Abu Dhabi Islands: 6 Projects Offering Capital Gains and Tax Relief in 2025

REAL ESTATE2 months ago

Abu Dhabi’s AED 100B real estate market in 2024 (18% YoY growth, 15,000+ transactions in H1 2024) positions its islands Saadiyat, Yas, Al Reem, Jubail, Ramhan, and Al Maryah as prime investment hubs for capital gains and tax relief.

These six projects offer apartments, villas, and commercial spaces (AED 600K–15M) with 6–9% ROI and 8–12% appreciation by 2026, driven by Abu Dhabi Vision 2030, infrastructure (Abu Dhabi Metro 2026, Zayed International Airport), and tourism (2M visitors in 2024).

Freehold laws since 2019 allow 100% foreign ownership, attracting expats (60% of 1.5M population, mainly India, UK, Russia). Tax policies include zero personal income, capital gains, or property taxes, with 2% Real Estate Transaction Tax (RETT) exemptions for off-plan purchases (saving AED 12K–300K). A 9% corporate tax on mainland profits above AED 375K applies, but Abu Dhabi Global Market (ADGM) offers 0% corporate tax for Qualified Free Zone Persons (QFZP).

Small Business Relief (SBR) exempts SMEs with revenues below AED 3M until 2026. The Domestic Minimum Top-up Tax (DMTT) at 15% targets multinationals with revenues over €750M, leaving most investors unaffected. This guide analyzes these projects, detailing rental yields, freehold benefits, tax strategies, sustainability features, and investment potential, supported by 2024–2025 data.

1. Saadiyat Island

Project Details: A cultural hub hosting Louvre Abu Dhabi, offering 4–6 bedroom mangrove villas and apartments in Saadiyat Lagoons and Grove (AED 2M–10M, 1,500–5,000 sqft) with smart tech, beach access, and retail. Handover Q2 2027. Average price: AED 2,000–2,500 psf. 20 minutes to Zayed International Airport.
Rental Yields: 6–8% (apartments: AED 80K–200K/year; villas: AED 150K–400K/year), with 8% rental growth in 2025 due to 94% occupancy and cultural tourism. Short-term rentals yield 7–9%.
Freehold Benefits: 100% freehold ownership via Abu Dhabi Real Estate Centre (ADREC) since 2019. Enables global resale and inheritance.
Tax Incentives and Planning: Zero personal income, capital gains, or property taxes. 2% RETT exemption for off-plan purchases (AED 40K–200K savings). 5% VAT exemption on residential sales; recoverable for off-plan (AED 10K–50K/year). ADGM offers 0% corporate tax for QFZP entities. SBR exempts SMEs (revenue <AED 3M) from 9% corporate tax until 2026. De-enveloping saves 9% on rental profits (AED 7.2K–36K/year). ADGM SPVs or Family Foundations ensure tax transparency. Double tax treaties with 138 countries (e.g., India, UK) minimize foreign tax liabilities.
Sustainability Features: LEED Gold-certified, solar-powered systems, mangrove conservation, aligning with Abu Dhabi Economic Vision 2030 and SDG 11.
Investment Potential: 8–12% appreciation by 2026 (e.g., AED 2M villa to AED 2.16M–2.24M). 94% occupancy due to cultural appeal and Golden Visa eligibility (AED 2M+). Tax savings (AED 40K–250K) via ADGM attract Indian and UK investors.

2. Yas Island

Project Details: An entertainment hub with Ferrari World and Yas Marina Circuit, offering branded residences and apartments in Yas Bay and SeaWorld Residences (AED 1M–8M, 600–4,000 sqft) with smart tech and waterfront views. Handover Q4 2025. Average price: AED 1,800–2,500 psf. 15 minutes to Zayed International Airport.
Rental Yields: 6–9% (apartments: AED 60K–200K/year; villas: AED 150K–350K/year), with 8% rental growth in 2025 due to 90% occupancy and tourism (1M visitors in 2024). Short-term rentals yield 7–10%.
Freehold Benefits: 100% freehold ownership via ADREC. Enables global resale and inheritance.
Tax Incentives and Planning: Zero personal income, capital gains, or property taxes. 2% RETT exemption for off-plan purchases (AED 20K–160K savings). 5% VAT exemption on residential sales; recoverable for off-plan (AED 5K–40K/year). ADGM offers 0% corporate tax for QFZP entities. SBR exempts SMEs (revenue <AED 3M) from 9% corporate tax until 2026. De-enveloping saves 9% on rental profits (AED 5.4K–31.5K/year). ADGM SPVs ensure tax transparency. Double tax treaties enhance tax efficiency.
Sustainability Features: Energy-efficient designs, smart systems, aligning with Abu Dhabi Economic Vision 2030 and SDG 11.
Investment Potential: 8–10% appreciation by 2026 (e.g., AED 1M apartment to AED 1.08M–1.10M). 90% occupancy due to entertainment appeal and Golden Visa eligibility (AED 2M+). Tax savings (AED 20K–200K) via ADGM attract Russian and UK investors.

3. Al Reem Island

Project Details: A mixed-use hub with Reem Mall, offering apartments and penthouses in Reem Hills and Reflections (AED 600K–5M, 400–3,000 sqft) with smart tech, retail, and sea views. Handover Q3 2025. Average price: AED 1,200–2,000 psf. 10 minutes to Abu Dhabi city center.
Rental Yields: 7–9% (apartments: AED 40K–150K/year), with 8% rental growth in 2025 due to 85% occupancy and demand from professionals. Short-term rentals yield 8–10%.
Freehold Benefits: 100% freehold ownership via ADREC. Supports global resale and inheritance.
Tax Incentives and Planning: Zero personal income, capital gains, or property taxes. 2% RETT exemption for off-plan purchases (AED 12K–100K savings). 5% VAT exemption on residential sales; recoverable for off-plan (AED 3K–25K/year). ADGM offers 0% corporate tax for QFZP entities. SBR exempts SMEs (revenue <AED 3M) from 9% corporate tax until 2026. De-enveloping saves 9% on rental profits (AED 3.6K–13.5K/year). ADGM SPVs ensure tax transparency. Double tax treaties minimize foreign tax liabilities.
Sustainability Features: Green building practices, smart home tech, aligning with Abu Dhabi Economic Vision 2030 and SDG 11.
Investment Potential: 8–10% appreciation by 2026 (e.g., AED 600K apartment to AED 648K–660K). 85% occupancy due to urban connectivity and investor visa eligibility (AED 750K+). Tax savings (AED 12K–125K) via ADGM attract Indian and Syrian investors.

4. Jubail Island

Project Details: A luxury residential community offering villas and townhouses in Jubail Terraces (AED 2M–10M, 2,000–5,000 sqft) with mangrove views, smart tech, and wellness amenities. Handover Q1 2026. Average price: AED 1,500–2,200 psf. 25 minutes to Zayed International Airport.
Rental Yields: 6–8% (villas: AED 150K–400K/year), with 8% rental growth in 2025 due to 80% occupancy and eco-luxury appeal. Short-term rentals yield 7–9%.
Freehold Benefits: 100% freehold ownership via ADREC. Enables global resale and inheritance.
Tax Incentives and Planning: Zero personal income, capital gains, or property taxes. 2% RETT exemption for off-plan purchases (AED 40K–200K savings). 5% VAT exemption on residential sales; recoverable for off-plan (AED 10K–50K/year). ADGM offers 0% corporate tax for QFZP entities. SBR exempts SMEs (revenue <AED 3M) from 9% corporate tax until 2026. De-enveloping saves 9% on rental profits (AED 13.5K–36K/year). ADGM SPVs ensure tax transparency. Double tax treaties enhance tax efficiency.
Sustainability Features: Mangrove preservation, LEED-certified designs, aligning with Abu Dhabi Economic Vision 2030 and SDG 11.
Investment Potential: 8–12% appreciation by 2026 (e.g., AED 2M villa to AED 2.16M–2.24M). 80% occupancy due to exclusivity and Golden Visa eligibility (AED 2M+). Tax savings (AED 40K–250K) via ADGM attract UK and Indian investors.

5. Ramhan Island

Project Details: A premium waterfront project by Eagle Hills, offering villas and townhouses (AED 3M–15M, 2,500–6,000 sqft) with private beaches, smart tech, and yacht facilities. Handover Q2 2026. Average price: AED 2,000–3,000 psf. 30 minutes to Abu Dhabi city center.
Rental Yields: 6–8% (villas: AED 200K–500K/year), with 8% rental growth in 2025 due to 80% occupancy and luxury demand. Short-term rentals yield 7–9%.
Freehold Benefits: 100% freehold ownership via ADREC. Enables global resale and inheritance.
Tax Incentives and Planning: Zero personal income, capital gains, or property taxes. 2% RETT exemption for off-plan purchases (AED 60K–300K savings). 5% VAT exemption on residential sales; recoverable for off-plan (AED 15K–75K/year). ADGM offers 0% corporate tax for QFZP entities. SBR exempts SMEs (revenue <AED 3M) from 9% corporate tax until 2026. De-enveloping saves 9% on rental profits (AED 18K–45K/year). ADGM SPVs ensure tax transparency. Double tax treaties minimize foreign tax liabilities.
Sustainability Features: Eco-friendly designs, water conservation systems, aligning with Abu Dhabi Economic Vision 2030 and SDG 11.
Investment Potential: 8–12% appreciation by 2026 (e.g., AED 3M villa to AED 3.24M–3.36M). 80% occupancy due to waterfront exclusivity and Golden Visa eligibility (AED 2M+). Tax savings (AED 60K–375K) via ADGM attract Russian and Chinese investors.

6. Al Maryah Island

Project Details: A financial hub with Galleria Al Maryah, offering luxury apartments and commercial spaces in Al Maryah Vista (AED 1M–6M, 500–2,500 sqft) with smart tech and business amenities. Handover Q4 2025. Average price: AED 1,800–2,500 psf. 10 minutes to Abu Dhabi city center.
Rental Yields: 6–8% (apartments: AED 60K–200K/year; commercial: AED 100K–300K/year), with 7% rental growth in 2025 due to 85% occupancy and corporate demand. Short-term rentals yield 7–9%.
Freehold Benefits: 100% freehold ownership via ADREC. Supports global resale and leasing.
Tax Incentives and Planning: Zero personal income, capital gains, or property taxes. 2% RETT exemption for off-plan purchases (AED 20K–120K savings). 5% VAT exemption on residential sales; recoverable for off-plan (AED 5K–30K/year). ADGM offers 0% corporate tax for QFZP entities. SBR exempts SMEs (revenue <AED 3M) from 9% corporate tax until 2026. De-enveloping saves 9% on rental profits (AED 5.4K–27K/year). ADGM SPVs ensure tax transparency. Double tax treaties enhance tax efficiency.
Sustainability Features: LEED-certified buildings, smart infrastructure, aligning with Abu Dhabi Economic Vision 2030 and SDG 11.
Investment Potential: 8–10% appreciation by 2026 (e.g., AED 1M apartment to AED 1.08M–1.10M). 85% occupancy due to business hub appeal and investor visa eligibility (AED 750K+). Tax savings (AED 20K–150K) via ADGM attract UK and Indian investors.

Market Trends and Outlook for 2025

Yields and Appreciation: Abu Dhabi’s island projects offer 6–9% ROI (7–10% for short-term rentals) and 8–12% appreciation, driven by AED 100B in 2024 transactions and 18% growth in H1 2024 (AED 1,200–3,000 psf). Rentals grew 7–8%, with 80–94% occupancy due to tourism (2M visitors) and expat demand (60% of population).
Tax Environment: Zero personal income, capital gains, and property taxes. 2% RETT exemptions (AED 12K–300K) save AED 12K–375K. 5% VAT exemption on residential sales; recoverable for off-plan (AED 3K–75K/year). 9% corporate tax on mainland profits above AED 375K; ADGM offers 0% corporate tax for QFZP. SBR exempts SMEs (revenue <AED 3M) until 2026. De-enveloping saves 9% on rental profits (AED 3.6K–45K/year). DMTT (15%) applies to MNEs with revenues over €750M. Double tax treaties with 138 countries enhance tax efficiency.
Infrastructure Impact: Abu Dhabi Metro (2026), Zayed International Airport upgrades, and AED 66B in 2024 projects boost values by 10–15%. Proximity to Louvre Abu Dhabi, Ferrari World, and Galleria Al Maryah drives rentals (AED 3,000–12,000/month).
Investor Drivers: Limited supply (5,000 units by 2026), investor visas (AED 750K+), and Golden Visa (AED 2M+) fuel 60% expat demand. Smart tech and sustainability (LEED, Estidama Pearl) align with Abu Dhabi Vision 2030.
Risks: Oversupply (5,000 units by 2026) and AML compliance costs (AED 5K–15K) pose a 5–8% correction risk in H2 2025. Mitigated by 80–94% absorption, ADREC escrow protections, and developer credibility (Aldar, Eagle Hills). Indian investors face FEMA/PMLA scrutiny for non-compliant payments (e.g., cryptocurrency), risking 120% tax penalties.
Regulatory Framework: ADREC ensures transparency with digital title deeds and escrow laws for off-plan sales (handover 2025–2027). Freehold zones allow inheritance with no estate tax; DIFC Wills Service Centre recommended for non-Muslims. AML compliance requires KYC and source-of-funds verification via authorized banking channels (LRS limit: $250,000/year).

Smart Tax Planning Strategies

Personal Ownership: Hold properties personally to avoid 9% corporate tax on rental income, saving AED 3.6K–45K/year via de-enveloping. Ideal for individual investors with rental revenues below AED 3M.
Free Zone Entities: Register entities in ADGM to benefit from 0% corporate tax for QFZP status, provided non-mainland revenue is <5% or AED 5M. Suitable for investors leasing to international tenants or managing portfolios.
SBR Utilization: SMEs with revenues below AED 3M can leverage SBR to avoid 9% corporate tax until 2026, maximizing returns for small-scale investors.
Double Tax Treaties: Leverage UAE’s 138 double tax treaties (e.g., India, UK, Russia) to claim deductions in residence countries, reducing foreign tax liabilities on rental income or capital gains.
VAT Recovery: Register with UAE FTA to recover 5% VAT on off-plan purchases (AED 3K–75K/year), enhancing cash flow for investors.
Compliance: Engage advisors like Savills (middleeast@savills.com) or Commitbiz (info@commitbiz.com) to ensure AML compliance and optimize tax structures. Use authorized banking channels to avoid FEMA/PMLA penalties for Indian investors.

Investment Strategy

Diversification: Invest in Al Reem Island (AED 600K–5M, 7–9% ROI) for affordability, Yas Island (AED 1M–8M, 6–9% ROI) or Al Maryah Island (AED 1M–6M, 6–8% ROI) for urban appeal, Saadiyat Island (AED 2M–10M, 6–8% ROI) or Jubail Island (AED 2M–10M, 6–8% ROI) for mid-range luxury, or Ramhan Island (AED 3M–15M, 6–8% ROI) for premium waterfront properties.
Entry Points: Off-plan units with 5–10% down payments or 1% monthly plans offer flexibility and RETT exemptions (AED 12K–300K). Early investment maximizes appreciation as infrastructure matures (e.g., Abu Dhabi Metro, tourism hubs).
Process: Verify freehold status via ADREC portals. Pay 2% RETT (unless exempt) and registration fees (AED 2K–4K). Use platforms like PropertyFinder.ae, Dxboffplan.com, or Tekce.com. Required documents: passport copy, proof of funds (via authorized banking channels for FEMA/PMLA compliance), no UAE visa needed. Documents must be translated into Arabic and legalized.

Conclusion

In 2025, Abu Dhabi’s six island projects Saadiyat, Yas, Al Reem, Jubail, Ramhan, and Al Maryah—offer 6–9% ROI and 8–12% appreciation, backed by AED 100B in 2024 transactions and 18% growth in H1 2024. Freehold laws since 2019 enable global ownership, while tax policies zero personal income, capital gains, and property taxes, 2% RETT exemptions (AED 12K–300K), and 5% VAT recovery (AED 3K–75K/year) maximize returns.

ADGM offers 0% corporate tax for QFZP entities, and SBR exempts SMEs (revenue <AED 3M) until 2026. De-enveloping saves 9% on rental profits (AED 3.6K–45K/year). Sustainability features (LEED, smart tech) align with Abu Dhabi Vision 2030.

Despite a 5–8% correction risk from oversupply, 80–94% absorption, ADREC escrow protections, and infrastructure (Metro, airport, tourism hubs) ensure stability. With prices from AED 600K–15M and visa incentives, these projects attract Indian, UK, and Russian investors. Abu Dhabi Islands