Buying Abu Dhabi Real Estate for Foreign Buyers

Photo Courtesy: Travel Faery/iStock

If you’re interested in buying property in Abu Dhabi, it’s critical to understand how the real estate market there works for foreign buyers. The United Arab Emirates (UAE) has a highly regulated property market, but it’s also highly transparent, making it less confusing to navigate. If you’re a foreign buyer interested in purchasing Abu Dhabi real estate, here’s what you need to know.

Can Foreigners Buy Property in Abu Dhabi?

While foreigners weren’t previously allowed to purchase property in Abu Dhabi, the government altered real estate laws in 2019 to make it possible. Prior to that rule change, foreigners were primarily restricted to leaseholds, limiting their ability to invest in properties to a 99-year lease. After the law was updated, foreigners were allowed to buy and own freehold property in designated zones.

What Are the Rules for Expatriate Purchases?

Even though the new law allows for expatriate purchases, there are still distinct rules regarding real estate purchases in Abu Dhabi made by foreign buyers. Generally, foreigners can only purchase properties in designated investment zones, which are chosen by the Abu Dhabi Executive Council. Outside of those areas, foreigners don’t necessarily have property rights. As such, they can be inherently excluded from being eligible buyers in certain areas.

Rules can also vary depending on whether any construction on the property is complete or whether it’s underway. With the latter, specific precautions are typically necessary in these situations, as money often changes hands before construction is finished, which can increase the overall level of risk.

What Does the Purchase Process Look Like?

Often, the process of purchasing property in Abu Dhabi isn’t as complex as you might expect. The market is highly transparent, and the procedures are suitably formal.

For cash buyers, making the purchase isn’t difficult, as you aren’t navigating any challenges relating to securing financing. If you need to use a mortgage, residing in Abu Dhabi at least six months before the purchase is often necessary. Additionally, down payment minimums are typically 25%, and you’ll need to address any agency fees.

Otherwise, the process largely requires official, legally binding contracts, which is not unlike the homebuying process in the United States. You’ll negotiate a Memorandum of Understanding (MoU), and then the property usually undergoes various inspections to ensure the purchase price aligns with the property’s value. If the sale moves forward, any existing mortgage is typically cleared during closing. At that time, ownership is also officially transferred.

Tips for Buying Abu Dhabi Real Estate

If you’re buying Abu Dhabi real estate, working with a local real estate professional is typically best. They’ll be able to point you toward acceptable investment zones to ensure you’re buying in an appropriate area.

Exercising some due diligence is also wise. Research the property’s history and ownership records, make sure inspections are part of the process, verify the property’s size, and identify any transferable warranties. Also, see if there’s a current mortgage associated with the property. This will allow you to navigate the steps required to clear it before transferring the property into your name.