savills Middle East

"It is actually phenomenal [news]. It's a game-changer. It will encourage corporates to come here and build their headquarters. The cascade from this should be phenomenal.

"You have to remember that Abu Dhabi's objective is to diversify its investments and stimulate its economy and this is a massive step in the right direction."

"The aim of Executive Council is to make Abu Dhabi more investable and by doing this [enacting freehold regulation] they did it as foreign investors can own the land. Also, it levels the playing field with Dubai as Dubai has had freehold for a while".

Lynnette Abad, director of research and data at Property Finder

"This is very promising news for Abu Dhabi as this now puts them on par, real estate investment-wise, with Dubai. Of course, the devil is in the details. Therefore, we will need to wait for further information regarding the freehold structure.

“With that said, this is the basis of a maturing market in Abu Dhabi and will create a proper title deed structure for a property, which in turn should bring transparency to the market when it comes to transaction data. This will also entice further investment, especially foreign investment to Abu Dhabi."

Rush of buyers at Aldar stand -- people have flocked to Cityscape on day three of the event looking for their future homes, following news of changes in property laws. Reem Mohammed / The National
Rush of buyers at Aldar stand -- people have flocked to Cityscape on day three of the event looking for their future homes, following news of changes in property laws. Reem Mohammed / The National

Kamraan Khan, residential associate at Cavendish Maxwell Abu Dhabi

“We expect these changes [in the property law] to positively impact sentiment as they provide expats and end users greater security of tenure. This is proof of a continued increase in market maturity, and a willingness of the legislature to embrace positive regulatory change.

“How this relates to existing developments remains to be seen, although it may well tempt cautious buyers with a lower risk appetite back into the market. However, the timing of this announcement could not be better, considering the current appetite for land plots within investment zones.”

Updated: April 19, 2019 03:12 AM

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