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On 14 March 2006, His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai passed the muchanticipated property law for Dubai. The new law has recently been published in the Official Gazette and is now in force. The law is to be known as “Law No. (7) of 2006 concerning Real Property Registration in the Emirate of Dubai”. Amongst other things, it permits foreign ownership of property within designated areas of Dubai - the areas however are yet to be confirmed. This supplement provides an overview of the new property law. The supplement is divided into three sections, namely:
The new property law is primarily an enabling law that creates a framework within which a complete property ownership law for Dubai can be built. It is a good first step in providing foreign purchasers (and lenders) with the key surety they seek in relation to property ownership in Dubai, namely the ability for foreigners to register their interest and obtain title to their property.
The main features of the new law are:
In a number of ways, the Dubai property law is similar to property laws in other Emirates within the UAE and other GCC countries, particularly in relation to foreign ownership.
In particular, several other Emirates and GCC countries also allow foreign ownership and as with Dubai it is only in designated areas. The noteable exception is Abu Dhabi, which only permits foreign ownership of buildings erected on land (but not of the underlying land itself), and then still only in designated areas.
Whilst the new property law deals with the concern of foreign investors in relation to ownership, it does not (and could not fairly be expected to) provide a holistic solution to all property ownership and security related issues.
The new law is a first step in creating a legal framework for property ownership in Dubai. Therefore, while further regulations and laws are contemplated, they are yet to be passed. To ensure that the confidence and momentum that has been achieved by Law No. (7) is retained the new regulations need to follow as soon as possible. There are several areas where further laws or regulations are required in order to create certainty for foreign owners and lenders. We have already mentioned some of these areas, but others include:
Law No. (7) creates the legal framework for further property laws and regulations in Dubai. We will provide further updates, as significant new property laws and regulations are passed.
A dedicated Real Estate team, consisting of 1 partner and 4 lawyers, all with considerable local and international legal experience has recently been established in Dubai.
The team advises on all aspects of real estate transactions including acquisition/disposal, development, construction, hotels and leisure, infrastructure (including PFI/PPP), real estate investment funds, real estate financing, commercial leasing/licensing and retail.
Clifford Chance, Summer 2006
Middle East Supplement to the International Construction Newsletter