Abu Dhabi permits foreigners to own freehold properties in investment areas

The Abu Dhabi government issued a law on 17 April to amend its real estate law to permit all foreigners to own land and property in designated investment areas on a freehold basis. Previously, freehold ownership was restricted to Emiratis and citizens of Gulf Cooperation Council (GCC) states, while foreign investors were generally restricted to 99-year leases.

Law No. 19 of 2005 provided for the creation of investment areas as zones within Abu Dhabi in which GCC and non-UAE/GCC nationals were entitled to real property rights, but specifically excluded ownership rights to land for foreigners.

The revision introduces amendments to Articles 3 and 4 of Law No. 19 as follows:

• Article 3 provides that the rights to own property are limited to three categories – Emirati citizens, natural or legal persons; public holding companies with ownership not exceeding 49% by non-nationals; any person to whom a decision is issued by the Abu Dhabi Crown Prince or the President of the Executive Council. It also now provides that non-UAE nationals, natural or legal persons, shall have the right to own and acquire all original and in-kind rights in real estate properties located within investment zones.
• Article 4 now provides that the holders of a ‘usufruct’ (the right to enjoy the use and advantages of another’s property) or ‘musataha’ (the right to construct a building or to invest in, mortgage, lease, sell, or purchase a plot of land belonging to a third party for a period of its validity) for more than ten years will have the right, without the consent of the landlord to dispose of the property, including the right of mortgage. However the landlord may not mortgage the property except with the consent of the usufruct or musataha holder. In both cases, the parties may agree otherwise.

Residential units in investment zones will now be registered under Abu Dhabi’s freehold law, which will increase transparency and provide clarity of title for property owners, increasing the opportunities for long-term investment into the emirate’s real estate sector.

The Abu Dhabi government’s Executive Committee was asked to examine ways to help develop Abu Dhabi’s real estate sector in line with the best international standards and to improve the investment climate in the emirate.

The committee proposed updating the real estate ownership law following an in-depth study on the needs of the real estate sector, and after a series of meetings with investors and developers to identify ways to develop and consolidate the real estate sector.