Dubai Property Law

LAW NO (7) OF 2006 CONCERNING REAL PROPERTY REGISTRATION IN THE EMIRATE OF DUBAI

We, Mohammad Bin Rashid Al Maktoum, Ruler of Dubai:

Upon cognizance of the Federal Law No. 5 of 1985 issuing the Civil Transactions Law, as amended,The Federal Law No. 11 of 1992 issuing the Civil Procedures Law, as amended,The local Law No. 7 of 1997 concerning the charges for the registration of lands,And the local Decree of 1960 concerning the formation of the Lands Committee,Have issued the following Law:

Chapter One
Name and Definitions

Article (1)

This Law shall be called the “Law No. (7) of 2006 concerning Real Property Registration in the Emirate of Dubai".

Article (2)

Unless the context requires otherwise, the following terms and expressions in this Law shall have the meanings as shown against them respectively:

“State” means United Arab Emirates;

“Emirate” means the Emirate of Dubai;

“Government” means the Government of Dubai, including any of its departments, authorities or public establishments;

“Ruler” means H. H. the Ruler of the Emirate of Dubai;

"Department" means the Department of Lands and Properties;

“Chairman” means the Chairman of the Department;

“Manager” means the General Manager of the Department;

“Real Property” means anything immovable fixed within its boundaries which cannot be moved without damaging or changing its features;

“Real Property Rights” means any right in rem, whether principal or collateral, over a Real Property;

“Real Property Register” means a set of documents held in written or electronic format in the electronic register at the Department, which point out the description and location of each Real Property and the rights attached thereto;

“Real Property Unit” means any plot of land and any constructions, plants and other things thereon located in a single Real Property Area without any part thereof being separated from the other parts by any public or private property and without having any rights or liabilities on any part thereof other than the rights and liabilities of the other parts;

“Real Property Area” means a group of Real Property Units identified by main streets or fixed and clear landmarks, bearing an approved name and independent serial number in accordance with the regulations applied by the Department;

“Person” means a natural or legal person.


Chapter Two
Scope of Application and Right to Hold Title


Article (3)

The provisions of this Law shall apply to the Real Properties in the Emirate.

Article (4)

The right to own Real Property in the Emirate shall be restricted to UAE and GCC nationals and to companies owned in full by them and to public joint stock companies. Subject to the Ruler's approval and in specific areas in the Emirate as determined by him, non-national persons may be granted the following rights:

A. The right to freehold ownership without time restrictions; or

B. Usufruct right or leasehold right over a Real Property for a period not exceeding 99 years.


Chapter Three
General Provisions


Article (5)

The original documents and judgments under which registrations are made shall be maintained at the Department, and removing them outside the Department is prohibited. Any party having an interest, the judicial authorities or any experts appointed by them and the competent committees may inspect the documents maintained in the Register and obtain a certified copy of them in accordance with the provisions of this Law.

Chapter Four
Competence of the Department


Article (6)

The Department shall solely, to the exclusion of others, be authorized to register the Real Property Rights and long term leases as provided under Article 4 hereof. For this purpose, the Department shall undertake the following:

1. determine areas for survey or re- survey and approve maps prepared thereof;
2. determine the rules in connection with the survey, inspection and issue of maps related to Real Property Units;
3. prepare standard contracts in relation to Real Property transactions;
4. lay down the rules in connection with organizing, maintaining and destroying documents;
5. lay down the rules in connection with the use of computers for saving and registering data;
6. lay down the rules in connection with regulating and maintaining a register for real estate brokers;
7. lay down the rules in connection with the evaluation of Real Properties;
8. lay down the rules in connection with the sale of a Real Property at optional public auction and the supervision thereof;
9. determine the charges payable for services provided by the Department; and
10. establish branches for the Department as the Manager may deem fit.


Chapter Five
Real Property Register


Article (7)

A Real Property Register shall be established at the Department. All Real Property Rights and any amendments thereon shall be registered in the Register, which shall have absolute power of evidence against all parties. No objections against the data of the Register may be made other than on the grounds of fraud or forgery.

Article (8)

Subject to the provisions of Article 7 hereof, documents and instruments of the Real Property Register registered electronically in a computer shall be acceptable for the purpose of evidence as original documents and instruments.


Chapter Six
Registration

Article (9)

All dispositions that may create, transfer, vary or terminate a Real Property Right and all final judgments confirming any such dispositions shall be registered in the Real Property Register. Such dispositions shall not be valid unless they are registered in the Real Property Register.

Article (10)

The liability for breaching an undertaking to transfer any Real Property Right shall be limited to payment of indemnity, whether or not such undertaking provides for an indemnity.

Article (11)

Any inheritance declaration shall be registered in the Real Property Register if the inheritance includes Real Property Rights. No dispositions by any heir in connection with any such rights shall be valid or effective against third parties unless such dispositions are registered in the Real Property Register.

Article (12)

The Department may, in accordance with procedures to be issued under a resolution by the Chairman of the Department, consider applications for registration submitted by holders of lands that are not registered in their names in order to settle the position of such lands.


Chapter Seven
Alteration or Correction of Data in the Real Property Register

Article (13)

The Department may correct purely material errors in the folios of the Real Property Register upon a request from an interested party or on its own initiative and shall inform the concerned parties of such corrections.

Article (14)

The Department shall, in coordination with the relevant authorities, update the data in relation to Real Property Units together with the buildings, plantations or other structures thereon.


Chapter Eight
Maps


Article (15)

1. Upon the registration of the Real Property Areas and Units in the Real Property Register, the following maps shall be relied upon:

(a) The base topographic map;
(b) The Real Property Unit map;
(c) The Real Property Area map.

2. Every Real Property Area shall have a separate map showing the Real Property Units in that area together with their numbers.

3. Every Real Property Unit shall have a separate map indicating its location, boundaries, dimensions, area, features and the structures thereon together with the numbers of the adjacent units.


Chapter Nine
Division and Merger


Article (16)

If a dominant Real Property Unit is divided, the easement right shall persist for each part of the Unit, provided that such division shall not increase the burden on the servient Real Property Unit. However, if the easement is actually beneficial to only one of those parts, the owner of the servient Real Property Unit may apply to the Department to terminate the easement right of the other parts.


Article (17)

If a servient Real Property Unit is divided, the easement right shall persist on each part of the Unit. However, if the easement is actually used on some parts or cannot be used thereon, the owner of each part thereof may apply to the Department in accordance with the provisions of this Law to terminate the easement right on the part owned by him.

Article (18)

Easement rights shall terminate if the servient Real Property Unit and the dominant Real Property Unit become under the possession of a single owner.

Article (19)

If a Real Property Unit burdened with a collateral right in rem is divided to two or more Real Property Units, each new Real Property Unit shall bear the right in full. The new owners and the holder of the collateral right in rem may agree to divide such right so that each of the new Real Property Units will bear only part thereof as agreed.

Article (20)

If two Real Property Units are merged, where one of them is burdened with a collateral right in rem and the other unit is free of such right, the collateral right in rem shall extend to the new Real Property Unit in full without the consent of the holder of the right to merger.
However, if each of the Units is burdened with a separate collateral right in rem, the consent of the holders of such rights to the merger shall be obtained prior to such merger.


Article (21)

Any amendment of merger or division on the Real Property Unit shall be registered in the Real Property Register.


Chapter Ten
Title Deeds


Article (22)

The Department shall issue title deeds of Real Property Rights in accordance with the current records in the Real Property Register.


Article (23)

Subject to the provisions of any other law, a multi floor or apartment Real Property shall be considered as a single Real Property Unit and a folio shall be designated thereto in the Real Property Register. Supplementary folios in the names of the owners of such apartments and floors and common areas shall be added to the original folio.

Article (24)
1. Title deeds referred to under Article (22) of this Law shall have absolute power of evidence to establish Real Property Rights.

2. Any conditions, undertakings, encumbrances or any other liabilities related to Real Property Rights shall be stated in the designated folio of the Real Property Unit.


Chapter Eleven
Final Provisions


Article (25)

The provisions of the Federal Civil Procedures Law No. 5 of 1985, as amended, shall apply to anything not provided for in this Law.


Article (26)
1. Any agreement or disposal made in violation to the provisions of this Law or with the intent to circumvent its provisions shall be null and void.

2. Any party having interest or the Department or the Public Prosecution may demand to invalidate such agreement or disposal and the courts shall rule as such on its own initiative.


Article (27)
The Decree dated 6 November 1977 concerning civil and criminal cases relating to land transactions in the Emirate of Dubai is repealed.

Article (28)

The Chairman shall issue the required regulations, orders and instructions for the enforcement of the provisions of this Law.

Article (29)

This Law shall be published in the Official Gazette and shall come in force as of the date of its publication.

Mohammad Bin Rashid Al Maktoum
Ruler of Dubai

Issued in Dubai on 13 March 2006

High rental yields likely to support Dubai property prices

In the global search for investment returns the pricing of major asset classes has increased to reflect much lower interest rate levels. Interest rates are now on the way back up again but this has so far had little impact on asset pricing. So the search is still on for assets with a good yield like Dubai property. Consider the case of a newly arrived expatriate family arriving from the UK. They have just sold the family home and wants to re-invest the funds in bricks-and-mortar. But the dilemma is simple: should they buy in Dubai, or go for a UK buy-to-let property?

Now let us answer this from an investment perspective, quite apart from the fact that owning your own home has an attraction of its own.

If you buy in Dubai and save on your rent then your saving will be equivalent to the yield, or rent paid, on the property, presently around 7-8%. Now in the UK and buy-to-let investment will probably not cover the cost of the mortgage and return 3-4%, and property prices look stagnant and possible falling.

Dubai yields good value
Unless Dubai rentals collapse - and they would need to fall by an unprecedented amount - the Dubai option looks the better investment. Indeed, in the Dubai property you have a margin of safety in that the rental yield has a long way to fall to reach UK rates.

It has to be said that with a 7-8% rental yield Dubai property appears fairly valued, while UK and many other major property markets have rental yields that suggest they are 50% or so overvalued.

This is not rocket science: with a 4% yield it takes 25 years to re-pay the value of a house; and 12.5 years at an 8% yield. It is not hard to see the better deal, or the more sustainable investment case.

Sustainability
Now it may well be that this equation shifts in the future, against the Dubai model. The population growth of the city might not absorb the available property supply at some point, but you still have to ask which market out of the UK and Dubai is the high growth emerging market, positioned on the cross-roads of world trade and which is the debt-ridden service economy?

Another way to look at this is to consider the property cycle, and to ask whether property is priced closer to ‘fair value’ in the UK or Dubai. From this perspective Dubai property prices still have higher to go while the UK may have already topped out.

So property investors in search of value should still consider Dubai seriously. Of course you need to be selective and pick the right location and do your due diligence. But the market fundamentals are still strong at the moment.

Source: AME Info

Dubai property prices are still going up?

Academic discussions about the future of Dubai property are one thing. But have you noticed how prices are moving in 2006? So far there is no sign of supply catching up with demand and house prices are still on the way up.

One advertisement for a Dubai apartment tower last week presented readers with the chance to buy before prices went up by 10% on April 1. Now either this is a very clever marketing ploy to get people to sign up to beat a price rise, or this indicates that the Dubai property market is rather stronger than some believe.

A brief glance through the ever-thick pages of the Gulf News property sections, and there are three of them, confirms that price levels are up in 2006. If you look at apartments in The Greens or villas in The Meadows you will find that 10% is about the going rate of house price inflation so far this year.

How can this be explained? Well we are looking at completed property, available for occupation, and not one of the many towers emerging from the ground in the Dubai Marina and Jumeirah Lake Towers district. But this does not explain the advertisement proclaiming a 10% rise for off-plan apartment prices.

New investors
Perhaps there is a second wave of investor interest in the Dubai market now that Gulf stock markets are turning downwards. In classic investment theory a real estate boom will typically accelerate after a stock market crash due to a shifting of funds from one asset class to another in a search for solid value.

It has to be said that Dubai property is still attractively or at most fairly valued, and that does leave some room for speculators to drive prices to more exceptional levels. Yields on Dubai villas of 7.5% compare very favorably with 2-3% available in more mature markets like the UK, and are therefore attractive to investors who will drive prices higher and rental returns downwards.

There is also the case that the oversupply of property in Dubai remains somewhere in the future. At present apartments and villas available for rental are snapped up in days as people are still flooding into Dubai to participate in the economic boom.

This lively rental market again encourages investors, and indeed the upward pressure on rentals is still very clear, despite the 15% Government cap on increases which is widely side-stepped by vacating property and re-letting it. Thus buoyant letting conditions are another support for property prices.

Delivery delays
Constant delays to the delivery of new property also boost the demand for available property, and hence rental and property values. This still represents an upward cycle - and the fall off in demand required to dampen the market is just not evident, even if the market is slower than it was 18 months ago.

The difficult thing for buyers is to know whether to jump in now before prices and rents go higher, or to wait and hope that the real estate market has a correction like the local stock market. But that could turn out to be a long and expensive wait, even if this is the logical and inevitable outcome in the end.

Source: AME Info