8 key steps to buy a property in Abu Dhabi

Congratulations, you’ve decided to buy property in Abu Dhabi. This guide outlines the most important steps involved from the initial stages to the actual purchase. The most important factor in the buying decision to consider is that property ownership in Abu Dhabi comes with a number of rights and limitations.

Let’s get into it.

Area limitations:

Non-resident foreign investors in Abu Dhabi can purchase property under one of two types of ownership contracts:

• Usufruct:

  The most common form of apartment ownership contract of apartments lasts 99 years. It does not allow ownership rights to the land on which the property is built, only the particular property in consideration.



• Musataha:

  Usually used in transactions concerning plots in Investment Areas, this allows the contract-holder to develop and build on land which is owned by a third party. Rights defined in the contract last up to 50 years and are renewable once on mutual consent for another period up to 50 years.

Once a buyer has settled on the area and ownership contract they are eligible for, the steps to buying a property in Abu Dhabi are relatively straightforward. They involve:

1. Identifying the property type and area:

   
   

   Market research is essential in finding the location and development that presents the most optimum investing opportunity. Every investor looks for properties with a high rental value and low vacancy risk, but it is also important to take into consideration the age of the unit, expected maintenance costs and service charges. This is especially important if considering apartments in Abu Dhabi in the older and more central parts of the main city. If the property is for self-use, identify the ideal unit size as well as proximity to retail areas, workplace and schools, how connected the area is in terms of transportation and other other amenities on offer.




2. Hiring a Real Estate Agent and finding the property:

   
   

   After shortlisting a location (or more than one), hire an experienced broker who can talk you through the entire Abu Dhabi property buying process. The broker should have spent long enough in Abu Dhabi to have an informed opinion on the overall investment climate in the emirate and be fully versed with the paperwork involved. Hiring an agent isn’t mandatory but can dramatically simplify the legwork involved with arranging viewings across compare multiple units, setting up transfer appointments, preparing contracts, maintenance and inspection reports and during the handover. When purchasing an off-plan property, a developer’s reputation, past projects, and timely delivery of the units is of paramount importance and a knowledgeable Real Estate agent should be able to identify any warning signs or share recommendations.




3. Hiring a mortgage broker and getting a mortgage:

   
   

   As with any market offering an array of property options for investors, banks in Abu Dhabi offer a variety of financing options. It is up to the individual investor or mortgage broker to source the best available terms. In the UAE, banks usually require the buyer to put up a deposit of at least 20% of the purchase price for UAE Residents, and 15% for UAE Nationals. However, Lenddoo can help you finance up to 85% of the property value, including the transaction fees. Buying a property on a mortgage involves the bank valuing the property – check to see if this can be done before signing an MoU with a developer or seller. Banks usually take anywhere between 20 to 30 days to advance the financed amount.




4. Getting the No objection certificate (NOC) from the developer:

   
   

   If buying from a third party, you will need an NOC from the developer of the property stating that the seller has paid all their dues and that they have no objection to the property being handed over to the buyer. If buying from a developer, the NOC will simply state that they do not object the property being handed over to the buyer.




5. Putting down the deposit:

   
   

   On making an offer, investors will often sign an agreement that involves putting down a deposit (usually 10% of the total purchase price).




6. Signing the Sales and Purchase Agreement:

   
   

   Once the NOC has been received, all parties are ready to sign the sales and purchase agreement (SPA). In agreements involving bank financing, the seller will receive a Guarantee Letter (also known as a Comfort Letter) stating that the bank transfer them the funds once the developer signs the SPA.




7. Paying the property transaction charges:

   
   

   If you are buying a property in Abu Dhabi from the secondary market, then you will most likely pay:

   • Property transfer fee

     (between 1% and 4% depending on the area)

   • Registration fee

     (2% of the purchase price – see title deed below).

   • Real Estate Agent fee

     (2% on the purchase price)

   • Bank processing fee

     (0.5% to 1% of loan amount)

   • Property valuation fees

     (up to AED 3,500)



8. Receiving your title deed:

   
   

   After all the fees and principal payments are made, the buyer can register their property with the Department of Municipal Affairs to be registered as the new Abu Dhabi home owner and receive a title deed. The process carries a standard charge of AED 1,000.