Inclusive Guide to Musataha Agreement in Abu Dhabi: Everything You Need to Know

Musataha Agreement in Abu Dhabi, where we provide you with all the information you need to understand this type of land ownership. Whether you're an investor, property developer, or simply curious about the subject, this guide will cover the different features, conditions, and benefits of the Musataha Agreement in Abu Dhabi.

Understanding the Musataha Contract:

The Musataha contract is a specific type of land ownership that grants the holder the right to rent a piece of government-owned land in Abu Dhabi. With this contract, property developers and investors can utilize the land to build structures or engage in agricultural activities for a period of 10 to 50 years. It offers a unique opportunity for long-term and substantial real estate development projects.

The Reason Behind Introducing the Musataha Agreement:

The introduction of the Musataha concept across the UAE was aimed at supporting and encouraging investors to embark on real estate projects that are built on more stable and secure foundations. This agreement provides a favorable environment for real estate development, fostering economic growth and attracting foreign investment to the region.

Benefits of the Musataha Agreement:

A Musataha contract offers the holder several advantages, including greater rights, flexibility, and reassurance. It is particularly beneficial for those undertaking long-term and significant real estate development projects. Some of the key benefits of the Musataha Agreement include:

• Construction and Alteration Rights: Under a Musataha contract, the landowner grants the property developer or investor the right to construct buildings and make alterations to the property.
• Investment Opportunities: Musataha holders have the freedom to invest in, mortgage, lease, sell, or purchase a plot of land belonging to a third party for a specified term, not exceeding 50 years.
• Renewable Agreement: Once the initial period is over, the Musataha Agreement can be renewed by mutual consent of the parties involved for an additional period of up to 50 years.

Musataha Agreement for Expats:

Foreign nationals interested in property ownership in Abu Dhabi should be aware that property ownership laws vary between emirates. While UAE nationals can hold Musataha contracts throughout the country, expats (and companies owned by them) can only hold these contracts in designated Investment Areas without the right to own land. The Musataha Agreement for expats is subject to a renewable term of up to 50 years.

Differentiating Between Long Lease Contracts and Musataha Agreements:

In Abu Dhabi, most land contracts fall under the category of long lease contracts. However, there are significant differences between long lease contracts and Musataha agreements that are worth considering. Some of the key distinctions include:

Long Lease Contract:

• The holder has no ownership rights over the land.
• The holder has the legal right to make permanent improvements to the land and retain ownership of those improvements during the term of the contract..
• Rent is typically paid to the landowner..
• The agreements include provisions for early termination or renewal..

Musataha Agreement:

• The holder has the right to make permanent improvements to the land.
• Instead of paying rent, the developer or investor may share profits with the landowner.
• Musataha contracts can be more challenging to terminate early and may not be renewable.
• The holder can mortgage the land and receive a loan from a bank.
• In the event of the holder's death, the Musataha contract can be bequeathed to the holder's dependents.
• The Musataha Agreement allows for the possibility of applying for a waiver, which terminates the contract before its expiration date.

Converting a Long Lease Contract to a Musataha Agreement:

If you currently hold a long lease contract and wish to convert it to a Musataha Agreement, it is possible to do so through a service provided by DARI. However, such a transfer would require renegotiating the terms of the contract, including the duration and rent payments. Both parties involved must consent to these changes.

Conditions for Signing a Musataha Contract:

When signing a Musataha contract, several conditions must be considered. As with any contract, the Abu Dhabi government, as the owner of the land, will need to identify the following:

• Parties Involved: The contract must clearly state the parties involved, including the landowner and the holder of the Musataha right.
• Description of the Contracted Property: A detailed description of the land being contracted must be provided.
• Terms and Duration: The contract should outline the specific terms and duration of the Musataha Agreement.
• Development Rights: The rights granted to the holder, such as construction, alteration, and investment opportunities, should be clearly stated.
• Termination Clauses: The contract should include provisions for the termination of the agreement, including conditions and penalties, if applicable.

It is advisable to seek legal advice to fully understand your rights and obligations when entering into a Musataha Agreement. Additionally, please note that Musataha contracts with the Abu Dhabi government are only available to Emirati nationals.

Understanding the Cost of Musataha Agreement:

The cost of a Musataha agreement is calculated by multiplying the yearly rent (land area in square feet multiplied by the price per square foot) by the number of years specified in the agreement. The price per square foot varies depending on the location in Abu Dhabi:

• 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 the land's designated use:

• Industrial use: 1% of the total annual rent
• Other uses: 2% of the total annual rent

It is important to note that the fee is always paid by the owner of the Musataha right (the Musateh).

Payment of Musataha Fees:

DARI provides a convenient service called "Rent Payment" that allows Musataha contract holders to pay their rent, whether it is accumulated dues or advance payments. This service simplifies the rent payment process and ensures a seamless experience for Musataha holders.

We hope this inclusive guide has provided you with a comprehensive understanding of the Musataha Agreement in Abu Dhabi. It is a significant aspect of land ownership and real estate development in the region. By offering greater rights, flexibility, and investment opportunities, the Musataha Agreement encourages long-term and substantial projects that contribute to the growth and development of Abu Dhabi's real estate sector.