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New Law Encourages Foreign Ownership in Dubai Property Like Condo Hotels


In March 2006 the government of Dubai implemented a new property law, Law Number 7, which is expected to boost all sectors of Dubai's real-estate market. It allows foreigners freehold ownership rights in Dubai property such as condo hotels.

While it's expected that the residential market will benefit most from the change in the freehold and lease-hold laws, properties such as condo hotels may also see a surge in sales, now that one of the last objections to investing in Dubai property by non-nationals has been eliminated.

The Dubai government announced its intention to change property laws in 2002, which stimulated foreign investment into designated freehold projects developed by three state-owned real estate groups -- Emaar, Nakheel and Dubai properties.

But until this law was passed, non-nationals with ownership stakes in Jumeirah, Jbel Ali, and Dubailand areas had no legal autonomy over their investment. Most sale contracts, however, already stated that freehold titles would be granted as soon as the law was put into practice. Now, foreigners will be given the deeds to their land and can register ownership with the Dubai Lands and Properties Department. They are also able to transfer property ownership directly without having to go through the developer.

Analysts agree that since foreigners with a stake in freehold properties felt secure in their ownership rights even before the new law was put in place, its affects on the commercial real-estate market will be minimal.

Residential real-estate prices - which have remained below those in comparable cities - are expected to surge once international investors become aware of the freehold ownership law and can feel more secure because they'll be receiving a formal legal deed when making their investments.

The new law will likely bolster secondary real-estate markets also such as the mortgage sector. The insecurity of foreign ownership rights was deterring international banks from entering Dubai's mortgage market, which has remained uncompetitive as a result.

Some firms offer residential loans that are guaranteed by the property developer-such as Amlak Finance's and RAKbank with mortgage rates of 7.5 percent 6.9 percent respectively, but interest rates have remained high since conventional mortgages are secured with a deed of ownership.

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