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Abu Dhabi implements new real estate law

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Those investing in Abu Dhabi's real estate market should take note of a new law passed in the Emirate.

Al Tamimi & Company released an update in October 2015 detailing the stipulations associated with a regulation which took effect in January. The law will have many implications for property development plans across the metropolis. 

Funding off-plan real estate 

Before the implementation of Law No.2 of 2015 on the Regulation of Real Estate Sector in the Emirate of Abu Dhabi, property financiers benefited from no form of security. For example, whenever a party financed an off-plan unit, his or her credit was at risk based on both the property developers and the end buyer's decisions.

The risk was greater than it was before the new law because lenders had to rely on developers to register the real estate rights in the property. To account for this risk, the Property Law implements several stipulations with which developers must comply before the Department of Municipal Affairs provides them with licences. 

Knight Frank noted that, in short, the law obligates people interested in partaking in real estate development to be registered in the Real Estate Development Register and maintain licences. In fact, those who do not become registered by March 31 may face penalties of between AED 100,000 and AED 2,000,000. 

How to obtain licences 

As noted above, the Department of Municipal Affairs will dictate who and who doesn't receive licences to engage in property development. Interested individuals must submit several forms in order to be considered eligible for licences, such as: 

  • The developer's trade licence.
  • A membership certificate to the Abu Dubai Chamber of Commerce and Industry.
  • Project master plans and construction designs.
  • Title deed of the land off-plan land.
  • Sale and purchase agreements with sub-developers (assuming a master developer is applying for a licence). 

Depending on the resources at their disposal, it's possible that real estate investors could manage and prepare these documents through property feasibility software

Abu Dhabi's real estate has experienced consistent supply and demand, the former of which has grown at a higher rate between 2009 and 2013. A report from the Abu Dhabi Urban Planning Council noted that office supply rose 18.4 per cent during this time period, while demand for such real estate grew 4.4 per cent. This indicates that enterprises have plenty of options.

The Emirate of Abu Dhabi can be tough to navigate for some. Having solutions that make it easy to track administrative duties can make all the difference. 

Date Published: 28 Feb 2016
Category: General News

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