Speculation grows about new Dubai property law

This legislation is eagerly awaited by the Dubai property market. Up to now foreign buyers have bought on the understanding that their 'sale agreement' will be transferred into a title deed as soon as the law is passed.

Observers expect another wave of buyers to enter the Dubai market as soon as this legislation is in place. At the same time, the arrival of the new property law or laws will clarify the situation for lenders, so that many more mortgage products will become available.

Competition in the mortgage market should result in a lower cost of monthly ownership for buyers who need finance. And the arrival of more mortgage finance in the Dubai real estate sector should also be good for prices.

Indeed, another leg to the Dubai property boom is generally anticipated after the passing of the new legislation, local and federal. There are still a lot of long-term expatriates, for example, who are unconvinced about buying in Dubai, and these should be the next to enter the market.

At the same time, the ponderous progress of some developments is leading to a shortage of supply to meet any new upturn in demand. Every project delay is bad for supply. This should put upward pressure on prices at least in the short-term.

However, the current thinking on local Dubai legislation does leave one glaring anomaly. It appears that freehold will be reserved for Government-controlled developers only - i.e. Emaar, Nakheel and Dubai Holdings - so that private developers will have to content their buyers with 99-year leases.

If this speculation is confirmed then two classes of tenure will be created. In fact, this already exists as Union Properties only sells on 99-year leases, and has always argued that this is the only tenure appropriate for its developments. Thus other private developers would merely be falling into line.

But we still need to wait to see the legislation first before any solid conclusions can be drawn. On the other hand, those would-be buyers who want to close deals at the best prices should really be looking to take advantage of the quieter summer months.

The autumn promises a far more hectic Dubai property market, particularly now that the UAE stock market has entered a correction phase, and will likely cease to interest speculators.