Professional Speak on Real Estate market laws

It has been almost 13 years since Dubai’s property market was opened up for the expatriate population. In this period, the real estate industry has seen many ups and downs. As this sector steadily attains maturity, new property legislation are being introduced.

Brent Baldwin, partner at Hadef and Partners, gives us an overview of these laws and how they are going to affect the industry.

Escrow accounts

The 2014 Dubai real estate market survey by Hadef and Partners has revealed that Law No. (8) of 2007 Concerning Escrow Accounts for Real Estate Development in the Emirate of Dubai has had the greatest impact on the Dubai real estate market. Whilst this law does not guarantee an investor reimbursement of funds invested in the event of a failure by the developer to complete the project, it does provide assurances that the funds have been spent only on the project in respect of which they were paid.

Law No. (13) of 2008 Regulating the Interim Property Register in the Emirate of Dubai as amended by Law No. (9) of 2009 has also had considerable impact on the regulation of developments and, in particular, the ability of a developer to conduct off-plan sales. The law requires developers to receive approval for and register proposed projects with RERA, and to register all off-plan sales in an interim property register, which provides investors with a recorded interim legal interest in property. This protects investors’ rights in respect of off-plan property and regulates the ability of either party to terminate the sale and purchase agreement.

The survey has revealed that while the market has shown clear signs of recovery during 2014, investors are evidently much more risk averse and less speculative. Against the background of failures by developers to perform and deliver in accordance with agreed contractual terms and time frames, investors are seeking more secure investments. Preference is shown for completed units from larger government-backed master developers with a proven track record over sub-developers.

Investor protection

The Real Estate Investor Protection Law, though not yet issued, is likely to increase protection for real estate investors. It is expected to place additional obligation on developers including delivering projects within agreed time frames and as represented to purchasers together with compensation frameworks to purchasers. In addition, the full implementation and enforcement of Law No. (27) of 2007 Concerning Ownership of Jointly Owned Property in the Emirate of Dubai (Jointly Owned Property Law) will play an important role in creating transparency and the role of an owners association in representing investor interests.


The sale and purchase agreement (and any documents referred to in the sale and purchase agreement) is the most crucial document when buying off-plan property. This document regulates that basis upon which the investor will acquire the property including the payment of the purchase price, details of exactly what the investor is acquiring and the obligations on the developer with regard to delivery. It is mandatory for a developer to issue each purchaser with the agreement, a disclosure statement pursuant to the Jointly Owned Property Law which identifies (amongst others) key features of the development, the property and the potential costs an investor may be liable for.

The agreement is likely to refer to other key documents governing the future management of the property and, in particular, the ongoing obligations of the investor such as documents prescribed under the Jointly Owned Property Law. The most important of such documents is the Jointly Owned Property Declaration which governs the rights and powers of the owners association and the property owners of the development in question.

Prudent investors may also wish to see the Master Community Declaration governing the master community of which the development forms part in order to understand the vision for the development as a whole and the rights and obligations on the part of the master developer.

Source: S. Dhar, Special to Freehold

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