Photo «Zagranitsa»
If a foreign citizen purchased an apartment or villa from a developer before the adoption of the Property Registration Law, his status was only recorded in the contract with the company. Registration with any government bodies was not provided for. Accordingly, he could not assign rights to a third party without the company's representatives, even after construction was completed. The contract usually contained a stipulation that a foreign citizen would be able to fully formalize his right to the purchased square meters after the adoption of the relevant law. Despite the absence of legal documents regulating the status of foreign owners and their acquisitions, investors believed in the safety of investments in real estate and over four years invested considerable sums in Dubai property. However, in the fifth year, their enthusiasm began to wane - demand for projects under construction started to fall, and price growth slowed.
And so, finally, on March 14, 2006, a law was published authorizing the Dubai Land Department to handle the registration of property rights, and also regulating all the conditions under which real estate is sold, and in the case of a mortgage, a pledge is formalized.
The law stipulates all rights and restrictions on ownership of land and property in the emirate of Dubai and the rules for their application. The main focus is on the process and regulations for registering real estate with the Land Department. Important for investors, in particular, is the introduction of the concept of 'housing unit'. Multi-story buildings are considered a housing unit, which must be registered as a single entity. Apartments within the building will be entered in the register additionally, with the owner's name indicated.
According to the law, citizens of the UAE and Gulf countries have the right to purchase property in freehold, as well as lease for 99 years anywhere in the emirate of Dubai, while persons who are not citizens of the UAE or Gulf countries have the right to acquire land and property in freehold and lease in specially designated areas. A full list of these locations will be issued later, but it is already known that the areas designated for foreign real estate are projects being developed by the three largest developers - Nakheel, Emaar, and Dubai Properties. Accordingly, real estate from smaller developers operating on the sites of the aforementioned companies also acquires 'freehold' status.
Also, all of the above categories of persons were granted the right to officially register the purchase and owner status with the Dubai Land Department. Currently, the registration fee is 2% of the purchase price, of which 0.5% is charged to the seller and 1.5% to the buyer. It is possible that the rate may be revised in the near future.
Although the property registration law largely confirmed existing market practices and brought no surprises, with its help Dubai's legislative authorities spurred the real estate market situation. This document prevented current housing prices in the primary market from falling. The incipient stagnation also receded into the background, and for certain projects prices slowly but steadily crept up. Moreover, many developers have already noted an increase in demand for their product - mainly from skeptics who, out of caution, were in no hurry to invest in real estate in the absence of legislative guarantees.