UAE Developments: Residential Areas in Abu Dhabi Open to Foreign Residents to Buy Freehold Property
The residential real estate market in Abu Dhabi received a boost this year with stimulus packages and relaxed business regulations.
The United Arab Emirates is an oil-rich country on the Persian Gulf and the Gulf of Oman in the middle east and is known for its entrepreneurship. It has taken many positive steps to increase foreign direct investment to enable its economy to diversify.
Over the last 15 years, massive amounts have been spent on infrastructure and construction of apartments, single-family villas, and commercial and retail districts. Its population is nearly 10 million, of which almost 90% are expats. It has 30,000 square miles with a GDP nearing the $500 billion per annum—similar to the GDP of Argentina and Austria. It has two major cities, namely Dubai and Abu Dhabi, which have become known as centers for high-end residential real estate developments like Dubai Marina, The Palm Jumeirah, and Burg Khalifa.
As a developing country, UAE embraces change, and while many countries are currently resisting immigration and an influx of foreign residents, the UAE is leveraging the opportunities that this brings for real estate and welcomes people from all across the globe. Dubai airport is now the busiest airport in the world and supports a healthy initiative to increase tourism.
Foreign residents have been able to purchase freehold homes in Dubai since 2002, and changes in legislation this year will enable the same to happen in designated residential areas in Abu Dhabi.
Giving Real Estate A Boost
The residential real estate market has received a boost this year with the UAE Cabinet designating more than half its annual budget to education and social development. Also, it introduced several residence visas linked to the purchase in cash of residential real estate ranging from $500,000 to $2.5 million. They’ve also added many stimulus packages and relaxed business regulations to boost business and consumer confidence in the country.
After peaking in the second half of 2014, UAE residential property prices have been declining and are now approaching the levels last seen in the 2009-2010 property recession. The downturn is likely to continue for the rest of 2019 and is expected to stabilize in 2020 with meaningful recovery only expected in 2021, according to rating agency Standard and Poor.
One of the main drivers of the recovery will be the Expo 2020 held in Dubai. This event will generate billions of dollars of building projects and over 250,000 new jobs. Due to the current oversupply of residential units, prices could decline 7 to 10% this year and a further 5% in 2020 as the market absorbs the oversupply.
In Dubai, both real estate prices and rentals have fallen by almost 25% since 2014, resulting in the margins obtained by large developers dropping as they offer incentives and payment plans to move their stock. Notwithstanding this fact, Abu Dhabi announced two major residential and commercial projects worth over $2 billion in Jubail Island and Lea, a waterfront residential project on Yas Island.
Industry insiders are predicting that with an uptick in oil prices this year, there will be a steady increase in demand for real estate in the UAE over the next five years from foreign buyers.
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