Real Estate 101: A Buyer's Guide to Abu Dhabi

Abu Dhabi's real estate market has altered dramatically in recent years, giving investors more possibilities. Because Abu Dhabi has many affordable homes, investors are flocking there. Compared to bank deposits, real estate investing gives a high return on investment (ROI). Before entering the exciting world of real estate investment, investors must follow some fundamental criteria to ensure a favourable return.

Start by researching thе mаrket. Investors must understand current and future market conditions and if the site can attract visitors and renters. These two criteria work together to make Abu Dhabi real estate investments successful. When investing, investors should examine the future and if the location can attract visitors or renters to enhance property value and ROI. 

Before You Get Started

When purchasing houses in Abu Dhabi, there are many factors to think about and make a decision on. These include:

• Purpose of the purchase: When buying Abu Dhabi property, the purpose for the purchase determines the kind of home. Some want a permanent home, while others prefer rentals. To make an educated decision, first establish your goal.
• Budget: It's obvious. Without a budget, you risk making bad financial decisions, wasting time on unattainable possibilities, and losing out on great offers because you won't think you can afford them! Calculate your savings, determine whether you want a mortgage, and find out how your spouse can help. You can also check for the payment plan options offered by the developer. 
• Location preference: Everyone's ideal place is different. Families benefit from multi-school neighbourhoods. A nearby hospital may be helpful when you or a loved one are unwell. Choose a property near your workplace to avoid a lengthy commute. Choose a good spot to avoid early rushes and simplify your day. The most preferred locations are nearby schools, parks and shopping malls. Others are near highways, popular landmarks and airport.
• Size and type of property: Your space needs are the main determinant of whether you should buy a studio apartment, apartment, or villa. Studios are ideal for busy professionals who spend little time at home.
• Special features & amenities: Before purchasing a house, evaluate what features you desire. Some examples of such features include a waterfront property, maid room, swimming pool, gym, covered parking, kids play area, community park. Consider your lifestyle, routine, and daily requirements while choosing features.

What are the types of popular property types in Abu Dhabi?

Exploring property kinds can help potential buyers become more invested and educated about their possible homes in this vibrant city:

• Villas: Villas in Abu Dhabi provide privacy and space for those seeking a luxurious lifestyle. 
• Apartments: Apartments and studio apartments in Abu Dhabi are popular with individuals who want cosy, vibrant spaces due to their convenience and modern lifestyle.
• Townhouses: For those seeking villas at more affordable pricing, townhouses are undoubtedly the ideal choice. Reason being, they resemble villas more than flats. They're cheaper than villas and more private than apartments. 
• Penthouse: A penthouse is an apartment on the highest floor of an apartment building. If you are looking for luxurious options then Penthouse is a good choice. It comprises staff rooms, spacious balconies and terraces and more.

What are the popular neighbourhoods for homebuyers?

Here are five of the most popular residential areas in Abu Dhabi according to dubizzle Q3 2023 property market report: 

• Yas Island: Yas Island is a famous Abu Dhabi freehold property area for foreigners. Yas Marina Circuit, Warner BrosWarner Island, Yas Mall, and the recently opened Yas Bay are all located here. 

ROI Apartments: 6.96%

ROI Villas: 4.79%’

Starting price studio apartment: AED 747,000

ROI: 6.50% 

• Saadiyat Island: As Abu Dhabi's cultural centre, ALDAR Properties' Saadiyat Island master development is popular. Saadiyat Island attracts worldwide investors with its museums, cultural attractions, and art exhibits and seminars. 

ROI Apartments: 6.23%

ROI Villas: 4.84%

Starting price for studio apartment - AED 853,000

ROI: 3.74%

• Al Raha Beach: Al Raha Beach is another famous Abu Dhabi freehold investment zone for foreigners. Al Raha Beach is a popular Abu Dhabi apartment neighbourhood for young couples and families who desire easy access to schools, beaches, and shopping.

ROI Apartments: 6.6%

Starting price studio apartment: AED 810K

Starting price for 3 bedroom townhouse: AED 3.8M

ROI: 7.17%

• Al Reef: Located on the mainland near Abu Dhabi International Airport, Al Reef is a development by Manazel Real Estate. With quicker travel to Dubai, investors like its position along the Abu Dhabi-Ghweifat Highway.

ROI Apartments: 7.91%

ROI Villas: 6.27%

Starting price studio apartment: AED 570K

Starting price for villas: AED 1.2M

ROI - 7.67%

• Reem Island: Al Reem Island is the most luxurious beachfront freehold residence in Abu Dhabi. In Abu Dhabi, it's one of the most popular neighbourhoods to purchase apartments.

ROI Apartments: 6.52%

Starting price studio apartment: AED 419K

2 Bedroom townhouses: AED 2.97M

ROI: 7.09%

Understanding Abu Dhabi's Freehold and Leasehold Areas

Abu Dhabi has freehold and leasehold properties:

• Freehold areas: Foreign nationals are permitted to purchase homes with the full power of ownership in the UAE. A legislative amendment in 2019 opened up access to select freehold territories to foreign nationals.
• Leasehold areas: Properties are normally leased for 99 years before returning to its original owner.

Guide for non-UAE residents buying property in Abu Dhabi

Non-UAE nationals can buy property in Abu Dhabi but it is subject to some restrictions. Foreigners can find properties in areas like Al Reem Island, Saadiyat Island, Yas Island, Al Raha Beach and more.

• The foreigners will need a residency visa. The visa is linked to property ownership therefore foreigners must maintain their residency visa if they want to own property.
• They can apply for a mortgage to buy property or contact the lenders in Emirati for home loans. Foreigners must have been at their job for 1 year or a minimum of 6 months. Self-employed foreigners must have established their business for a minimum of 2 years.
• If foreigners want to buy property worth up to AED 5M then they will have to make a down payment of 20-25% of the mortgage value. For property worth above AED 5M, the down payment will be 35%.
• Once you have finalised the property you will have to negotiate the terms of purchase with the seller or developer. The purchase agreement should include the purchase price, payment schedule and any special conditions.
• Foreigners will have to apply for a No Objection Certificate from UAE government authorities.
• After obtaining the NOC you will have to register the property with Abu Dhabi municipality. This involves paying the required fees and the taxes.
• Once the registration is completed you will get the title deed. This officially confirms the ownership of the property.

Purchasing Property in Abu Dhabi on Mortgage

• If you are applying for a mortgage you will need to be a resident of the country with a valid visa for six months.
• Most banks offer loans for a value of 75% of the purchase price.
• At a minimum, you will need a 25% down payment for your deposit.
• Agency fees of 2% have to be paid. Abu Dhabi municipality will charge 2% as a levy charge on the purchase price. This amount can be split between the buyer and the seller if the parties agree on a Memorandum of Understanding (MoU). A MoU is a governing contract between the two parties.
• For the initial bank application, you will need a copy of your passport, a valid visa, an Emirates ID and an employment letter with a salary certificate.
• You may also be charged a No Objection Certificate to ensure that the property is clear.
• After starting the home loan process with the bank a valuation company will be sent to the property to make a report and ensure that the property is being bought at a fair price.
• If the seller has a mortgage then the bank will clear it leaving the property free to be sold without any liability.
• If the seller does not have a mortgage on the property then the bank will hand over the cheque directly to the seller.
• Once the process is completed with the banks the agency will book the transfer of property.
• The seller, buyer and bank representative meet at Abu Dhabi Municipality to complete the process of transferring the property to the new owner.
• The owner will then receive a title deed which is the legal recognition of the ownership of the property.

Tips for Homebuyers from Experts

Note these real estate experts' tips:

• Compare multiple properties before choosing one. Compare prices of similar properties sold in the same area. Look for urgent selling properties to better negotiate the rates.
• Check the developer's track record to ensure quality.
• You should learn about agency commissions, registration and transfer fees, etc.

Post-Purchase Checklist

Once you have the property in your possession, remember to:

• Get the utilities set up, such as water and electricity. These utilities have to be requested from the ADDC, this can be done online.
• If needed, get residency visas. As a visa owner, you can access financial services, open a bank account, apply for a driver’s licence and more.
• Ensure you have homeowner's insurance. It is not mandatory but it helps to protect your property from unforeseen losses and damages.

Acquaint yourself with the rules, facilities, and services of your neighbourhood. It is better to research the culture of Abu Dhabi to prepare yourself.

Conclusion

Abu Dhabi has a strong real estate market and long-term growth potential, making property investment beneficial. The guide's information and tools will help buyers navigatе this process. To make a smart and rewarding investment, investigate properties, locations, and market dynamics. It could be beneficial to get advice from expert sources as well.