Foreign investor confidence in UAE property on the rise

Confidence of international investors in the Dubai property market has increased, but steps need to be taken to ensure that contractual provisions negotiated by buyers can ultimately be enforced, says a UK-based law firm.

"Compared to certain other real estate markets, the significant efforts of the Land Department and Real Estate Regulatory Agency have led to increased confidence. Further steps do, however, need to be taken, particularly in regard to confidence that contractual provisions that can now be negotiated by buyers can ultimately be enforced," says Christian Taylor, Partner, Holman Fenwick Willan.

International investors are looking at completed properties not off-plan in the UAE since the downturn, says the law firm.

"In particular, we are seeing an interest in investment opportunities for commercial (office) premises fully let to strong international tenants. Besides, investors seem to be looking for fairly secure income producing assets."

Asked if international investors were now seeking legal assistance prior to investing in the UAE, Taylor says: "Most definitely. Investors are looking to limit their risk exposure as much as possible, particularly after experiences suffered as a result of not having taken legal advice on contracts entered into during the boom times."

Neil Heaney, CEO, Judicare Legal Services told this website earlier that international financial advisors were still advising their clients to buy properties in the UAE, but the biggest challenge was getting regular updates from developers on the projects.

"Maintaining good dialogue with property developers and to keep providing regular updates to their clients on their investments is the biggest challenge for international financial advisors. Clients will tell us that good or bad news is always preferable to no news," he had said.

In a report, released November, on the legal state of Dubai real estate market, Hadef and Partners said the regulators in Dubai had the added disadvantage of having to rapidly introduce regulation to previously unregulated market to address the real estate boom, and then react.

"It is no surprise that the laws have been tested so much, particularly as Dubai has not had the benefit of hundreds of years of legal and real estate development. This meant that the Escrow Law, Pre-Registration Law and other regulatory regimes designed to introduce order to the market were required to operate in a reactive manner to endeavour to catch up. This is not an enviable position to be in and most objective observers would sympathise with the challenge the regulator faced in trying to control market forces and some of the excesses of human nature."

The report further stated the Escrow Law to be viewed as the most useful law, followed by the Landlord and Tenant Law, the Jointly Owned Property (Strata) Law, Mortgage Law and Pre-registration Law.

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