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UAE Freezones Biz News Updates
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Attention expats! You can own land in UAE
The main
areas in Dubai, where freehold plots are currently available for sale, are
Dubai South, Business Bay and Pearl Jumeirah.
Khaleej Times looks at the areas where residents can buy plots across
the emirates
Gone are the days when expats had to stifle their dreams to own a property
in the UAE as wide options are available today for them to invest in plots
and apartments across the seven emirates.
Dubai remains a popular choice for majority of expatriates who consider the
UAE as their second home and prefer to have an apartment in the emirate. Abu
Dhabi, Sharjah and other emirates have also opened up their land parcels to
expatriates, allowing them to invest either on lease or freehold terms.
The Dubai government passed a decree this week allowing expatriates to
purchase freehold plots in Dubai South, formerly called Dubai World Central.
This will open up land parcels to private developers and investors who can
capitalise on the anticipated development boom in the run-up to Expo 2020.
For the uninitiated, there are four types of land ownership in the UAE - GCC
land, available freehold for UAE nationals only; GCC land for lease, which
is open to all nationalities and can range in duration from one year to 99
years; freehold land for all nationalities; and freezone land for lease,
which is open to all nationalities and can range in duration from one to 99
years and is renewable.
Plots are available for sale in both freehold and leasehold areas in Dubai.
In leasehold communities (designated areas), there will be a tenure attached
to the plot, whereas in freehold areas, the owner will own the plot
outright. For leasehold plots, after the period expires, the owner has the
right for renewal at a certain price.
Freehold plots in Dubai
The main areas in Dubai, where freehold plots are available for sale today,
are Dubai South, Business Bay and Pearl Jumeirah and in secondary locations
such as Al Furjan, Dubai Sports City and Jumeirah Village South. This
excludes older areas such as Bur Dubai, Karama and Qusais.
Buyers usually purchase plots from the master developer or on the secondary
market. But property watchers say plots are scarce to come by in the heart
of Dubai.
The plots in higher demand are in the more established and mature areas of
Dubai, such as Dubai Marina, Downtown and Jumeirah Lakes Towers [JLT], which
are currently quite scarce. However, there is more of a selection in
secondary locations such as Al Furjan, Dubai Sports City and Jumeirah
Village South, says Edward Macura, partner, Core, UAE associate of Savills.
In the same vein, Hussain Alladin, head of research, GCP Properties, says
Plots in developed high-end communities such as Emirates Hills and Dubai
Marina would be scarce and not easily obtained.
Plot prices vary
Robust demand also has a direct bearing on prices. However, plot prices can
have a huge variance depending on location, zoning and size.
The average price for plots in Dubai can range from Dh60 per sq ft to Dh100
per sq ft in secondary locations such as Dubai Silicon Oasis and Dubai
Sports City, informs Macura. It will rise to Dh250 per square foot to Dh350
per square foot in the more mature, prime locations of Dubai, such as
Downtown Dubai and Dubai Marina.
Adds Alladin In frontier communities such as Majan and Arjan, plot prices
for residential buildings will be in the range of Dh90 to Dh130 per square
foot, depending on the plot size and number of storeys. In other high-end
upcoming communities, such as the Dubai Hills Estate, villa plots will vary
from Dh380 to Dh450 per square foot, depending on the location and built-up
area.
Historically, land has proven to be a more lucrative asset class compared to
ready residential units. However, the value of a plot is dictated by the end
product that is built.
In Dubai, land prices have outperformed ready unit prices by a factor of two
since 2003. These superior growth rates are not only seen in Dubai, but as
well in other metropolitan cities such as Beijing and Calgary, explains
GCP's Alladin.
Appreciation of land value depends on the area you purchase in and the price
you buy at.
If you purchase prior to the infrastructure being complete and neighbouring
plots are still under construction, you would expect a more attractive price
compared with when the area's infrastructure is completed and the
neighbourhood has matured, says Macura.
Traditionally, GCC investors have purchased plots to build high-rise towers
in Dubai.
We are now seeing a number of expats also entering the market. Like we have
seen in Emirates Hills and sections in Jumeirah, the buyer profile is
varied. However, we see more traction from high net worth investor Indians,
Pakistanis and other Arabs [particularly Lebanese], in addition to GCC
investors and western European investors. Russian investor interest has
dwindled in the past few years, informs Core's Macura.
Purchasers could be owner occupiers looking to build commercial or
residential accommodation for themselves or individuals andor development
companies looking to sell to third parties.
Luxury areas have higher rate of plot utilisation compared to mid-income
developments.
According to Alladin For example, Dubai Marina has a plot utilisation rate
of higher than 90 per cent compared to Dubai Silicon Oasis which is at 20
per cent. Using the metric of profitability, we can infer that developers
would be more incentivised to build premium projects in order to maximise
returns.
Abu Dhabi offers
A significant number of plots of land are available for sale to construct
buildings on Abu Dhabi's Al Reem and Al Saadiyat Island investment zones,
where foreigners are allowed to own real estate, says a property adviser.
There are significant plots of land available to build mid to high-rise
towers on Al Reem Island and Saaidiyat Island, says Ben Crompton, managing
partner of Abu Dhabi-based property firm Crompton Partners Estate Agents.
There are not many plots of land available for sale anywhere in Abu Dhabi
investment zones, where foreigners are allowed to own property, he said.
The Emirate has 11 investment zones, of them seven have been designated as
residential and commercial zones where foreigners can own real estate. These
zones include Saadiyat Island, which is being developed by Tourism
Development and Investment Company or TDIC, owned by the Abu Dhabi
government; Reem Island; Raha Beach; Al Reef; Yas Island; Hydra Village and
Al Ghadeer on the Abu Dhabi-Dubai border.
There are four industrial and one financial zone. The Khalifa Industrial
Zone or KIZAD is the biggest industrial zone and is part of Khalida Port.
Masdar City is a free zone where clean tech business can only be carried
out, while the Abu Dhabi Airport Free Zone offers opportunities for variety
of businesses.
Al Maryah Island is the international financial centre where foreigners can
own up to 100 per cent of the businesses.
To a question on whether a foreigner can own a plot of land, the real estate
advisor said Everything that an expat buys is built on a 99-year lease. If
you are leasing pure land that will be on a 50-years lease, renewable for
another 50 years.
There are not many options to buy pure lands, its only built assets in Abu
Dhabi, he said. You can buy a plot of land to build a tower anywhere in
those investment zones but you build your own villa on Al Saadiyat Island
only, he said.
Most populated investment zone is Al Reem Island, which is located 500
meters off the coast of downtown Abu Dhabi and spread over 114 hectors.
The Abu Dhabi Urban Planning Council last year unveiled its new master plan
for Al Reem Island, which will have 10,000 hotel rooms, 11 schools, a light
rail transit system and will house 210,000 residents on completion.
In April, on the occasion of Cityscape Abu Dhabi, Mubadala Development
Company, which owns Al Maryah Island, offered land plots for sale to build
commercial towers.
Sharjah, RAK and others
Like Dubai, Northern Emirates have also started to offer freehold or 99-year
lease properties to non-GCC nationals in the UAE.
Ras Al Khaimah (RAK) was the first Northern Emirate to opene up the real
estate market, followed by Ajman and Sharjah, which relaxed rules two years
ago.
The RAK government setup its own public joint stock property development
company, RAK Properties, which received freehold rights for all its
properties in November 2005. It's listed on the Abu Dhabi stock market. RAK
Properties' developments include Mina Al Arab, Julphar Towers, RAK Tower,
and Julphar Residence.
Ajman has a significant amount of freehold units in the emirate. Its major
projects include City Towers Ajman, Corniche Tower, Al Naeemiya Towers, Al
Khor Towers, and Al Rashidiya Tower among others.
The Sharjah real estate market has been in the limelight since the emirate
opened up the market for non-GCC nationals in late 2014. A couple of big
projects have since been announced.
Last year, Sharjah Waterfront City was announced. The new waterfront city is
being built at a cost of between Dh18.5 billion and Dh20 billion that will
accommodate 200,000 people upon the completion of 10 natural islands, which
will be connected by bridges and canals. Comprising 10 islands, Sharjah
Waterfront City will be spread across 36km of coastal land on the
northeastern coast of the emirate.
The city will have 200 mixed-use towers, 95 apartment buildings, offering
affordable luxury apartments, multi-level hotels and service apartments,
over 1,100 water-front and park-side villas, marine clubs, a shopping mall,
two entertainment centers and mosques, schools, banks, stores, coffee shops
and restaurants.
Another big development in Sharjah is Tilal City, which was announced two
years ago. Its developer Tilal Properties, has recently announced that it is
making excellent progress with its Dh2.4 billion Tilal City development in
Sharjah.
Al Thuriah, another developer in Sharjah, is building six towers next to
Sahara Centre mall. The developer has sold five towers and has started
booking for sixth tower. Its completion is expected in September 2019.
June 24, 2016
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Courtesy Khaleej Times
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