Abu Dhabi will allow foreigners to own the land under their homes and offices for the first time as the emirate looks for ways to bolster its stalled property market.
The oil-rich sheikhdom will let individuals and companies enter so-called freehold agreements across 30 designated zones after previously restricting them to a 99-year lease of the land. Abu Dhabi resisted the step long after neighboring Dubai decided to allow such purchases in 2002.
Abu Dhabi, which sits on nearly 6 percent of the world’s oil reserves, is trying to revive a property market where home values and rents have been sliding since crude prices collapsed in 2014. A regional downturn and strong U.S. dollar, to which the local currency is pegged, has made property more expensive to the United Arab Emirates’s traditional customers in India and the U.K., and officials are targeting Chinese investors.
Citizens of the U.A.E. and other Gulf Cooperation Council countries were already allowed to purchase land in Abu Dhabi before the law change.
The change would allow an owner to include land on a mortgage, sell it, inherit it and enjoy the full rights that come with free and full ownership, Falah Al Ahbabi, director general of the Abu Dhabi’s Department of Urban Planning and Municipalities, told reporters on Thursday.
Talal Al Dhiyebi, chief executive of Aldar Properties PJSC, said he expects the step to “increase investment in real estate exponentially.” He predicted that it will boost sales at Aldar, Abu Dhabi’s biggest developer, by 40 percent to 50 percent this year.
But not everyone agrees about the impact. Craig Plumb, head of Middle East research at broker Jones Lang LaSalle, said while the change is a positive step, it’s unlikely to have significant impact on demand immediately.