DUBAI’S NEW PROPERTY LAW, currently being debated and soon to be finalized, will inject a new burst of energy to the Emirate’s booming property market. The ‘fuzziness’ surrounding the exact status of ‘freehold’ and ‘long term lease’ properties in ‘exempt’ areas will finally be eradicated with its ratification. So far the legal vacuum has not had a negative affect on land sales due to strong backing by the Government of Dubai.
Speaking at the Dubai Property Group’s ‘Networking Breakfast’ event held yesterday at Emirates Towers, Essam Al-Tamimi, managing partner of Al-Tamimi & Company legal advocates, said that closing the circle with the introduction of a comprehensive property law would boost the existing trust in Dubai’s real estate market and invigorate potential buyers and sellers worldwide.
“Introducing a comprehensive property law in Dubai will increase foreign investment and provide banks with added security to enable them to issue more loans – with better terms for buyers and the general public,” stated Al-Tamimi. “The legislation will close the circle and positively affect buyers, developers, and banks.”
The current legal framework governing Dubai can generally be classified under two main categories: those laws governing properties lying in exempted areas where foreigners may buy freehold and long lease property, and the remaining areas where only UAE and Gulf Cooperation Council (GCC) nationals may own.
In essence, the Government of Dubai ‘exempts’ certain geographical locations and develops them in cooperation with quasi-government companies such as Emaar, Nakheel and Dubai Properties. Foreign ownership is the main driver for setting up these ‘exempt’ areas – an idea that is not lawfully permitted in the rest of Dubai where only UAE and GCC nationals may own land.
“Trust plays a key role in promoting the ‘exempted’ areas where no laws exist but where Dubai’s governance and courts system does have a certain amount of jurisdiction. Transactions are governed by contractual agreements between the main developers, the secondary market developers and brokers or the end buyers.”
These contracts, whether they pertain to villas, apartments or commercial space, are not considered as titles or deeds to ownership. Solving this issue is the main thrust of the new legislation, which will also include clauses to properly manage communal areas and public spaces as well as regulate new ideas, such as timeshare properties.
The law will also examine the relationships between the main developers and the secondary developers. Additionally, it will give banks the legal standing to be able to better enforce bad debt recovery and, therefore, reduce the costs of home loans to benefit the buyers.
“Clarifying the legal status of the property sector and making it more transparent to investors is an important step in Dubai’s real estate story,” continued Al-Tamimi. “It is essential, however, for a consumer protection watchdog developing to oversee and add balance to the equation.”
Currently, the main developers act as watchdogs over the secondary developers with regards to safety requirements, design specifications and promised delivery schedules.
Al-Tamimi also stated that Abu Dhabi is working on a similar package of legislation to serve its emerging real estate sector. The legislation is expected to be unveiled later this year.
“Putting a legal structure around the booming industry will bring a new surge of energy and a modern set of legal tools to develop new opportunities in Dubai’s real estate sector,” said Adel Lootah, executive director of Dubai Property Group. “As an association of leading real estate professionals, DPG has been involved in debating the proposed legislation amongst its members and continues to relay new ideas to the relevant leaders in Dubai’s government to help shape the new law.”
Independent of favour or influence, DPG represents the combined interests of Dubai’s real estate community. The Group’s 110 members include some of the highest profile real estate players in Dubai, such as the Dubai Development Board, Cluttons chartered surveyors and property consultants, Arenco Real Estate, Union Properties PJSC, Better Homes LLC and facilities management firm, Asteco Property Management LLC.
Apart from the ongoing monthly ‘Awareness and Networking’ events – as part of its services to improve and grow member benefits and increase their business potential, DPG provides advertising opportunities through its website, newsletters and exclusive agreements with UAE based media, aimed at helping members reach larger and more diverse audiences – be they business related or the general public. The Group also regularly puts together training and educational packages and seminars.
