A recent law legitimising property ownership by foreigners in Dubai is expected to boost the real estate market in the booming Gulf city state, experts say.
"The new law is liable to enhance confidence in the legal framework protecting property buyers," said Abdul Salam al-Bessis, who runs estate agencies in Dubai and in Europe.
The legislation will "attract more big international property developers, who prefer to invest in countries that have clear-cut rules in this sector," he told AFP.
A law passed in mid-March allowed foreigners, who hitherto bought indirectly through contracts with developers, to "become freehold property owners in areas designated by the ruler."
The legislation also authorises foreigners, who make up more than 80 per cent of Dubai's estimated 1.2-million population, to "derive benefit from their property or rent it out for a period not exceeding 99 years."
Property ownership was previously limited to citizens of the United Arab Emirates (UAE), of which Dubai is part, and other nationals of the Gulf Cooperation Council, which also includes Bahrain, Kuwait, Oman, Qatar and Saudi Arabia.
But another real estate expert who asked not to be named expressed doubt that large numbers of expatriates would buy homes in Dubai, which has rapidly turned into a regional business and leisure hub.
"I don't know if many people who want to buy a lifetime home in Dubai. They rather want to buy in order to sell afterwards," he told AFP.
"Foreigners know that they will never become citizens of this country. I understand the Government's reluctance (to naturalize foreign residents), but it means that Dubai, and the UAE in general, are not seen as a place where one would live and die," he said. Buying property will make it easier for foreigners to get residence permits guaranteed by property developers, "but there are no guarantees in the long run," the source added.
A European investor who also asked not to be identified said that he bought two flats four years ago and sold them at a huge profit two months ago amid a sharp rise in real estate prices in Dubai.
"Many people fear that the bubble will burst because Dubai has been booming so quickly, even though all indications are that the growth is solid," he said.
Mr. Bessis said any decline in Dubai's fortunes is likely to be manageable. "Dubai will continue to grow, even though it will face competition ... especially from Abu Dhabi," he said.
Abu Dhabi, the largest and wealthiest of the seven emirates making up the UAE, accounts for the bulk of the Gulf country's oil production. It serves as capital and has recently launched big property projects open to foreign ownership for up to 99 years.
Dubai passed its new property law amid a steep hike in rent and purchase prices, which according to the real estate expert who wished to remain anonymous, is making foreign companies think twice before settling in the emirate.
Despite construction frenzy, a shortage of supply has sent rent prices soaring by up to 50 percent. Before the law was issued, foreigners who bought property in Dubai or one of the man-made islands emerging along its coast received a deed from the major developing companies.
These are effectively owned and controlled by Dubai's Government and its ruler, Sheikh Mohammed bin Rashed al-Maktoum, and his family.
Mohammed Ali al-Abbar, chairman of real estate giant Emaar Properties, which runs mega-projects in Dubai, has described the legislation as "a real gain for the market and investors."
The massive projects under way "would have hit serious problems if the issue of freehold ownership had not been resolved," he said. - AFP
ON A ROLL: The law legitimising property ownership by foreigners in Dubai is expected to boost the real estate market in the Gulf city State. - Photo: REUTERS