In Abu Dhabi, there are three main types of land ownership: free ownership, Usufruct, and Musataha. This article is about Musataha in detail and covers its different features, conditions, and benefits.
This is to give you full visibility about it and answer all your questions
- Musataha Contract
- Reason Behind Introducing the Musataha Agreement
- Benefits of the Musataha Agreement
- What Does This Mean for Expats?
- Difference Between the Long Lease Contract and Musataha Agreement
- Swapping Your Long Lease Contract for a Musataha Agreement
- Conditions for Signing a Musataha Contract
- Musataha Agreement Cost
- Paying the Musataha Fees
1. What Is the Musataha Contract?
A Musataha contract is one of the types of land ownership that enables its holder to rent a piece of government-owned land.
Besides, it gives the property developer or an investor the right to build or plant on the land for a period of 10 to 50 years.
2. What Is the Reason Behind Introducing the Musataha Agreement?
The Musataha concept was introduced across the UAE to support and encourage investors to embark on real estate projects that are on more stable and safer grounds.
3. What Are the Benefits of the Musataha Agreement?
A Musataha contract typically provides the holder greater rights, flexibility, and reassurance. This is particularly beneficial for those who wish to undertake long-term and sizeable real estate development projects.
Under a Musataha contract, the landowner grants the property developer or investor the right to
- Construct a building
- Alter the property
- Invest in, mortgage, lease, sell, or purchase a plot of land belonging to a third party for a specified term (not longer than 50 years).
Once the period is up, the right is renewable once by mutual consent of the parties for a further period of up to 50 years.
4. What Does This Mean for Expats?
Foreign nationals’ property ownership laws differ from one emirate to another.
A standard form of the Musataha agreement has been introduced for use within Abu Dhabi for a government-owned property.
UAE nationals can only hold a Musataha contract throughout the UAE. Still, they may only be held by expats (and companies owned by them) in designated Investment Areas without the right of ownership of land.
They, again, can be no longer than a 50-year renewable term.
5. What Is the Difference Between the Long Lease Contract and the Musataha Agreement?
Most land contracts in Abu Dhabi are long-lease, but there are key differences between the two, which are worth considering as Musataha contracts do have some benefits.
| Long Lease Contract | Musataha Agreement |
| The holder has no ownership rights | – The holder has the legal right to make permanent improvements to the land – Retain the ownership of those improvements during its term. |
| The lessee typically pays rent to the landowner. | The developer or investor may share profits with the landowner instead of paying rent. |
| The agreements include provisions for early termination or renewal | Musataha contracts can be more challenging to terminate early and may not be renewable |
| This doesn’t apply to this type | With a Musataha contract, a holder can mortgage the land and receive a loan from the bank. |
| This doesn’t apply to this type | The holder can be bequeathed to the holder’s dependents in the event of death. |
Moreover, with Musataha, a holder (or a landowner, for that matter) can also apply for a waiver (at DARI they offer a quick, efficient, and safe service for this). A waiver of Musataha, in essence, hands back control to the landowner and terminates the contract before its expiration date.
This can happen for various reasons; for instance, the developer may be unable to continue with the project for certain reasons.
However, the original contract will likely have financial provisions in place, so compensation or penalties may have to be paid, depending on the reasons for the termination.
6. Can You Swap Your Long Lease Contract for a Musataha Agreement?
Long lease contract holders can seek to convert their agreement into a Musataha contract; it’s a service that DARI offers too. Such a transfer would likely need the renegotiation of the terms regarding contract duration and rent payments.
Besides, both parties have to consent to these clauses.
7. What Are the Conditions for Signing a Musataha Contract?
The Abu Dhabi government is the owner of the land. As with most contracts, it will need to identify the
- Parties involved
- The description of what is being contracted (in this case, land)
- The terms
- Duration
- Development rights
- Termination clauses.
You should go for legal advice to understand your rights and obligations; also, keep in mind that only Emirati nationals are eligible to do Musataha with the Abu Dhabi government.
8. How Much Does Musataha Agreement Cost?
The Musataha contract value is calculated by multiplying the yearly rent (land area in square feet x price per square feet) by the number of years of the agreement.
The price per square foot differs from one area in Abu Dhabi to another. For example
- Abu Dhabi City: 0.75 Dhs/SqFt
- Al Dhafra: 0.25 Dhs/SqFt.
The fee payable for the Musataha agreement in Abu Dhabi depends on land use:
- 1% of the total annual rent for industrial use
- 2% for other uses
The fee is always paid by the owner of the Musataha right (the Musateh).
9. How Can You Pay the Musataha Fees?
There is a service called “Rent Payment” on DARI. Through this service, the holder can pay their rent, whether they were accumulated dues or paying in advance.
Bio
Dari is Abu Dhabi’s trusted digital ecosystem for real estate. Backed by the Department of Municipalities and Transport (DMT) and developed by Advanced Real Estate Services (ADRES), Dari provides a one-stop solution for all real estate requirements in Abu Dhabi. Dari re-engineered the existing system and introduced new services to offer real estate personas an effortless experience in handling any real estate matters. Dari provides an integrated platform that connects all real estate stakeholders.
It incorporates property sale, purchase, and lease on the same system, includes a directory that provides access to licensed real estate professionals, and builds a real estate dashboard for the public for the first time to help investors explore future investment opportunities in the real estate market in Abu Dhabi. Dari supports the Abu Dhabi government’s vision of enhancing the quality of life in the emirate. It also aims to position Abu Dhabi as a global hub for investors, supporting Abu Dhabi Economic Vision 2030.
