DUBAI RULER ISSUES NEW PROPERTY LAW

UNCLAS DUBAI 002076

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: PGOV ECON EINV
SUBJECT: DUBAI RULER ISSUES NEW PROPERTY LAW



1. On March 15, UAE Vice President and Prime Minister Mohammed
bin Rashid Al Maktoum (MBR),in his capacity as Ruler of Dubai,
issued a new property law providing land ownership rights to
expatriates and public joint stock companies. The law grants
buyers indisputable legal title to property in Dubai for the
first time.


2. The law -- Law Number 7 of 2006 -- allows foreigners to lease
or purchase land in designated freehold areas, after getting
approval from one of three master developers -- Emaar, Al
Nakheel, and Dubai Real Estate. Prior to the issuance of this
law, the only guarantee expatriates had of ownership was a
contract with the developer. Under the new law, Dubai Land and
Properties Department will set up a real estate registrar to
record properties under the names of owners. Multi-story
property will be dealt with as one unit in the register. The
law will be followed by a number of new by-laws that will
identify the freehold areas in Dubai and determine the
registration fees and procedures (currently 2% of the property
value). (Note: Although the assumption is that many existing
developments will be designated as freeholds, as of now, the
Emirate of Dubai has not formally designated any properties as
freeholds.)


3. The new legislation proposes three kinds of ownership:
freehold, usufruct, and common hold. The owner will have
complete title over free hold property, and buildings on the
land will be in the owner's name. The second category is
usufruct or long-term lease. The law defines usufruct as "the
right to use another's property short of destruction or waste of
its substance." The law states the right of usufruct should not
be for less than five years or greater than 99 years. Common
hold property owners, for instance those in an apartment
building, will have titles to their own units as well as a share
in the common property of a building. Subsurface rights,
commonly referred to as mineral rights, remain with the
government.


4. MBR`s decree -- eagerly awaited for more than four years
since an initial announcement formally opened the industry to
foreigners without establishing the necessary laws -- was
headlined in the local press and hailed by industry officials
and lawyers. Local economists predict hectic activity at the
Lands Department, and many expect that Dubai property prices
will increase.


5. The Government of Abu Dhabi introduced its own property law
on August 13, 2005. Under the law -- enacted in September 2005
-- UAE nationals can own property anywhere within the emirate of
Abu Dhabi. GCC nationals can own land in designated investment
areas. Other expatriates have certain leasehold rights in
investment areas under a 99-year land title agreement or a
renewable 50-year surface ownership deal.

DAVIS