Sunday, August 04, 2013

Dubai to issue 7 new property laws to regulate sector

The Dubai Land Department is in the process of issuing seven new legislations in the next two years in order to regulate the real estate market in the emirate and protect it from speculation and harmful practices, according to the Director-General of the department.
Sultan Butti bin Mejren said that the laws will help control the rhythm of the market and sustain the current boom, reported Al Ittihad.

New laws will also cover special programme (Tayseer) and Tanmya real estate initiative, while the laws will help facilitate the formation of a judicial committee to liquidate projects. Laws regarding landlords associations will be amended, as well, he said. .

Bin Mejren said a bill to protect the rights of real estate investors is also in the process, but declined to elaborate on the same.

The department will review rules of realty markets abroad, he added.

Dubai real estate market in Dubai is very dynamic. Of the total real estate units in the emirate, 60 per cent is leased, Bin Mejren said.

Dubai realty is unique. It has private real estate legislation commensurate with the nature and characteristics of the market, he said and added that the work on the new legislation comes after more than seven years. The Law No 7 was issued in 2006.

This law was related to security and the relationship between landlords and tenants as well as joint ownerships.

The real estate legislations that are in place have helped the sector attract foreign investment as well as face challenges effectively, he said.

Bin Mejren confirmed that laws will only strengthen the legislative structure of the real estate sector and increase its competitiveness and attract more local and foreign investments.

No property bubble

Bin Mejren said that the real estate market in Dubai has entered a new phase of growth, taking advantage of an increase in real demand for real estate.

He confirmed that the list of projects and proposals of laws under preparation aims to strengthen the legislative structure of the real estate sector to maintain gains achieved by the private sector, increase competitiveness and capacity to attract local and foreign investments.

Bin Mejren also pointed to the increase in the total value of real estate transactions in Dubai which rose by 30 per cent during the first half of this year, to reach Dh108 billion, compared to Dh83 billion during the corresponding period of last year.

He asserted that the rate of growth in the value of real estate transactions are a strong indicator of recovery in the real estate market and emphasised the attractiveness of the market, both for local and foreign investors.

Bin Mejren said that the price index has taken an upward trend over the past few months due to the demand for land, villas and apartments in specific projects in Dubai.

On the other hand Bin Mejren expected the recovery to continue, which was represented in the high rents and land prices and prices of residential and commercial units.

He added these factors encourage investors to increase their investment in the real estate sector in Dubai.

Bin Mejren also ruled out a property bubble with the steady rise in the price of the sale and rental of real estate.

He pointed out that the current demand for real estate in Dubai is based on a strong foundations.

He said that the current increases in real estate prices is logical and predictable, especially because it comes after a wave of declines, following the global financial crisis.

Reining in speculators
Bin Mejren also said that a developer is entitled to add conditions to sales contracts to prevent speculation and maintain the level of rates of the units in the project.

He added that after developers define a time period - ranging from six months to a year at a minimum to maintain a property before resale – this in turn contributes to limiting the role of speculators in the real estate market.

He confirmed that the department will, for its part, establish binding controls to regulate the re-sale of real estate in the emirate soon, as these controls include the development of thresholds for premiums paid, and the percentage of completion of the project.

Project finance – Tayseer and Tanmia
Bin Mejren explained that the department is currently working on a legislation for the Tayseer programme.

He added that this step aims at strengthening the role of Tayseer in providing the necessary financing for real estate projects in the emirate.

Also in accordance with the regulations of the programme a real estate company requires to be registered with the programme and should have not less than a 60 per cent rate of project completion.

Bin Mejren added that the programme contributed to the acceleration of mortgage procedures and increased demands for banks to join the programme.

He pointed out that so far, more than 300 real estate investors have benefited.

Bin Mejren also said the department also plans to issue a special law for the Tanmia initiative, which aims to restructure troubled real estate projects.

Bin Mejren pointed to the close link between the Tayseer programme and the Tanmiya initiative which was launched by the Land Department, where the Tayseer programme is the financial supporter of the Tanmiya initiative.

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