Dubai: Foreign nationals and foreigner-owned businesses can acquire land on full freehold in Abu Dhabi, at locations designated as investment zones. The new rights also empower them to develop properties for the land thus acquired.
Earlier, these rights only allowed foreigners to acquire properties in these designated zones. As reported earlier, Aldar Properties, in which Abu Dhabi Government holds a significant stake, and Imkan, owned by Abu Dhabi Capital Group, had been testing the waters offering plots for sale at recent launches.
Until now, Emirati buyers had been the most active when it came to buying plots in Abu Dhabi.
This strategy has paid off handsomely for Aldar, with the developer confirming Dh2 billion from such plot sales, at its Alreeman (in the Alshamka locality and close to the airport) and Lea projects. At the Lea, located on the northern side of Yas Island, the plots ranged between 405 square metres to 1,800 square metres, and with prices from Dh990,000.
“We are off to a flying start this year … and we are seeing really strong demand for land opportunities within masterplanned communities,” said Talal Al Dhiyebi, CEO of Aldar, in a statement. “Generating over Dh2 billion from our two recent developments — Alreeman and Lea — shows how market sentiment is moving in a positive direction.”
Market sources say even mid-sized developers can now use their land bank to bring in cash. “There are many developers with various degrees of land holdings, and the new Decree allows them to make better use of this,” said an industry source. “They can reduce their land holdings and free up much needed cash when needed.
“At a time when off-plan property sales have been on the decline, selling plots offers a viable option.”
So, what of the land prices in Abu Dhabi? Currently, if the intention is to build villas, the land would cost them between Dh200-Dh400 a square foot, and rise to around Dh450 if located by the waterside. Land for multi-floor buildings would be from Dh150 a square foot.
The latest decree also gives a push to foreign-owned businesses to consider owning their own real estate requirements in the emirate. Market sources say that more areas in the emirate could be assigned investment zone rights, which would allow them to do so. That would even extend to industrial properties built for warehousing and logistics needs.
Abu Dhabi’s real estate sector could definitely do with a boost. The latest Cavendish Maxwell update suggests that property prices in coveted locations such as Al Reem Island and Al Reef Downtown are down by 10-12 per cent for apartments in the 12 months to March 31, 2019.
“The market remains subdued across communities in Abu Dhabi — investors have shown growing interest in lower-priced inventory, particularly those assets with higher expected yields and flexible payment plans offered by developers. However, the overall sentiment is bearish, with investors waiting for prices to soften further in 2019.”
What plot buyers should be aware of
Master-developers typically require an investor to build on the plot within four years, failing which penalties could be imposed.
According to one industry source, “Typically, it takes up to 12 months for a project to receive all the design clearances in Abu Dhabi, while Dubai’s would be around 4-6 months. If the gap is shortened, this would be a real ballast for plot sales. Investors will have a better grip on their cost needs.”