Freehold vs Leasehold Property in Abu Dhabi: What Buyers Need to Know
When you plan to live in the middle of grand skyscrapers, luxurious locales, and bespoke communities, choosing the right property in Abu Dhabi becomes more than just a smart buy. It sets the foundation for the prosperous future you dream of.
When it comes to making such an important decision, you need to understand the ownership structures available, freehold and leasehold. Knowing the difference will help you choose the option that best aligns with your lifestyle, investment goals, and long-term plans.
Over the years, the UAE has become one of the most thriving real estate markets in the Middle East. Thanks to strong economic growth and investor-friendly reforms, Abu Dhabi now attracts both residents and international investors. In this context, it’s important to understand how freehold and leasehold properties work.
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What is Freehold Property?
A freehold property in Abu Dhabi grants you total ownership of the complete property unit, i.e., both the building and the land it is situated upon. Now, Freehold property purchase is more applicable when you look to buy apartments, villas or townhouses as an investment or a forever home since the property you intend to buy are directly built on an allocated land in which you have the full autonomy and the right to to make decisions in regards to its future reference of Relevant.
Looking to buy freehold property abu dhabi turns out to be worth your time and investment as the ownership of the property is considered perpetual. This simply means that your property purchase is for lifelong and has no expiration date.
Who Can Buy Freehold Properties
The real estate market in Abu Dhabi is witnessing a phenomenal surge in demand, thanks to amendments in property laws that encourage foreign nationals and expatriates to invest. At the same time, UAE nationals are also showing growing interest in freehold properties.
Many people still wonder if foreigners can buy freehold properties in Abu Dhabi. The answer is yes, they can. In fact, this is one of the main reasons why Abu Dhabi’s property market has become so attractive in recent years.
Since 2019, foreign nationals have been allowed to purchase properties in designated investment zones with full freehold ownership rights. This means expatriates can own residential, commercial, or investment properties in government-approved areas without being limited by leasehold restrictions.
Previously, foreign ownership was only possible through leasehold arrangements of up to 99 years. With the new regulations, buyers now enjoy much greater flexibility and long-term security.
Another important factor to consider is the legal age requirement. Under UAE law, you must be at least 21 years old to sign a property purchase agreement. However, individuals who are 18 and above can manage properties with court approval, while minors can only do so through their legal guardians.
It is highly recommended that you buy freehold properties only through UAE government-approved agents or property developers. By doing so, you can ensure that your deals will be risk-free and worth the money you invest.
Key Benefits Of Freehold Properties
By introducing freehold property ownership specifically aimed at foreign nationals, Abu Dhabi took a noteworthy step in boosting the appeal of the real estate market and attracting international investment. Given below are some of the primary benefits that you can enjoy when buying freehold property in Abu Dhabi.
Total Control
One of the most significant benefits you will avail when you plan of buying property in abu dhabi under the freehold structure is that you will get the comprehensive ownership. Yes, the complete ownership of both the property you wish to buy and the land it is situated upon. Adding to that, you will have the complete freedom to lease, sell, and reside in your property without any restrictions.
No Restrictions for Renovations/Alterations
Having the right clearances, owners of freehold property abu dhabi can go for renovations or alterations without any restrictions.
Legally Eligible for Long-Term Residency Visas
Freehold property owners are eligible to avail renewable UAE residency permits for 5 or even up to 10 years. Another attractive fact is that Abu Dhabi grants Golden Visas for people who make property investments of AED 2 million or more. Individuals with Golden Visas are able to enjoy residency rights of 5 to 10 years in Abu Dhabi without depending on a local sponsor. If you are an international buyer who prefers to expand your business base in the UAE and reside there, a Golden Visa will provide you with such significant value.
Potential for High ROI
The ever-flourishing real estate market of Abu Dhabi provides you with enhanced property value appreciation and lucrative rental yields. Undoubtedly, freehold property ownership, especially in the prime locations, will also help you generate maximum ROI.
Potential Tax Benefits
Another major attraction of getting freehold property ownership is that you get to enjoy big VAT exemptions for residential sales, along with corporate tax benefits for free zones. Such type of attractive tax benefits will only enhance your returns.
Prime Locations and Lifestyle Amenities
Most of the major freehold property communities, such as Yas Island, Saadiyat Island, Al Hudayriyat Island, Al Marayah Island, Al Reem Island and Al Jubail Island, are located at prime locations that present you with the finest lifestyle amenities and modern infrastructure.
Key Locations to Buy Freehold Properties
Yas Island
Yas Island is hailed as a popular prime hub renowned for its world-class buildings, leisure, and entertainment facilities. Adding to that, this location features a vivid range of plush freehold properties such as villas and apartments. So, if you are looking for villas or abu dhabi apartments for sale, Yas Island will prove to be a wise choice.
Saadiyat Island
Well acclaimed for the Louvre and the upcoming Guggenheim Abu Dhabi, the striking cultural attractions of the region, Saadiyat Island, provide you with the opportunity to live amidst luxurious residential communities.
Al Hudayriyat Island
To enjoy enchanting beachfront vibes, catch up with dear friends, and spend quality time with your family, the Hudayriyat Island is the best location to be at. Marsana waterfront promenade and numerous art installations guarantee fun-filled times for everyone who dwells there, and for holiday enthusiasts alike.
Al Marayah Island
The Al Marayah Island in Abu Dhabi is a prime freehold property destination that boasts a world-class waterfront address. This place assures you a luxurious lifestyle with top-notch amenities available for comfortable living. Both studio and apartments are the most preferred property options in this location that can provide you with high returns on investment. There is quick access to the beach area from Al Marayah Island, and it also bestows you with some of the finest options for dining and entertainment.
Al Reem Island
Al Reem Island, which is situated just off the coast of the big Abu Dhabi city, is a lucrative option for both residents and potential investors alike. This prime destination grants you quick access to the city centre. It is also home to luxurious high-rise apartments for sale with spectacular waterfront views.
Al Jubail Island
Al Jubail Island is a well-planned community with various freehold property options for buying and ensuring a huge ROI. This island region in Abu Dhabi also gives great emphasis on ecological preservation, and encourages meaningful community living with wellness at its centre stage.
What is Leasehold Property?
A leasehold property entitles you the right of buying it for a specific lease period. In Abu Dhabi, the lease period for such a property is 25 years and can be extended up to 99 years. However, you should note that you will only have the ownership of the building and not of the land where it is situated.
Who Can Buy Leasehold Properties?
Expatriates can buy leasehold properties based on signing the lease contract for a specific period. Once the contract ends, it can be renewed. Buying a leasehold property for a specific period is considered ideal if you are not sure about a long-term stay in the UAE.
Key Benefits of Leasehold Properties
More Affordable Initial Investment
You can see that getting leasehold properties in Abu Dhabi is more affordable, and this is what makes it a favourable option for investors.
Less Maintenance Responsibilities
Being a leasehold property owner, one of the biggest advantages is that you don’t have to be concerned about the maintenance works. All the major repair works will be undertaken by the main property owner.
Long Lease Periods Provide Stability
Signing contracts for lease periods is considered more stable for both the lessor and lessee. The agreements made for extended periods will be well honoured by both parties.
Contract Renewal Option
One of the best things about getting leasehold properties is that you can always renew your contract after completing the time mentioned in the lease agreement.
Potential Access to Well-Located Areas at a Lower Cost
Unlike having the ownership of freehold properties, which can be more expensive, getting a leasehold property provides you with quick access to all the prime destinations at a lower cost.
Concerns Regarding Leasehold Properties
Limited Control Over Property
You will only have full ownership of the building and not the land where it is situated, which limits your control over the entire property. Besides that, once the lease agreement expires, the ownership is claimed back by the freeholder.
Restrictions On Renovation
To make any considerable change or renovation to the structure of the building, you need to get the approval from the main owner of the property.
Uncertainty Regarding the Rental Costs
There are chances for the leaseholders to come across uncertainties, especially during the renewal period of the lease contract. The extended agreements can come with higher rental expenses and additional costs, which could be challenging.
Residency Visa Not Required
A valid passport is more important than having a residency visa when it comes to the purchase.
Key Differences Between Freehold & Leasehold
| Feature | Freehold Property | Leasehold Property |
|---|---|---|
| Long-Term Security | Permanent ownership | Gets reverted to the freeholder once the lease period expires |
| Repairs and Modifications | Total control | Requires approval of the freeholder |
| Visa Benefits | Eligible for residence visas and Golden Visa (Investors with investments of AED 2M+) | Not eligible for any property-related visas |
| Who Can Buy? | Expats and UAE nationals in the designated areas | Expats and UAE nationals |
| Costs | Higher purchase price. Complete asset ownership | Lower upfront costs. (Lease fees may apply) |
| Ownership | Complete ownership of the building | Lease agreement (up to 99 years) |
Frequently Asked Questions
- Can expatriates purchase freehold property in Abu Dhabi?
Yes, but in designated areas approved by the government specifically for foreign ownership.
- What happens after the expiry of a leasehold agreement?
The ownership is returned to the freeholder if it is not renewed with new terms.
- Do freehold property owners need to pay additional charges?
Yes, based on the specific community regulations where they reside, freehold property owners need to pay the maintenance fees, utility bills, and associated service charges.
- Is freehold ownership worth the investment?
Yes, freehold ownership is considered worth the investment as it grants higher resale value, more options for resale, and gives complete ownership.
- Which is the finest option, freehold or leasehold?
It depends on the time you intend to stay and your personal goals. Freehold is the best choice when you prefer long-term ownership, want complete control of the property, and enjoy maximum investment potential.
Conclusion
Be it for buying a freehold or leasehold property in Abu Dhabi, the essential facets that you need to consider are your personal goals, priorities, and the budget at hand. It is imperative to be well-versed regarding the major differences and advantages of the two options. It will also be more resourceful and safer when you touch base with experienced professionals in the vast UAE real estate market. Contact Sixs Real Estate now, and get ready to make the most profitable investment of your life.
