On the Heels of a New Property Law
Reports that the much awaited property law is just around the corner have become more compelling with some expecting the new law to be introduced by the end of February 2006---at the conclusion of the 40-day mourning period for former Dubai ruler Sheikh Maktoum bin Rashid Al Maktoum.
One expectation is that the designation of "freehold" will be granted only to those properties that fall under the auspices of the three government affiliated developers, Nakheel, Emaar and Dubai Holdings. A question arises, however, over projects like those in Dubai Marina and Jumeirah Lake Towers which, while part of master-plans created by the major developers, house a large number of towers being built by private developers. Will buyers among these projects be offered freehold ownership, or be limited to a 99-year leasehold?
A second expectation, and one of unambiguous benefit, is that property buyers will at last be able to register titles to their purchases with the Dubai Lands Authority, a procedure that has been in limbo since the right of property ownership was first announced in May 2002.
The effect of the new property law may be to spur more activity in the property market on the one hand, due to greater legal clarity, or there could be a cooling off effect on the other hand, if a large number of projects are deemed to be leasehold as opposed to freehold. The notion of freehold has been heavily promoted by developers to lure buyers, who if given anything less may feel betrayed. Some may even seek to divest and prospective buyers may feel led to reconsider.
The fact, however, that it will finally be possible to register purchases will be well recieved. Many prospective investors it would seem are waiting in the wings for this. Depending on just how many such fence-sitters there are, there could be a sudden influx of new buyers.
A greater as opposed to lesser availability of freehold properties is what most would hope for and it would seem to be the most logical step for the Dubai government to take. Selling off to foreigners or non-residents a piece of property which is virtually in the air, as would be the case with apartments in towers, or parcels of land on the newly formed off-shore islands would still leave most of the original land mass of the Dubai emirate untouched. So why shouldn't these properties be granted to whomever wishes to acquire them on a freehold basis?
In a practical sense there may be little difference between ownership on the basis of freehold as opposed to long-term leasehold, anyway. What percentage of apartment towers, or villas for that matter, will remain intact beyond 99-years? Will the island developments (products of land reclamation) even remain above water? Most likely the substantial investment required over time to maintain the buildings and reclaimed lands may make them cost in-effective in 100 years time. thus negating the value of freehold over leasehold. That being said the term "freehold" seems to have more capital value for reasons of emotion as much as anything else--it just sounds more valuable than "leasehold." But, if buyers are more rational than they are emotional then either offering should be acceptable.
PollGo to DM Blog latest posts, Dubai Marina Communities or MAG 218 Community homepage.
One expectation is that the designation of "freehold" will be granted only to those properties that fall under the auspices of the three government affiliated developers, Nakheel, Emaar and Dubai Holdings. A question arises, however, over projects like those in Dubai Marina and Jumeirah Lake Towers which, while part of master-plans created by the major developers, house a large number of towers being built by private developers. Will buyers among these projects be offered freehold ownership, or be limited to a 99-year leasehold?
A second expectation, and one of unambiguous benefit, is that property buyers will at last be able to register titles to their purchases with the Dubai Lands Authority, a procedure that has been in limbo since the right of property ownership was first announced in May 2002.
The effect of the new property law may be to spur more activity in the property market on the one hand, due to greater legal clarity, or there could be a cooling off effect on the other hand, if a large number of projects are deemed to be leasehold as opposed to freehold. The notion of freehold has been heavily promoted by developers to lure buyers, who if given anything less may feel betrayed. Some may even seek to divest and prospective buyers may feel led to reconsider.
The fact, however, that it will finally be possible to register purchases will be well recieved. Many prospective investors it would seem are waiting in the wings for this. Depending on just how many such fence-sitters there are, there could be a sudden influx of new buyers.
A greater as opposed to lesser availability of freehold properties is what most would hope for and it would seem to be the most logical step for the Dubai government to take. Selling off to foreigners or non-residents a piece of property which is virtually in the air, as would be the case with apartments in towers, or parcels of land on the newly formed off-shore islands would still leave most of the original land mass of the Dubai emirate untouched. So why shouldn't these properties be granted to whomever wishes to acquire them on a freehold basis?
In a practical sense there may be little difference between ownership on the basis of freehold as opposed to long-term leasehold, anyway. What percentage of apartment towers, or villas for that matter, will remain intact beyond 99-years? Will the island developments (products of land reclamation) even remain above water? Most likely the substantial investment required over time to maintain the buildings and reclaimed lands may make them cost in-effective in 100 years time. thus negating the value of freehold over leasehold. That being said the term "freehold" seems to have more capital value for reasons of emotion as much as anything else--it just sounds more valuable than "leasehold." But, if buyers are more rational than they are emotional then either offering should be acceptable.
PollGo to DM Blog latest posts, Dubai Marina Communities or MAG 218 Community homepage.
posted by B.D. at
Monday, February 13, 2006
1 Comments:
I don't think, whether freehold or leasehold, owners of Emaar developed villas will have much leeway to alter their properties. The question is whether the contracts explicitly express such limitations. There has been a lot said--some in the press, some rumors--about the poor quality of construction in many projects. Nakheel's the Garden View Villas were completed in 2003 (200+ villas), moved into briefly then abandoned--reportedly due to serious flaws. This whole community of villas sits there today, beautifully manicured but unoccupied. That being said, I think villas can be maintained and improved structurally--even without altering the design--so that they can last a long time.
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B.D., at 28 March, 2006 16:30
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