The Freehold Saga Continues
Jul 16th 2005, 8:51 am
#1
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The Freehold Saga Continues
Here is something very interesting.... The latest in the freehold saga...
Business | Real Estate Property
Published: 16/7/2005, 07:26 (UAE)
New property law may deny freehold rights to foreigners
By Saifur Rahman, Staff Reporter
Dubai :
The new federal law, expected to be issued this year, may fall short of allowing freehold ownership of properties to foreigners, industry sources said.
It might offer a 99-year leasehold to foreign buyers.
"What we hear is not freehold, but a 99-year leasehold ownership extended to foreigners," said a UAE national developer.
"The government will issue the new federal property law by the end of the year. However, according to the UAE constitution, individual emirates are allowed to adopt their own property laws, giving the country the needed flexibility.
"What we hear is that Abu Dhabi will follow the federal law, but is expected to grant freehold ownership of property to UAE and GCC nationals and 99-year leasehold to foreigners.
"Dubai, however, will allow freehold ownership to foreigners in selected areas of land, masterplanned by some government-owned entities."
Dubai allowed the sale of "freehold" properties in 2002, which triggered solid investment in the emirate's real estate sector. Investors began to pour in money as developers, benefitting from high liquidity in the market, began to cash on the new opportunity.
The market took an almost vertical upturn last year when speculators began to influence price of Dubai's real estate to a large extent. However, with the growth of the stock market, property prices began to stabilise this year.
The market is expected to witness another boom early next year.
"Dubai's property market is in the process of stabilising. It is the beginning of maturity. With the enactment of the new law, we expect another boom to take place in Dubai's property market as mortgages will become more accessible and people who are still hesitant to invest due to the absence of the law, will begin to invest."
Currently Nakheel, Dubai Holding and Emaar Properties are allowed to extend property ownership to foreigners. They have created masterplanned lanscapes for individual developers to build apartment complexes and towers a trend which, developers said, will continue.
While Dubai Holding and Nakheel are government entities, Emaar is 32.5 per cent owned by Dubai government with the rest being held by the public.
Dubai's model, which ensures controlled participation by the private sector in government-designated areas, is expected to be followed by other emirates.
Abu Dhabi has begun the process through Aldar Properties, which recently rolled out its first batch of properties, with many more in the pipeline.
Following Dubai, Ras Al Khaimah and Ajman are also opening up their markets. Sharjah, on the other hand, was one of the first emirates to offer foreign ownership of properties to GCC and Arab expatriates a trend which it is continuing.
Published: 16/7/2005, 07:26 (UAE)
New property law may deny freehold rights to foreigners
By Saifur Rahman, Staff Reporter
Dubai :
The new federal law, expected to be issued this year, may fall short of allowing freehold ownership of properties to foreigners, industry sources said.
It might offer a 99-year leasehold to foreign buyers.
"What we hear is not freehold, but a 99-year leasehold ownership extended to foreigners," said a UAE national developer.
"The government will issue the new federal property law by the end of the year. However, according to the UAE constitution, individual emirates are allowed to adopt their own property laws, giving the country the needed flexibility.
"What we hear is that Abu Dhabi will follow the federal law, but is expected to grant freehold ownership of property to UAE and GCC nationals and 99-year leasehold to foreigners.
"Dubai, however, will allow freehold ownership to foreigners in selected areas of land, masterplanned by some government-owned entities."
Dubai allowed the sale of "freehold" properties in 2002, which triggered solid investment in the emirate's real estate sector. Investors began to pour in money as developers, benefitting from high liquidity in the market, began to cash on the new opportunity.
The market took an almost vertical upturn last year when speculators began to influence price of Dubai's real estate to a large extent. However, with the growth of the stock market, property prices began to stabilise this year.
The market is expected to witness another boom early next year.
"Dubai's property market is in the process of stabilising. It is the beginning of maturity. With the enactment of the new law, we expect another boom to take place in Dubai's property market as mortgages will become more accessible and people who are still hesitant to invest due to the absence of the law, will begin to invest."
Currently Nakheel, Dubai Holding and Emaar Properties are allowed to extend property ownership to foreigners. They have created masterplanned lanscapes for individual developers to build apartment complexes and towers a trend which, developers said, will continue.
While Dubai Holding and Nakheel are government entities, Emaar is 32.5 per cent owned by Dubai government with the rest being held by the public.
Dubai's model, which ensures controlled participation by the private sector in government-designated areas, is expected to be followed by other emirates.
Abu Dhabi has begun the process through Aldar Properties, which recently rolled out its first batch of properties, with many more in the pipeline.
Following Dubai, Ras Al Khaimah and Ajman are also opening up their markets. Sharjah, on the other hand, was one of the first emirates to offer foreign ownership of properties to GCC and Arab expatriates a trend which it is continuing.
Jul 16th 2005, 11:41 am
#2
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Re: The Freehold Saga Continues
So, Dubai will offer freehold but Abu Dhabi will only offer 99 year leases. As there are no developments available to foreigners in Abu Dhabi at the moment this isn't really a big deal. I can't imagine Dubai turning around in 6 months time and saying, "Actually, we have changed our mind, you can only have a 99 year lease." They would never be able to attract any foreign investment for anything, ever again.
Jul 16th 2005, 11:51 am
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Re: The Freehold Saga Continues
Originally Posted by Border Reiver
So, Dubai will offer freehold but Abu Dhabi will only offer 99 year leases. As there are no developments available to foreigners in Abu Dhabi at the moment this isn't really a big deal. I can't imagine Dubai turning around in 6 months time and saying, "Actually, we have changed our mind, you can only have a 99 year lease." They would never be able to attract any foreign investment for anything, ever again.
AlAdar, which have already begun selling properties on Al Raha beach in AD are offering it to investors under the 99 year lease scheme. Dubai however, has been issuing "freehold" deeds since 2002, but it now seems that only SOME properties will be allowed to offer "freehold", the rest WILL have no choice but to offer properties under the 99 year lease scheme, which ideally would be renewable, depending on the condition of the property.
Ultimately, all this freehold/99 year lease stuff will continue to remain in the grey area in which it resides now..... no1 really knows anything. Typical!
Jul 16th 2005, 11:57 am
#4
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Re: The Freehold Saga Continues
Well, maybe I misunderstood it, but the article you quote says:
"...according to UAE constitution, individual emirates are allowed to adopt their own property laws...."
and
"Dubai, however, will allow freehold ownership to foreigners in selected areas of land....."
Which seems pretty clear to me
"...according to UAE constitution, individual emirates are allowed to adopt their own property laws...."
and
"Dubai, however, will allow freehold ownership to foreigners in selected areas of land....."
Which seems pretty clear to me
Jul 16th 2005, 12:04 pm
#5
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Re: The Freehold Saga Continues
Originally Posted by Border Reiver
Well, maybe I misunderstood it, but the article you quote says:
"...according to UAE constitution, individual emirates are allowed to adopt their own property laws...."
and
"Dubai, however, will allow freehold ownership to foreigners in selected areas of land....."
Which seems pretty clear to me
"...according to UAE constitution, individual emirates are allowed to adopt their own property laws...."
and
"Dubai, however, will allow freehold ownership to foreigners in selected areas of land....."
Which seems pretty clear to me
the emphasis being on "selected areas" and again, this is a local source that the paper spoke to.... its not even an official statement..... the local even says "what we hear is...."
the truth is, no one will know until the fat lady sings....
Jul 16th 2005, 12:08 pm
#6
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Re: The Freehold Saga Continues
As you say, it is not even an official statement- I expect we will see a lot more rumours before we see anything that looks like a law. Must be a slow news day.
Jul 16th 2005, 12:10 pm
#7
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Re: The Freehold Saga Continues
Originally Posted by Border Reiver
As you say, it is not even an official statement- I expect we will see a lot more rumours before we see anything that looks like a law. Must be a slow news day.
how r u doing anyway?
Jul 16th 2005, 12:19 pm
#8
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Re: The Freehold Saga Continues
When they do finally produce a law I hope they word it so clearly that there is no possible scope for misinterpretation- we have all suffered enough. I'm not holding my breath though. 
I'm fine, but the UK is a little cold for my tastes at the moment. I must be too acclimatised to Dubai.
I'm fine, but the UK is a little cold for my tastes at the moment. I must be too acclimatised to Dubai.
Jul 16th 2005, 12:32 pm
#9
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Re: The Freehold Saga Continues
Selected properties will continue to mean "Dubai Holdings, Emaar and Nakheel", essentially because the economy would go tits up if these companies started struggling.
Doesn't Emaar account for something like 60% of all trading on the Dubai exchanges?
If there isn't a property boom next year, then a lot of people will lose money (not that the papers here will be reporting a lack of a second boom)
Nothing on transfer of freehold in the event of death I notice, so I'm assuming that if you die, your family gets nothing if you're an expat?
Finally...99 year lease, freehold. What's the difference. I can't seriously imagine my villa being remotely habitable in 25 years never mind 99.
Doesn't Emaar account for something like 60% of all trading on the Dubai exchanges?
If there isn't a property boom next year, then a lot of people will lose money (not that the papers here will be reporting a lack of a second boom)
Nothing on transfer of freehold in the event of death I notice, so I'm assuming that if you die, your family gets nothing if you're an expat?
Finally...99 year lease, freehold. What's the difference. I can't seriously imagine my villa being remotely habitable in 25 years never mind 99.
Jul 16th 2005, 12:34 pm
#10
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Re: The Freehold Saga Continues
Originally Posted by Border Reiver
When they do finally produce a law I hope they word it so clearly that there is no possible scope for misinterpretation- we have all suffered enough. I'm not holding my breath though.
If you are an MBA or Masters you can change jobs 3 times, if you have a degree or equivalent you can change jobs twice or something. Great, except that you cannot transfer sponsorship without having an NOC
So no change there then.
Jul 16th 2005, 12:39 pm
#11
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Re: The Freehold Saga Continues
Originally Posted by W10
Finally...99 year lease, freehold. What's the difference. I can't seriously imagine my villa being remotely habitable in 25 years never mind 99.
Jul 16th 2005, 12:48 pm
#12
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Re: The Freehold Saga Continues
You're right. I have about 87 years left on my lease on my flat in London. No big deal.
I'd be more concerned about whether I could pass my property onto someone in the event of my death? I'm not sure whether you can or not at the moment, and I'm not sure whether you will be able to even if they do pass a freehold law.
On the stock market front, special mention to 7days for having the guts to print something other than a "dubai is booming, everything is rosy investor type people" story. That way inexperienced small investors can actually make an informed decision as to whether to put their life savings in the market rather than blindly following the hype.
http://www.7days.ae/other-business/b...investors.html
http://www.7days.ae/other-business/b...ts-course.html
I'd be more concerned about whether I could pass my property onto someone in the event of my death? I'm not sure whether you can or not at the moment, and I'm not sure whether you will be able to even if they do pass a freehold law.
On the stock market front, special mention to 7days for having the guts to print something other than a "dubai is booming, everything is rosy investor type people" story. That way inexperienced small investors can actually make an informed decision as to whether to put their life savings in the market rather than blindly following the hype.
http://www.7days.ae/other-business/b...investors.html
http://www.7days.ae/other-business/b...ts-course.html
Jul 16th 2005, 5:01 pm
#13
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Re: The Freehold Saga Continues
Originally Posted by W10
You're right. I have about 87 years left on my lease on my flat in London. No big deal.
I'd be more concerned about whether I could pass my property onto someone in the event of my death? I'm not sure whether you can or not at the moment, and I'm not sure whether you will be able to even if they do pass a freehold law.
On the stock market front, special mention to 7days for having the guts to print something other than a "dubai is booming, everything is rosy investor type people" story. That way inexperienced small investors can actually make an informed decision as to whether to put their life savings in the market rather than blindly following the hype.
http://www.7days.ae/other-business/b...investors.html
http://www.7days.ae/other-business/b...ts-course.html
I'd be more concerned about whether I could pass my property onto someone in the event of my death? I'm not sure whether you can or not at the moment, and I'm not sure whether you will be able to even if they do pass a freehold law.
On the stock market front, special mention to 7days for having the guts to print something other than a "dubai is booming, everything is rosy investor type people" story. That way inexperienced small investors can actually make an informed decision as to whether to put their life savings in the market rather than blindly following the hype.
http://www.7days.ae/other-business/b...investors.html
http://www.7days.ae/other-business/b...ts-course.html
Just out of curiousity, do your freehold/leasehold setups in london have any tie in to the land, or provide any protection if the building falls down one day for no reason? Not saying that it will, i'm just wondering if there is any type of tie in to the land there, to protect you in case of unforeseen disaster in regards to the structure. I feel like that is one of the big killers about dubai freehold/leasehold/whatever it is, because these buildings are built absolutely shiite and have an effective life of less than 25 years.
Jul 16th 2005, 6:38 pm
#14
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Re: The Freehold Saga Continues
As far as I know, and I'm no lawyer, you lease the land but you own the building. So, if the building falls down it is your problem. There are various ways the lease can be extended at fairly minimal cost once it gets into the last 5 years or so. You obviously can't leave the land to anyone if you die (because you don't own it) but you can pass the remaining term of the lease on.
Jul 16th 2005, 9:05 pm
#15
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Re: The Freehold Saga Continues
Originally Posted by Border Reiver
As far as I know, and I'm no lawyer, you lease the land but you own the building. So, if the building falls down it is your problem. There are various ways the lease can be extended at fairly minimal cost once it gets into the last 5 years or so. You obviously can't leave the land to anyone if you die (because you don't own it) but you can pass the remaining term of the lease on.
Alot of interesting points are coming out of this.... i especially like the transfer of deed in case of death and also the lack of legislation (or so we think) to deal with total collapse of the housing unit.....
I honestly feel that it will be almost impossible for them to draft a law on something as wishy washy as this... I mean on the one hand, they cannot ( and wouldnt probably be happy to) sell off parts of their country to expats.... at the end of the day, there may be little or no land left under governement control. This could become a serious problem as the U.A.E is a relatively small country, land wise.
And on the other hand, a declaration of a law that says that no expat can ever own anything under a "freehold" deed will be a MEGA blow to investors and will hurt the U.A.E's reputation as a property haven....
The arguments on either side are just too convincing.... I wonder how the FNC will look upon this, or will they just leave it in their "to-do" pile as they have done for the past 5 years.