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The ability to own different interests in land and property in Abu Dhabi depends on the nationality of the individual or company. The law (for property outside of Abu Dhabi Global Market, where different laws apply to real estate interests) classifies individuals and companies that own property in the capital under three groups:
1. UAE nationals and companies wholly owned by them.
a) UAE government and governments of other emirates.
b) Entities wholly owned by the Abu Dhabi government.
2. GCC nationals and companies wholly owned by them.
3. Foreign individuals and companies falling outside categories 1 and 2.
UAE nationals can hold land interest anywhere in Abu Dhabi, but may only dispose off government-allotted land after holding it for at least five years. GCC nationals can hold any land interest within Investment Areas.
Non-GCC foreigners can hold the following land interests inside Investment Areas only:
a) Ownership of floors in buildings (but not the land).
b) Usufruct rights over land for up to 99 years.
c) Musataha rights over land for up to 50 years (renewable by mutual consent).
d) Long-term leases of land for up to 25 years (renewable as per the contract terms).
Investment Areas are physical zones of land designated by the Abu Dhabi Executive Council as places where GCC nationals and foreigners are entitled to hold some land interests. There are currently 11 Investment Areas in Abu Dhabi:
1. Al Raha
2. Al Reem
3. Al Reef
4. Saadiyat Island
5. Bani Yas Island
6. Al Lulu
7. Seih Al Sedira
8. Madinat Masar
9. Al Maryah Island (formerly Al Sowwah Island)
10. Abu Dhabi Airport Free Zone (ADAFZ)
11. Khalifa Industrial Zone of Abu Dhabi (Kizad)
A musataha is a development right that allows a person to construct, alter, own and use a building on someone else’s land for up to 50 years. If the musataha right extends beyond ten years, the holder may dispose off the property without the landlord’s consent, unless the contract provides otherwise.
A usufruct is an exploitation right that permits the use of someone else’s land to make profit for up to 99 years. For example, the person with usufruct rights could lease the property out to someone else, operate a factory or use the land to grow crops, depending on the usufruct agreement. Usually, usufruct holders may not build on or alter the property.
As with a musataha, if the right to hold the usufruct extends beyond ten years, the holder may dispose off the property without the landlord’s consent, unless the contract provides otherwise.
A long-term lease is up to 25 years and gives a person an interest in property and exclusive possession for a specified time period. Long-term leases may be assigned or mortgaged subject to the terms of the contract. They are renewable according to the lease contract’s terms.
All agreements must be in writing, contain the essential elements of the transaction and signed by the parties. The signatures must be attested at the Abu Dhabi Land Registration Department (LRD). Sale contracts, musatahas, usufructs, long-term leases and mortgages are not effective until they are registered at the LRD. This means the relevant property rights will not be transferred unless the corresponding agreements are properly registered. The LRD will keep original versions of the registered agreements and issue copies to the parties. In practice, however, registration in some parts of Abu Dhabi is still not possible.
The information on the register is conclusive evidence of the land and property ownership rights. See table (Registration fees) for the main registration fees.
Property laws in Abu Dhabi bear some differences from those in other emirates.
1. There are no seller’s warranties implied by law and, therefore, buyers should take precautions to ensure their interests are protected by the contract with the purchaser.
2. In practice, only owners of property located in the residential investment areas (numbers 1-9 in the aforementioned list) may have title deeds issued to them.
3. A strata/jointly owned property law has not yet been enacted in Abu Dhabi. Such laws are necessary to form owners associations, which would enable owners of property within apartment blocks to take control of financial decisions relating to common areas (such as elevators, pools, maintenance and cleaning).
Source: Jessica Lambert, Special to Property Weekly
The author is a real estate paralegal at law firm DLA Piper. Additional reporting by Helen Hangari, Senior Legal Consultant.
This is the first of a series on property ownership and leasing in the UAE capital. Next: Landlord and tenant laws in Abu Dhabi.
Al Nisr Publishing accepts no liability for the views or opinions expressed in this column, or for the consequences of any actions taken on the basis of the information provided.