Investments in some property in Abu Dhabi can earn returns of more than 7 per cent on your money net (look at net returns and not gross). There are few bank accounts or funds in the world that will give you that kind of return. There is also the potential to leverage your investment for increased returns from capital appreciation.
The law in Abu Dhabi is very landlord-friendly. In brief there is no difficulty in evicting tenants once their lease term has finished, you just need to give them two months’ notice before the end of that lease. You do not need a reason not to renew the lease.
Property has gone through its boom and bust cycles like every other investment, but it remains a stable asset. Property prices and rents have recovered well since the global slowdown and Abu Dhabi’s significant income from oil and large capital reserves mean that continued growth prospects are good. As well as that, the UAE government has learnt its lessons from 2008 and is active (by use of loan to value rules and tinkering with registration fees) in reducing the chance of future bubbles.
Property prices and returns in Abu Dhabi are linked to population and supply. At the moment the government has a large infrastructure expansion plan in place (Etihad Rail, the Midfield Terminal, Etihad Airways, the Louvre and Guggenheim etc) called the 2020 Plan, which is bringing people to the UAE by creating jobs. Set against that there is little property supply in the pipeline. Only another 18,000 units are due to come online in 2015 and 2016 (an increase of just 2.8 per cent per year) according to JLL, and Colliers believes there is a current housing shortfall of more than 50,000 units.
Rent in Abu Dhabi is paid upfront for the year, usually in one or two cheques (the second is post-dated). This affords significant security of income and some safeguard against tenants absconding.
Low sophistication of current landlords