The UAE Civil Code does not prohibit a foreigner from owning land (freehold property). But each Emirate has specific laws regulating the real estate ownership. As a rule, foreigners are allowed to own land only in certain areas (usually in free zones) or rent it (leasehold up to 99 years), and in this regard, the local property market provides fewer opportunities for an investor than that of Dubai.
As a result of changes in the local legislation of Abu Dhabi, foreigners or companies with foreign capital may acquire freehold land in Abu Dhabi in designated areas – investment zones.
Previously, the citizens of the United Arab Emirates and the citizens of the GCC countries, as well as companies completely owned by them could have freehold rights to a land plot anywhere in Abu Dhabi. Those who are not the citizens of the UAE and GCC countries could fully own land only in free zones, so these innovations are intended to increase transparency and ensure clarity of property rights for property owners.
These innovations have already been approved on Yas Island in Abu Dhabi. Thus, according to official data of Aldar Properties company (The Government of Abu Dhabi is one of its principal shareholders) has already received AED 2 billion from sales of the first land plots on the northern side of the Island. The size of the plots varied from 405 to 1800 square meters, and the minimum price was about AED 1 mln.
The CEO of Aldar Properties appreciated this promising start. This confirms the high demand for land in the Emirate and shows the interest, prospects, and maturity of the market.
The new law not only gives foreigners access to previously inaccessible sites in Abu Dhabi, but also grants freedom to developers who can own land in various forms. The new Decree will provide them additional possibilities; for example, a company can divide its land plot and transfer ownership of some part in order to receive additional funds, which will allow such companies to be more flexible.
As for specific land plot prices, they currently range from AED 200-400 per square foot in the areas for private housing construction, such as villas. The cost per square foot of land is higher in areas at the seashore. As for the cost of land for multi-storey building construction, it is about calculated per square foot of buildable area.
This new law will significantly expand the area of land that can be acquired by a foreigner in the Emirate. These provisions also apply to land plots planned for industrial premises (warehouses, etc.). All this will give a significant boost to the local real estate market.
Since, due to fluctuations in oil prices, the demand for land and its value in the Emirate fluctuated significantly. The UAE government systematically works on diversifying the local economy, in particular on developing tourism, and the new law is designed to make the Abu Dhabi land market more flexible and, as a result, more attractive to foreigners because investors are interested in previously inaccessible cheaper options for real estate transactions.
Foreign investors who want to buy land here in Abu Dhabi will need to build up the property on the purchased land within four years. Otherwise, the owner of the land risks getting a fine.
Now, in order to start building in Abu Dhabi, it will take up to 12 months to obtain the appropriate permits (compared to about 4-6 months in Dubai). Liberalizing the Abu Dhabi market and narrowing this gap will make it more balanced and attractive to foreigners.