New Law Considers Property Refunds in Dubai

New Dubai property law into consideration has bought a light for hope for real estate investors in Dubai, who would be refunded or would get a property replacement, incase they fall pray to the failing developers. Developers would be financially penalized if they fail to deliver their constructed project on time or to agreed specifications.

The law firm, Al Tamimi and Company, unveiled a newsletter with the proposed law and the conversation between Dubai Land Department’s senior legal advisor, Emad Eldin Farouq and the firm’s head of property practice, Lisa Dale.

According to the legal advisors, the failure of developers on handing over completed properties and buyers defaulting on payment would breed more legal disputes throughout the year.

“There are lessons to be learnt from the crisis and we are emerging with a new legal regime,” said Mr Farouq. “Loopholes in laws are being dealt with and things will become more organised in 2010.”

“2010 is still the year of fighting,” said Michael Lunjevich, the head of the property practice at Hadef and Partners. “It will be about consolidations, legal claims, liquidations and insolvencies. The market needs to clean itself out.”

The proposed law predominantly protects the interest of the buyers, where they are delivered defective property or have had late deliveries. This would lead to financial penalties to the buyer including a refund or replacement property. Also, if the developers refuse to link the construction mile stone with the payment plans, the buyer would be able to demand a cancellation of the contract.

“The investor protection law is being proposed to deal with some specific issues identified last year, where investors needed further assistance in dealing with errant developers,” Ms Dale said. “The granted land system is a tradition in the UAE, enabling nationals to have access to lands for the purpose of building their home or business premises,” Ms Dale said. “However, the system is quite limiting, as there are restrictions on transacting with such land. If you upgrade your title from granted to freehold, you can sell the property to other UAE or GCC nationals, or you can put it into a property fund or mortgage it. It becomes a much more flexible asset.”

The Dubai Land Department also plans to begin regulating property valuers and conveyancers by requiring them to obtain licences, and to create a law to oversee property brokers who handle trust accounts for property deals, Ms Dale said.

Frame Structure of Ocean Heights Completed

DAMAC Properties, the provider of luxury lifestyle and the pillar behind several other projects, announced the completion of the concrete frame of the tallest tower in Dubai Marina along with its development at Ocean Heights standing high at 84 floors.

Ocean Heights is the flagship of DAMAC and is expected to become one of the most iconic buildings of the area. With its twisted architecture, it already is being visible above all others in the surrounding area.

The Chairman of the main contractors Arabtec, Mr. Sajwani said, “This is a significant day for DAMAC Properties - the structural completion of our flagship building is a source of great pride and an occasion that we are glad we have been able to mark with the support of RERA, Arabtec and so many of the staff who have worked on site for the past three years. To think that this magnificent building has been constructed in a little less than two and a half years is a testament to their efforts and I pay tribute to their hard work and accomplishments. This has been a turbulent 12 months for everyone involved in real estate and it is therefore all the more impressive that everyone involved has remained so focused and dedicated to the task at hand. We are delighted to be literally ending this year on a high by finishing our tallest building.”

He added, “As a contractor we are always proud to be associated with quality projects and it is pleasing to be here to commemorate this milestone event for DAMAC Properties as we finish the main construction of Ocean Heights,' he said."A large part of our philosophy at Arabtec is to work hard with developers to build a relationship and to work together as one team on challenging projects like this. In the light of some of the recent negative news and speculation, I believe it is even more important that we recognize the efforts and achievements of everyone involved in the construction of Ocean Heights and celebrate how significant they are. Once completed in 2010 Ocean Heights will eventually offer 680 apartments ranging from one to three bedrooms. In addition the building will feature DAMAC Properties' Signature Series penthouse range - ultimate luxury apartments with the latest in hi-tech gadgetry and luxurious home comforts.”

Long-Term Dubai Investors Still Gain From Property Investments in Dubai

According to the owner of a Dubai based brokerage firm, the investors who had purchased real estate in Dubai even less than two years ago, still stand to earn profit despite the current low prices.

“People who are suffering the most are those who purchased properties last year on mortgage, as the prices of properties then were very high and mortgage rates were also high. But, people who purchased before 2007 also have not lost. Even if they sell, they still get to make a profit,” said the CEO of Leo Sterling, Laura Martorano.

The recent Dubai World restructuring discussions have not really affected the property prices in Dubai, agreed Martorano and also added that due to the competition, the prices in the ready market are not prone to change.

She also added, “In a ready market, about 60 percent of purchases are cash purchases. Therefore, people may not necessarily be so desperate as opposed to 40 percent, who have bank loans and mortgages”

The transactions in the real estate in Dubai have gone down in November as per the official data. The toll of property sales had fallen by 11% from 208 in October to 186 in November and the value of the deals had fallen by 47% from that of Dhs1.84bn to Dhs.970mn in the same period.

The data by Dubai Land Department depicted that the sales of the villas have gone high by 24% from 88 to 109. However, there was a decline of 41% in value which went down from Dhs.290mn to Dhs.170mn in November.

The positive indicators were shown in the month of October with average monthly market index posting 11.25% rise whereas the trade increased by 10% in volume and 9% in value as per Dubai certificates of origin.

Despite the negative economic indicators, Martorano is confident that Dubai will continue to hold a bright future.