Abu Dhabi is one of the most investor-friendly real estate markets in the UAE. Its tax benefits, stable property laws, and high rental yields make it a prime destination for buyers and investors. However, understanding the associated fees, taxes, and service charges is essential. This guide covers everything you need to know about property costs in Abu Dhabi for 2025.
Unlike many global markets, Abu Dhabi does not impose an annual property tax on homeowners. This makes it an attractive option for expatriates and investors. However, there are some transaction-related fees that property owners should consider.
Once you purchase a property in Abu Dhabi, there is no need to pay an annual tax on its value. This is a major advantage compared to other countries where property taxes can be significant.
While there is no direct property tax, a municipality fee helps cover infrastructure and city maintenance services:
For Tenants: A 3% fee on the annual rent, added to their monthly utility bill.
For Owners: Freehold property owners typically do not pay this fee. However, leasehold property owners may be subject to it, depending on their community agreement.
When a property is bought or sold, a 2% transfer fee is charged by the Abu Dhabi Municipality. This fee is usually paid by the buyer, but sellers may agree to share the cost.
For mortgage buyers: An additional 0.1% fee applies for mortgage registration.
Since 2018, the UAE has applied a 5% VAT to certain real estate transactions:
VAT applies to:
Commercial property sales (e.g., offices, retail spaces, warehouses).
Property management services, including brokerage and legal fees.
VAT does NOT apply to:
Residential property sales or rentals.
First-time sales of new residential properties (zero-rated for VAT).
Abu Dhabi does not impose capital gains tax on property sales. Investors keep 100% of their profit when selling a property.
If you own a property in a residential community, you must pay service charges for shared facility maintenance. These charges vary based on property type and location.
These charges typically include:
Common area maintenance (parks, pools, gyms, walkways, etc.).
Security, cleaning, and waste management services.
Infrastructure repairs and elevator maintenance.
Utility costs for shared spaces (corridors, lighting, water, and air conditioning in common areas).
Service charges in Abu Dhabi are calculated per square foot and vary depending on the property’s category:
Standard properties: AED 10-15 per sq. ft. per year.
Luxury developments: AED 20-25 per sq. ft. per year.
Ultra-luxury communities: AED 30+ per sq. ft. per year.
For example, a 1,500 sq. ft. apartment in a standard community with a service charge of AED 12 per sq. ft. results in an annual service charge of AED 18,000.
In 2023, Abu Dhabi reduced service charges by 6% for owners in jointly owned properties, making investments more cost-effective.
Using a real estate agent to buy or sell a property incurs a 2% commission fee on the property’s sale price. This fee is subject to 5% VAT.
Utility costs (electricity, water, district cooling) are charged separately.
Owners should budget for maintenance expenses such as AC servicing, plumbing, and general repairs.
Mortgage registration fee: 0.1% of the loan amount.
Bank processing fees: Up to 1% of the loan amount.
Property inheritance planning: Some expats draft a UAE Will for asset protection, which incurs legal fees.
✅ No annual property tax, making Abu Dhabi a tax-friendly investment market.
✅ Municipality fees apply (3% of rent for tenants).
✅ Real estate transfer fee of 2% applies to property sales.
✅ Service charges vary (AED 10-30+ per sq. ft. depending on property type).
✅ 5% VAT applies to commercial property transactions but not to residential sales/rentals.
✅ No capital gains tax, so investors retain 100% of their profit.
Understanding property ownership costs in Abu Dhabi is essential for making informed investment decisions. While the absence of annual property tax is a major advantage, additional costs like municipality fees, service charges, and transaction fees should be factored into your budget.
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