One of the world’s foremost destinations where business, leisure and super prime real estate are concerned, Abu Dhabi is known for its impeccable safety record, cultural landmarks and elevated lifestyle. As such, it has become one of the most sought-after locations for countless ultra-high-net-worth individuals over the past couple of decades.
While purchasing property is always one of the biggest decisions a person can make, entering a foreign market like Abu Dhabi brings its own distinct considerations. As specialists in the super prime sector, we have guided clients through the city’s unique real estate landscape with confidence. Whether your goal is to secure a primary residence or to build a resilient investment portfolio, this guide will help you navigate the process with confidence, providing six things to keep in mind.
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The Importance of Knowledgeable Representation
Abu Dhabi Sotheby’s International Realty agents specialise in connecting clients with the city’s most exceptional properties. From your very first search through to completion, informed agents provide a seamless and professional experience every step of the way – adding convenience to the buying process.
One of the most common pitfalls buyers face in the early stages of their journey is misrepresentation. Proper due diligence should be carried out when selecting your real estate professional. Working with licensed real estate professionals – just like in any other market around the world – is a key consideration in Abu Dhabi. RERA-certified agents and government-accredited entities provide peace of mind for would-be buyers, essential for those purchasing from abroad who might be unfamiliar with the intricacies and nuances of the process.
Customisation Considerations
Personalising your new property can be an exciting opportunity, but it can occasionally present challenges for new entrants into the market.
When planning a bespoke home in Abu Dhabi, long-term flexibility might be something worth considering. Understandably, many UHNWIs want to adapt the layout of their homes to suit personal (and sometimes cultural) needs. One example of this might be Indian buyers who value Vastu-compliant properties. While it is the prerogative of the owner how to modify their own property, it can potentially impact resale value when it comes time to sell. A home’s flow is one of its biggest selling points, and as such, a property that has been overly modified could actually narrow the range of buyers it may appeal to.
European owners often choose open-plan layouts to maximise family connection, while GCC buyers sometimes prefer residences that offer more privacy and separation. Features such as majlis rooms – formal community spaces central to family life in the GCC – can add distinction and appeal for regional clients, even if international buyers prioritise different designs. While these designs are culturally specific, at this level of investment, homes can easily be remodelled to their original form or to a desired specification.
That said, while turnkey properties (ready to move in) are often the preference of most buyers, some buyers relish the opportunity to renovate and personalise their homes. This, of course, creates not just a place to live, but a home that fully reflects their individual taste and style.
Understanding the Market
Abu Dhabi’s real estate market, like all markets, experiences a variety of cycles, meaning what was in demand last year may not be today. This presents both opportunities and risks. In such a diverse market, even experienced UHNWIs can occasionally miss an investment opportunity – or, conversely, overpay for a property.
Before committing to a purchase, buyers should research current market trends in the city. This might involve exploring opportunities in up-and-coming districts, for example, or considering areas which might be slightly off the beaten path. This could offer significant long-term benefits.
Many UHNWIs choose Abu Dhabi for a range of reasons, including advantageous tax incentives. Residents of countries like the UK or Germany, for instance, face significant income tax rates of around 50%, while Finland is even more extreme at 55%. Abu Dhabi’s personal income tax – which famously stands at 0% – can make super-prime properties in the city more appealing than in other places, with potential tax savings cushioning the premium of these properties. It is also important to consider that the same property may be available at a different price for other buyers, depending on timing and circumstances, which is an often overlooked consideration.
Local amenities are also a key consideration. Families often prioritise an area for its proximity to private schools, while people living with elderly family members may rank access to healthcare highly. Leisure facilities and convenient commutes are also often at the top of many people’s priority lists. Experienced agents with specific area knowledge can advise buyers on which neighbourhoods match their needs, offering the best long-term value and ensuring a purchase that aligns with both lifestyle and investment goals.
Choosing the Right Developer
Abu Dhabi’s real estate market is evolving at a rapid pace, and a significant part of any growing market is off-plan properties. Buying off-plan (before construction is complete) can offer extensive value and potentially afford buyers input on layouts or finishes.
However, off-plan investments can occasionally carry some risk. Established developers, understandably, provide increased security; however, lesser-known developers – despite often offering attractive pricing – can sometimes encounter construction delays or, in the rarest cases, fail to complete on a project entirely. As such, regulatory screening is in place to protect buyers, but due diligence remains an essential part of the process.
Working with a reputable agency is an essential part of the purchasing process. Experienced companies have stronger relationships with the industry’s biggest developers, which in turn provides access to broader networks. This, of course, helps buyers to navigate the off-plan market with increased confidence, ensuring informed decisions are made and inherent risks are mitigated, while also providing access to exclusive projects and (potentially) even discreet opportunities. Agencies specialising in super-prime properties – such as Sotheby’s International Realty – implement rigorous vetting processes, ensuring even third parties who might be involved have been thoroughly vetted.
While an expert agent will help point you toward the most suitable investment for you, it is always smart to independently verify any agent that you come into contact with. This extra step in the process helps protect your investment, ensuring your purchase aligns with your needs.
Legal Considerations (Mortgage, RERA, Additional Fees)
Just like in any market, there are a number of legal and financial factors to consider when buying property in Abu Dhabi. As important as any other is fully understanding mortgage rates and repayment terms, should a mortgage be required. Abu Dhabi is home to a selection of mortgage professionals who can assist in high-value mortgages, the employment of whom can go a long way in smoothing out this occasionally complicated process.
You should also be aware that the UAE Dirham is pegged to the US Dollar, meaning fluctuations in the US market generally elicit a reaction in the UAE too. Most variable mortgages are linked to the Emirates Interbank Offered Rate (EIBOR) plus a bank margin, so rates can fluctuate in relation to EIBOR. While daily monitoring isn’t completely necessary, understanding what EIBOR means for your repayments allows buyers to plan for potential market movements.
Many mortgages in the UAE are variable, with fixed-rate periods typically lasting between 1 and 5 years, after which payments may increase.
Abu Dhabi’s real estate market is regulated by the Department of Municipalities and Transport (DMT), as well as the Real Estate Regulatory Agency (RERA), both of which have been developed to increase transparency and protect buyer interests. Moreover, it is important that any property you are considering is properly registered and brokers are RERA-licensed.
Off-plan developments should also be RERA-approved, while buyers should understand that the buying process often comes with extra costs, which experienced agents can outline clearly, ensuring a smooth and informed buying experience.
Freehold Vs Leasehold
While many buyers and investors in Abu Dhabi are familiar with the terms ‘freehold’ and ‘leasehold,’ it is important to understand the differences. Buying freehold means ownership of both the property and the land it occupies outright. In contrast, leasehold properties do not grant ownership of the land and come with certain limitations.
Although leasehold properties can be an attractive opportunity, freehold residences offer greater flexibility. It is easier for owners to make alterations, pass property down through inheritance, and, for qualifying homes, benefit from visa incentives. For example, purchasing a freehold property above a certain price point can bring eligibility for a long-term residency visa.
It is also important to note that leasehold ownership is restricted to GCC nationals. International buyers are able to acquire freehold properties, but only within Abu Dhabi’s designated freehold zones, such as Yas Island. Understanding these differences allows buyers to make informed decisions.
With significant capital on the line, making educated decisions before committing to a purchase is essential to securing a successful investment in Abu Dhabi’s fledgling property market.
From partnering with trusted professionals and researching market trends to understanding the legal and financial frameworks related to buying property in the city, thorough preparation is essential. Knowing the difference between freehold and leasehold ownership is also an important factor for any buyer.
For guidance navigating Abu Dhabi’s prime and super-prime property market, our experts at Abu Dhabi Sotheby’s International Realty are on hand to provide trusted advice and bespoke support at every step of the journey.
