Abu Dhabi is combining two of its investment firms to create a wealth fund with assets of about $250 billion.
Earlier this year Abu Dhabi implemented its long-awaited new property law aimed at better regulating the real estate market. The law took effect on 1 January 2016 and is a positive step towards attracting increased real estate investment in Abu Dhabi.
Al Tamimi has had the privilege of working with the team responsible for drafting this law, which went through more than seven years of consultation, review and amendment. We are now advising the Abu Dhabi Department of Municipal Affairs and Transport (DMAT) and many developers, banks and investors on the implementation and implications of the law.
The UAE’s real estate sector suffered a severe shock during the global financial crisis. Lessons were certainly learnt from that experience, leading to greater stability and maturity in the market. This new law is the next important step forward and should be welcomed as a balanced approach providing important protections.
The law empowers the DMAT to regulate the real estate market in Abu Dhabi. The DMAT’s authority includes implementing the law, issuing licences, controlling escrow accounts and cancelling real estate projects.
Those allowed to obtain licences to engage in real estate related activities include: master developers; sub-developers; real estate brokers and their employees; owners association managers; property valuers; and surveyors. The law stipulates that no one may undertake real estate activities without a licence from the DMAT.
The law creates two new registers: the real estate development register and the interim real estate register. Developers will not be allowed to engage in real estate development unless they have registered in the real estate development register. All data and documents relating to licensees, escrow accounts, banks and project marketing will be kept in the register.
Regulation of off-plan sales is one of the cornerstones of the law. This is where a purchaser is granted real estate rights over a unit that is proposed to be built in accordance with plans. Developers cannot sell off-plan until they have an interest in the project land and open an escrow account. Sales of off-plan units must be registered in the interim real estate register and off-plan sale agreements will not be legally binding unless registered.
The law allows for units sold off-plan to be mortgaged provided that the loan amount is paid into the escrow account. Banks will benefit from streamlined processes to enforce mortgages through the summary courts where debtors are in default.
The new law provides for setting up owners associations comprising all the owners of units in multi-unit real estate developments. Owners associations are intended to be independent legal entities that will own and manage the common parts of developments.
This is a sponsored article written by David Bowman, a Senior Associate in the Property Department at Al Tamimi & Company.
Copyright: UMS International Fz LLCTheme