Middle Eastern property markets are in something of a turbulent period, and the popular and previously high-performing market that is Dubai is now sliding into a correction. However, there are a handful of markets in the region that remain relatively steady and even potentially profitable, and investor attention is naturally shifting more and more in the direction of these few patches of calm water. A star example is Abu Dhabi, capital of the United Arab Emirates and one of the world’s wealthiest cities.
In recent years, Abu Dhabi has been somewhat in the shadow of fellow emirate Dubai as far as the more ambitious investor is concerned. Dubai has delivered rapid growth and distinguished itself as a fast-mover, but Abu Dhabi has always been the more stable of the two. This is why it has traditionally been favored by fund managers with a long-term view rather than individuals. Now that Dubai seems to be slowing down to catch its breath, the advantages of Abu Dhabi are beginning to look a lot clearer to investors of all kinds.
One thing which has traditionally put some investors off of Abu Dhabi is the comparative lack of regulation in the property market. The massive crash that its neighbor Dubai experienced in 2008 was partly down to the relatively lawless nature of its property market at that time, and this Wild West attitude to regulation seemingly continued to prevail in Abu Dhabi. However, this has finally and rapidly begun to change with the recent introduction of legislation specifically aimed at protecting the interests of investors.
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The newly-introduced law serves to define the responsibilities and remit of the Department of Municipal Affairs (DMA) with regards to a comprehensive range of real estate issues. It also clearly states the rights and obligations of a wide range of individuals involved in the property development and selling process, including developers, sales agents and mediators.
Arguably the most important new measures, however, are the introduction of project guarantees and the creation of a new real estate register. Developers will be required to open a project guarantee account for each new project that receives the approval of the DMA. This account will be used to deposit all capital paid to the developer for the purchase of off-plan real estate units in order to provide greater protections against the risks of purchasing property before completion.
The new real estate register, meanwhile, will retain copies of all documents and other data relating to off-plan real estate developments. It is hoped that this clear, definitive register of all vital information and documentation will help give buyers further protection against the risks involved in buying properties off-plan.
After the purchase process is complete, investors find that Abu Dhabi’s property laws are very landlord-friendly. On top of this, the UAE government has also applied some measures in Abu Dhabi that are similar to those seen in Dubai, such as tightening the rules around lending, to help mitigate the risks associated with boom and bust cycles. With net returns of over 7% on offer on well-chosen investments, Abu Dhabi can provide many excellent investment opportunities and may now be in a position to step out of the shadows of its neighbor, Dubai.
