Types of Real Estate Investment in Abu Dhabi

Real estate investment in Abu Dhabi is conducted within a legal and regulatory framework aimed at preserving the integrity of the UAE real estate market, which is a major contributor to the country’s economy, as well as providing greater transparency for stakeholders, including developers and investors.

Previously, real estate investment in Abu Dhabi was limited to ownership of commercial and residential properties only; however, other types have emerged, with commercial and residential types being the most common.

Types of real estate investment in Abu Dhabi

1- Residential Real Estate Investment

Owning residential properties of different types is one of the most common types of real estate investment. This involves buying a house in a vibrant area and using it for rental income with a fixed monthly or yearly return.

2- Commercial Real Estate Investment

This type of real estate investment includes commercial shops, retail spaces, warehouses, and offices, which are rented out to businesses and commercial enterprises, achieving high rental income.

3- Land Investment

There is also investment through buying a plot of land and using it to build a house or retaining it and then selling it to make a profit margin from the resale.

4- Real Estate Investment Funds

Real estate investment funds allow investors to enter the real estate market without buying properties. The process is limited to purchasing a share in the fund, which yields regular profits. Transactions in this type of investment rely on buying and selling shares in real estate investment funds, followed by distributing profits among partners.

5- Investing in holiday homes

This involves converting your house into a “holiday home” and renting it out for intermittent periods, provided that it meets the requirements and standards necessary for licensing holiday homes in Abu Dhabi.

The property owner obtains a holiday home license from the Department of Culture and Tourism in Abu Dhabi, through registration on the department’s electronic system.

Through quick steps, it is possible to submit an application for obtaining the license, after attaching the following documents to the application form:

• A copy of the ID or passport
• Insurance certificate for the independent unit
• Title deed

6- Agricultural Investment

Agricultural investment in Abu Dhabi involves:

• Agricultural assets
• Biological assets related to land
• Livestock
• Permanent or semi-permanent buildings and site improvements
• Fixed facilities and machinery on land, such as processing factories
• Movable machineries, such as vehicles and heavy equipment

Some of the important agricultural properties that can be invested in include:

• Palm farms
• Vegetable farms
• Flower and ornamental tree farms
• Horse farms
• Poultry farms
• Fish farms
• Livestock farms (dairy, meat)

Farms in Abu Dhabi are irrigated using groundwater, desalinated water, and recycled water.

Regulatory framework for real estate transactions in Abu Dhabi

Real estate transactions in Abu Dhabi are conducted under the umbrella of Law No. (3) of 2015 on the regulation of the real estate sector in the Emirate of Abu Dhabi.

The law specifies the general frameworks and provisions on which the Department of Municipal Affairs bases its regulations and development of the real estate sector in the emirate, as well as supervision and coordination between municipalities in this regard.

Real Estate Investment Regulations in Abu Dhabi

The Department of Municipal Affairs regulates the transactions and mechanisms of real estate investment between developers and buyers in the emirate, in accordance with the executive regulations of the law, which include the following requirements and guidelines:

Real Estate Development Registry

• Registering all real estate transactions and documents in the Real Estate Development Register at the Department of Municipal Affairs.
• Not dealing with a broker, real estate developer, surveyor, appraiser, seller in a public auction, or manager of a property owners’ association, unless they are registered in the Real Estate Development Registry.

Compliance with Sale Conditions on the Plan

When investing in a property on the plan, it must comply with the following conditions:

1- Obtaining approval from the relevant authorities for the real estate project.

2- Depositing the main or sub-plan of the project in the real estate register.

3- The developer must have one of the property rights to the land.

4- The developer must provide evidence of owning the project land.

5- The developer must have a project guarantee account.

6- Approval from the department on the disclosure statement.

7- The buyer pays the property value according to the actual completion of the construction unless agreed otherwise with the developer.

8- The developer or the buyer may terminate the sale contract on the plan in the event of a violation by either party.

Transfer of Property

The developer is obligated to transfer ownership of the properties sold on the plan to the registered buyers in the initial real estate register, to the real estate register, as soon as the construction and building operations are completed, and upon obtaining the completion certificate from the municipality.

This is subject to the buyer paying the full price of the property unless agreed upon otherwise with the developer.

Fees

Real Estate Developer

The real estate developer is prohibited from charging any fees for real estate transactions, except for administrative fees, which are determined by the department, up to a maximum limit.

Real Estate Investor

In addition to the unit price, the real estate investor pays the following fees:

1- Electronic registration fees, which are 2% of the property value, and are not applied to those who directly contract a purchase deal with the real estate developer.

2- Agency fees, which are 2% of the property value, and are applicable if the purchase process is conducted through a real estate agent.