Dubai's so-called 'Strata Law' will be a model for other developing property markets in the MENA region, according to the Middle East's largest private developer, DAMAC Properties.
Dubai's Real Estate Regulatory Authority (RERA) has implemented a raft of comprehensive changes to property regulations in the emirate, which are aimed at boosting investor confidence by increasing transparency and clarity in the real estate sector.
"The regulatory and legal framework that now underpins Dubai's property market is now on par with international standards. RERA is to be commended for creating a regulatory environment that will become an example for other countries in the region to follow" said Niall Mc Loughlin, Senior Vice President, DAMAC Properties.
The Land Department introduced Law No 27, or the so-called 'Strata Law' in 2007. The law was aimed at regulating properties with multiple-ownership. In April last year, three new directions outlined the requirement for developers to provide full disclosure statements about all of their projects in Dubai, as well as prepare Jointly Owned Property Declarations, which include definitions of internal floor space and share of ownership of common areas. The third direction outlines the framework for establishing Owners Associations.
"Countries such as Saudi Arabia and Egypt are already making significant progress with regard to implementing regulatory framework to support growth in their respective real estate sectors. There is the potential for Dubai's Strata Law to be used as a template for neighbouring countries, planning to introduce regulations that define multiple-ownership" Mc Loughlin added.
Last month, The Saudi Arabian Ministry of Commerce and Industry introduced new world class laws to advance the off-plan real estate market, by making it more transparent and accessible, as well as offering additional protection and services to investors and customers. The new regulatory frameworks, including escrow accounts and a real estate register, have been initiated to ensure that further growth of the real estate market is sustainable and viable.
"Saudi Arabia is taking monumental steps to provide clear legal frameworks to advance growth in the property sector" said Mc Loughlin "DAMAC Properties is also eagerly awaiting the issuance of the mortgage law, which will play an active role in stimulating local and foreign investment in Saudi Arabia's real estate market" he added.
Egypt is also developing a mortgage finance law, which is expected to boost the growing property sector, by stimulating lending from financial institutions. Total mortgages represent less than half a percent of GDP in Egypt, compared to 14 percent of GDP in Morocco and more than 80 percent in Britain in 2008.
Swiss bank UBS AG's Global Asset Management unit says it is "very upbeat" on the Middle East's property sector. UBS's Global Asset Management chief executive officer told a conference in Saudi Arabia recently that Middle East commercial real estate offers a good long-term investment opportunity and that the region stands out "dramatically" alongside China as an investment destination.
The IMF is predicting GDP will expand 5.1 per cent in the MENA region this year, higher than the forecast global average of just 4.2 per cent. The MENA region is expected to be second only to Asia in terms of annual growth, with MENA economies expanding at more than double the pace of advanced nations including Europe and the United States.
The MENA region will be a powerhouse of the global economy in 2011. DAMAC Properties, with its large regional footprint is well positioned to take full advantage of the upturn.