Investors Guide to Abu-Dhabi

While some restrictions remain for foreign investors wishing to purchase freehold properties in certain areas of the UAE, the majority of the recent developments have been created to attract foreign investors to the location.

The Purchasing Process

Holding deposits are paid, often non-refundable, to secure the property. Depending on the location and restrictions of the development company, the reservation deposit may be required in the local Dirham currency AED, and normally amounts to approximately 3,000 GBP, with fluctuations depending on the exchange rate. With the AED index linked to the USD, these fluctuations are controlled and relatively minimal.

A Private Purchase Contract (PPC) will be issued once the deposit is paid. The PPC will outline the responsibilities for the purchaser to comply with regarding the payment schedule for the property, along with the developer’s obligations to the buyer.

Payments are often held in a secure Escrow account, ensuring a protection of funds during the planning and construction phases.

Staged payments are paid in percentage amounts over the course of construction. Depending on the time frame from the initial deposit until the completion of construction, these payments may vary in percentage however they are usually 10% or 20% paid approximately every 3 or 6 months.

Part of the legal fees may be required at the PPC stage. The remaining legal fees will normally be paid upon completion, along with the final staged payment and the purchasing costs.

Upon completion of the project and the payment schedules, the property is then documented in the Land Registry.

Fees & Taxes

As Abu-Dhabi is a predominantly tax free location, the purchasing costs are minimal, while they are subject to change and additional costs may be required in specific circumstances, the average purchasing costs will include:

• Land Registry fee: 1.5%
• Legal fees: 1%

Payment of inheritance taxes and capital gains taxes may be required by non-residents in their country of residence. It is recommended to speak with a financial advisor to assess personal liability.

Financing the Property

Until recently mortgages were difficult to obtain, with many investors opting to release capital, or re-mortgage their existing properties to finance a purchase in Abu-Dhabi. While this is still a popular solution, the HSBC Middle East bank is now offering mortgage options to foreign investors. Islamic mortgages can be obtained by overseas investors to finance an Abu-Dhabi property purchase, with a payment concept similar to traditional bank mortgages.
More about overseas property finance

Visitors Guide to Abu-Dhabi
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