Should I be worried about the 99-year lease in Abu Dhabi?

• Buying Property in Abu Dhabi
• 99-Year Leasehold Ownership in Abu Dhabi
• Pros and Cons of 99-Year Leasehold Ownership
• FAQs

Capitalising on the increasing interest of foreign investors, Abu Dhabi has recently revamped its laws regarding real estate property ownership in the city. Unlike before, non-GCC residents can now own an apartment and villa, including land in selected areas. Nevertheless, most expats looking to invest in the capital city are held back by questions such as ‘Should I be worried about a 99-year lease in Abu Dhabi?’

The guide will also explain the laws concerning property ownership by expatriates in Abu Dhabi while answering the question.

Buying Property in Abu Dhabi: A Guide for Expatriates

Here’s an overview of property ownership options for expatriates in Abu Dhabi, as outlined by Law No. 19 of 2005 Concerning the Regulation of the Real Estate Sector.

Ownership Options

Expatriates can acquire property in Abu Dhabi through four main systems, but it’s important to note that ownership excludes the land itself. Here’s a breakdown of each option:

• Ownership (99 years): This grants you the right to use and sell apartments or villas under a 99-year lease agreement.
• Musataha (50 years, renewable): This allows you to own and use a property for 50 years, with the option to renew for another 50 years upon agreement with the landowner. You can also construct or alter the property within the specified period.
• Usufruct (99 years): This grants you the right to use and enjoy a property for 99 years, but you cannot make any structural changes. Read about usufruct rights for more information.
• Long-term Lease (minimum 25 years): This offers a lease agreement for an initial period of at least 25 years.

Legal Amendments (April 2019)

An update to the Abu Dhabi Real Estate Law now allows non-UAE nationals to acquire full ownership rights (including the land) in designated investment areas. Here’s a simplified breakdown of the key points:

Eligible Owners

• Emirati citizens and companies
• Public holding companies with less than 49% foreign ownership
• Individuals granted special permission by the Abu Dhabi authorities

Expatriate Ownership in Investment Zones

Non-UAE nationals can now own properties in designated investment areas.

Should I be Worried About the 99-year Lease in Abu Dhabi?

While many people prefer freehold ownership, a 99-year lease agreement is still an option for expatriates in Abu Dhabi. This concept might be familiar to those from countries with common law systems (like the UK).

In such scenarios, apartments and villas are typically sold as leaseholds, with the freehold of the entire building being held by a trust that the apartment owners belong to. This means you technically own your apartment but not the land it sits on.

Despite being the only option, before the 2019 amendment, foreigners hesitated to invest in the capital city. To counter the scepticism, Abu Dhabi introduced an Owners Associations (OAs) law for new developments in 2015.

These OAs function similarly to trusts in common-law countries. They own the freehold of the land the entire building sits on, while individual apartment owners are members of the OA.

So, what happens at the end of the 99-year lease in Abu Dhabi? The property simply reverts to the OA, which is controlled by the apartment owners. The OA will then grant each member a new 99-year lease, ensuring continued ownership of their apartment.

Pros and Cons of 99-Year Leases in Abu Dhabi

Deciding on a 99-year lease in Abu Dhabi depends on your priorities and how comfortable you are with a little uncertainty. Here’s a breakdown to help you weigh the pros and cons:

On the upside, Abu Dhabi 99-year lease is typically more affordable upfront compared to freehold ownership. Plus, the lengthy tenure allows you practical ownership for most purposes. There’s also the benefit of potentially less maintenance hassle, as the freeholder usually handles major land upkeep.

However, there are some drawbacks to consider. You won’t technically own the land, which might affect the resale value and future property appreciation. While the chances are slim, there’s always a possibility that lease renewal terms at the end of 99 years could be less favourable.

Additionally, some leases might levy restrictions on modifying or using the property the way you like.

Despite weighing the pros and cons on your own, it is crucial to consult a real estate professional familiar with Abu Dhabi’s property market. They can advise you on the latest regulations, compare freehold vs. leasehold options in your desired areas and help you find a property that aligns with your needs.

FAQs About 99-Year Lease Land in Abu Dhabi

Where can expats buy property in Abu Dhabi?

Since the law passed in 2019, Abu Dhabi has seen a major expansion in its investment zones. Expatriates now have the opportunity to purchase property in over 30 different areas, including:

• Yas Island
• Saadiyat Island
• Al Reem Island
• Al Mariyah Island
• Lulu
• Al Raha Beach
• Sayh Al Sedairah
• Al Reef
• Masdar City

Will I get a residence visa on buying a property in Abu Dhabi as an expat?

Buying property in Abu Dhabi can lead to residency visa opportunities, like the UAE Golden Visa, but there are specific requirements to meet. These include:

• The minimum value of the property should be AED 5M.
• The property should not be bought on a mortgage
• If the expat retains the property with themselves for three years

Is it a safe option to buy a property directly from the owner in Abu Dhabi?

Buying a property directly from the owner in Abu Dhabi comes with a certain set of pros and cons. If you want to save money by eliminating additional costs like mortgage fees or negotiating on your own, buying directly from the owner seems like the best option,

However, if you are new to the city and have limited knowledge of the real estate market, it’s best to involve a real estate agent to ensure you get the best deal!

Are there freehold areas in Dubai?

Yes, foreigners seeking real estate investment opportunities in the city should consider freehold areas in Dubai. These communities offer luxurious and affordable apartments, villas or a mix of both.

This concludes our guide on ‘Should I be worried about the 99-year lease in Abu Dhabi?’ If you have thought about setting up your roots here, the popular residential areas in Abu Dhabi are a great place to settle your family.

On the other hand, top off-plan projects in Abu Dhabi are lucrative deals for foreigners and expats looking for brand-new residences or investment opportunities.

It’s also a good idea to learn more about the property ownership rules in the UAE for foreigners. You should also be aware that the ownership laws can differ between emirates.

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