The UAE is a young country, and the story of the evolution of real estate in its largest Emirate is short but eventful. The book From Rags to Riches by Mohammed Al Fahim gives us the first fascinating glimpse into how the ownership of real estate really began. It was the wish of Sheikh Zayed bin Sultan that every citizen have three pieces of land. One for a house to live in, one for a shop to make money live, and one for a store for that shop. He began gifting these plots of land to make sure his people had a roof over their heads and money in their pockets. It ushered in a long tradition of the gifting of land. Most lands at the time (and to this day) were unclaimed and available to the government to provide to its people.
During this time, UAE Nationals were discouraged from buying or selling their gifted property in Abu Dhabi. They could only acquire land by grant from the government. An excellent example of this is the Khalidiya Area of Abu Dhabi, so named after Sheikh Khalid bin Sultan, Sheikh Zayed’s older brother. Sheikh Khalid was granted large amounts of land in the area, which he faithfully developed, and it became known by his name.
Sheikh Zayed bin Sultan passed away in 2004. Under his son, Khalifa Bin Zayed two new laws were enacted in 2005. The first Law 3 of 2005 allowed Emiratis to buy and sell the property they had been gifted. The second, Law 19 of 2005, established “Investment Zones.” These Investment Zones (the first two were Reem Island and Raha Beach) finally allowed non-nationals to buy property. They could buy a 99-year lease over villas and apartments called “Usufruct.” Members of the GCC and Emiratis could buy freeholds in these areas.
Real estate boomed until the global crash in 2008/9 affecting first Dubai and then Abu Dhabi. The recovery started in 2011 and was only stalled by the “Oil Recession” in 2015 when Brent Crude dropped from over 100 dollars per barrel to below 30. The effect on the Gulf and government spending saw Abu Dhabi and Dubai property prices begin to slide, losing almost 10% per year for the next five years.
In 2015 the biggest piece of real estate legislation in the history of Abu Dhabi was passed. Law 3 of 2015, “Concerning The Regulation Of Real Estate in Emirate of Abu Dhabi,” legislation primarily aimed at stopping the issues that arose in 2008/9, where developers took money from off-plan sales but never completed the projects. But it also covered the regulation of real estate professionals, owner’s associations, mortgages, and many other items.
The next big leap came in 2019 when expatriates were granted the right to own freehold property in Investment Zones by Law 13 of 2019. By this point, ownership in Investment Zones which had been evidenced only by contracts (Sale and Purchase Agreements (SPAs)), began to be officially registered in the Abu Dhabi Municipality, giving much more security to the rights of ownership.
All this time, property prices in the Emirate were declining until the unlikely savior, the Covid Pandemic, arrested this price decline. Some areas (notable high-end villas and apartments) took off. Prices in places like Hidd Saadiyat and Mamsha went up 20 to 30 percent in one year.
What does the future hold? Only time will tell, but it is a fantastic ride.
By: Ben Crompton