Investors in Dubai have had to cope with a 60% fall in the local stock market over the last few months; but the real estate market is still headed upwards, boosted by a new law giving freehold rights to GCC nationals and to a limited extent to non-GCC expatriates.
Law No 7 of 2006 regarding the registration of property grants ownership rights to UAE nationals, GCC nationals, companies owned by UAE and AGCC nationals and public joint stock companies. Foreigners will be able to buy interests in land only in respect of certain areas, and with the approval of three 'master developers', Emaar, Al Nakheel, and Dubai Real Estate, after completing payment for their purchase.
The law doesn't provide for 'floating freeholds', and it appears that in practice foreigners will be limited to buying whole developments in the nominated areas. While this may be a disappointment for individual expatriates, it should still encourage further foreign investment into development projects.
Detailed rules and regulations governing registration requirements, documentation, filing application, fees and other issues have yet to be issued.
The legislation identifies freehold, usufruct, and commonhold as types of property ownership. The law characterises 'usufruct' as the right to use another's property for not less than five years and not more than 99 years.
The registration fee for any transaction under the law will be 2% of the total value of the property, of which 1.5% has to be paid by the purchaser and the rest by the seller.
A real estate register will be set up at the Dubai Land and Properties Department. Expatriates who have already bought properties will be able to register their titles with the Dubai Lands and Properties Department.
While real estate prices have boomed in Dubai lately, and will presumably continue to do so at least for a time, the stock market is a different story, falling almost 60% from its all-time high reached last summer. It has been going up for a long time, however, so long-term investors will not have been hurt too much.
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