The Abu Dhabi government has made changes to real estate laws allowing foreigners to own freehold property in designated zones to increase foreign direct investment and boost the economy.
“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,” said Sheikh Mohamed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces.
Until the changes, ownership of property was only allowed for UAE and GCC nationals.
Now residential units in special designated investments zones, such as the one close to the international airport, will be registered under Abu Dhabi’s freehold law, with property ownership deeds issued to investors.
Foreign investors in Abu Dhabi property were previously granted leasehold arrangements with a maximum 99-year time period.
“The government wants to stimulate fresh demand for Abu Dhabi real estate and this is one of things that will help do this,” said Craig Plumb, head of research at consultancy JLL.
“None of the current 99-year leases held by foreigners have expired so nobody really knows whether the valuation of a freehold investment would be more than that of a leasehold. You can’t calculate any additional property value from this.
“But certainly, from a sentiment point of view, it could buoy the market to know that as a foreigner you can hold property in perpetuity.”
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.
Abu Dhabi developer Aldar Properties welcomed the law on Wednesday. Its Alreeman scheme, with plots of land for sale and residential development, is in such an investment zone.
“This is a game-changing announcement that will not only drive the maturity of Abu Dhabi’s real estate market, but also increase transparency and provide clarity of title for property owners, increasing long-term investment, injecting more liquidity into the market and encouraging longer-term residency,” Aldar chief executive Talal Al Dhiyebi said.
The changes were enacted after a study examined the needs of the real estate sector, including meetings with investors, developers and others, the Abu Dhabi Executive Council said.
Abu Dhabi, like the rest of the UAE, wants to attract more foreign investment to boost the non-oil economy.