Abu Dhabi likely to follow Dubai on regulatory framework

Speakers pointed out that the emirate's Law No 3 of 2005 on the registration of real estate, and Law No 19 on foreign ownership within designated areas, started the reform of the real estate sector.

Importantly Law No 19 did not allow foreigners to own the land on which a building or apartment is located, thus conforming with the late Sheikh Zayed's express wish that 'not one grain of sand' be owned by foreigners in Abu Dhabi. However, that did not exclude long leases for villas and a kind of freehold tenure for apartments in multi-owned buildings.

Clarification on the ownership position in multi-owned buildings is awaited, and experts expect a new Strata Law establishing the rights and obligations of developers and owners within such buildings to be issued shortly.

Confidence building

This is likely to support sales in 2008 and beyond by instilling greater confidence in buyers who have been understandably concerned about the lack of complete legislation regarding ownership.

UAE legal firm Al Tamimi & Company's senior property lawyer Mohammad Kamal told the seminar that there was also an urgent need to implement a land registration system similar to other established jurisdictions. The Dubai Land Department's computerised system is an obvious model.

In addition, he counseled the establishment of a new regulatory body which could operate like the Real Estate Regulatory Agency in Dubai in regulating real estate agencies and property developers and administering local laws.

It will be interesting to see if Abu Dhabi actually issues its Strata law on common ownership in buildings before Dubai, which has been somewhat slow in promulgating this long-awaited reform. This could happen as Abu Dhabi actually got its first property legislation on the statute book before Dubai, albeit the informal property market in Dubai started three years earlier in 2002.

Investor protection

However, anybody seriously considering the Abu Dhabi property market is bound to be encouraged by the continued development of local real estate regulations which protect the interest of both buyers and sellers alike.

There has certainly not been back-tracking on real estate market reform in the emirate, and this is good for local confidence in property investment which has been gradually rising this year.

The HSBC report published last week pointed to a pick up in buyer interest in the second half of 2007 after a slow start to the year. More legislative underpinning of the sector will deepen these firm foundations.

See also:
Commercial property still booming in Dubai