If you are looking to buy a property in Abu Dhabi, then there are a slew of things you need to know beforehand. Do not miss out on this complete guide.
Buying a property is always exciting. And when it comes to Abu Dhabi, the excitement gets manifold.
The city has a lot to offer by being the economic and cultural hub of the UAE. It provides you a luxurious lifestyle, and tax-free earnings, among other things.
But, when you think about buying a property in Abu Dhabi, many queries might arise in your mind, such as is there anything more that I should know before making a purchase?
There is no hassle in purchasing a house in the city. The real estate market is transparent, and there is plenty of information available on online platforms. With the availability of many properties for sale in Abu Dhabi, you can find a property to buy quickly.
Besides, the environment is safe for buyers with legal protection availability.
If you are a foreigner and looking to purchase a property in the city, confusion might do the rounds in your mind--can foreigners buy property in Abu Dhabi?
It will help if you go through the amendment to the Abu Dhabi Property Law in 2005. The amendment allowed Emiratis to buy and sell land(it was not allowed before) and created the concept of 'Investment Areas,' in which non-UAE nationals also can own property.
Why Can Buy Property, and Where?
Only UAE nationals can own property outside Investment Areas. But foreigners can buy properties and even land within Investment Areas.
What are the Types of Ownerships?
Foreigners, who buy property in Abu Dhabi, get two types of ownerships--Usufruct and Musataha.
It is the most common type of property ownership in the city. According to Article 4(1) of the Purchase Law, the property buyer has the right to the property for 99 years. You can regard the ownership as a 99-year lease. It grants the buyer the ownership of the property and not to the land on which the property stands.
It allows the property buyer to use and exploit the land belonging to a third party, on which the property stands. Article 4(1) of the Property Law states that the right lasts for 50 years. The right is renewable and can be extended further up to 50 years, as per mutual consent or contractual agreement.
Residency and Visas
You can buy property in Abu Dhabi as a foreign national. You are likely to face some limitations in local mortgage options and a few connecting utility issues. Property purchase in Abu Dhabi cannot guarantee you 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.
The Investment Areas
As already mentioned, the Investment Areas are the zones in Abu Dhabi where foreigners can purchase a property. Such areas are Saadiyat Island, Reem Island, Raha Beach, Yas Island, Al Reef, Hydra Village, and Al Ghadeer.
What You Need Before Starting to Search?
Before you begin your search for a property to buy in Abu Dhabi, you need to keep your visa and a bank account ready.
Additionally, there are a few more things to do beforehand. Finalize your budget, figuring out how much money you can spend on the property. If you want a loan for the 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 paying other financing dues.
If you want to purchase a property in the city through a bank loan, you should acquaint yourself with the bank financing rules in Abu Dhabi. Before you approach a bank for a loan, find out whether it lends for purchasing a property in the Investment Areas.
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:
If you buy your property from the secondary market, then you should pay two percent of the purchase price to register the property with the municipality. However, it is not applicable if you directly purchase the property from a developer.
If you buy your property through a broker or a property manager, then you need to pay him two percent of the property price as commission.
Mortgage Arrangement Fee
If you buy your property through a loan, you need to pay the bank a mortgage arrangement fee.