Property registration to streamline purchase process

ABU DHABI — The decree on the property registration in Abu Dhabi will ultimately see a streamlining of the purchase process but it is unlikely to directly help investors.

By Haseeb Haider

Published: Fri 10 Dec 2010, 11:36 PM

Last updated: Mon 6 Apr 2015, 10:06 AM

“On the contrary the registration process is unlikely to be free and may actually see further costs rested on investors“, says Matthew Green, Head of Research and Consultancy at Dubai based CB Richard Ellis Ltd Middle East.

The Resolution 64 of 2010 should help to boost confidence in the Abu Dhabi property market, said Jesse Downs, Director of Research and Advisory, Landmark Advisory.

“However, we do still need to understand the implementation details including a timeline,” she said.

Green said the long-term benefits of such a system come with the potential to improve transparency by creating a tracking system for property sales and a live snapshot of the health of the transactional market.

“How this information is used will thus prove to be the acid test. We would hope to see the information published publically similar to the sales data made available by the Dubai Land Department,” the property analyst said.

To a question whether this law would have any impact on the property market, Green said it is unlikely to have an immediate impact on investors. “But it should help to re-build confidence in the market that could lead to renewed activity in the sales market and with it growth in lending.”

Ms Downs said currently demand is largely hindered by the lack of regulatory framework and the delays in handover of large projects like Marina Square.

“Once the properties are finished and communities develop in the context of a stronger regulatory system, we expect sales volumes to improve.”

In terms of sale prices, the development of a property registry has already been factored into our short and medium term price forecasts, which will expect will decline in the coming years on the back of increasing supply and discerning demand.

Tahir A. Schon, chairman of Dubai-based Schon Properties said: “the registration of properties would increase comfortable level of European investors. At present property developers issue ownership deeds to property buyers, which under the new mechanism would be registered with the government agency.”

In the long term this development will be quite helpful to creating confidence in the real estate market, he said.

Eric J Milne, a partner at Dubai-based law firm Jones Day viewed that the new regulation will certainly aid banks and financial institutions who wish to re-open their balance sheets and lend against real estate based in Abu Dhabi as an asset class.

“Having a registered interest over which those financial institutions can take security will assist the real estate market and increase liquidity in that asset class,” Milne said.

Green said the decree may not have any visible impact on the property business. “But an improvement in the regulatory environment is likely to be met with some cheer as the market looks towards greater maturity,” he said.

He said the real estate market would expect to see the creation of a ‘RERA’ like structure in Abu Dhabi to deal with property related matters. The creation of a ‘Strata Law’ is essential with so many units in the capital sold off-plan during the boom period, he said.

The Strata Law will primarily help to bring transparency to service charges and may even lead to a reduction in rates if external management and facilities companies prove to be more efficient than developers at servicing these communities.

“With rental rates continuing to fall, the impact of service charges is being amplified,” the property analyst said.

Since the downturn rents have plummeted while service charges have typically remained the same or in some cases increased, which is decimating rental yields and is proving to be a huge barrier to further investment, he said.

Matthew Green said that Escrow accounts have already been implemented in Dubai and provide much needed protection to investors and their money.

He suggested the introduction of long term residency visas of say two or three would help to boost interest while also providing investors with greater protection.

“At this point too much uncertainty prevails and that is not conducive for improvement in the investment market,” he said. —

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