‘New rules protect all parties’
Dubai Lands Department has outlined new regulations for the city’s fast-growing skyline. Officials have been working to keep up with the pace of development in this multi-billion dirham sector and have introduced rules to enforce standards and protect the rights of individuals. Emirates Business spoke to the department’s Director-General, Sultan bin Butti bin Mijrin, about new developments in the emirate’s real estate sector.
What is the proportion of land earmarked for urban development compared to the total land area of the emirate?
The percentage of land allocated for projects and developments in the emirate is about 75 per cent. These areas have been mapped and divided into plots. We have strict regulations in these areas, keeping 60 per cent of all projects as open spaces, which include parks and roads. The remaining 40 per cent of the developed area should be the built-up part.
In 2006, the total value of land transactions was Dh18 billion, compared to more than Dh44bn in 2007. To what do you attribute the increase?
There are many reasons for this increase, such as the implementation of the property registration system, which was announced in 2006. This led many property owners in the freehold areas to start registering their properties, which has given a push to the real estate market and led to further price rises due to the increase in buying and selling. The other reason is that we started registering flats only in 2006. The number of flats being registered increased noticeably last year.
Another reason that led to this increase is the introduction of many new services by the department. More areas also entered the market, such as Jadaf and Jebel Ali, which increased the size of the market leading to an increase in prices in many areas.
This year the department has proposed new ways to monitor and regulate the growing real estate sector. Most recently, this has included the decision to draw up a rent index.
What is behind the move?
We have come up with the new systems to serve the sector better. The real estate market is witnessing huge growth and we came up with escrow accounts, the property index and the residential buildings’ classification in order to protect the rights of investors as well as developers. These systems also help in attracting further investments to the realty sector.
Do you expect the prices of properties to keep increasing this year?
The real estate market has witnessed a boom since 2005 and we are expecting similar increases this year. However, prices will not go up sharply. Our statistics show that in 2006, the increase in prices was about 65 per cent, but last year it was only 15 per cent. This shows that the market is now more mature in its movement.
Which are the top foreign and GCC nationalities buying property in the emirate?
Indians are at the top of the list of foreigners buying property in Dubai, followed by Britains and Iranians. As for GCC nationals, Kuwaitis are the top buyers, followed by Saudis and Qataris.
Has the rent cap made any difference to the increase in prices of land?
No, the rent cap has nothing to do with the price increase as it is implemented on properties that are already being used by individuals and establishments. The price increase is on new projects and properties that are not yet occupied.
When are you going to introduce penalties as part of the property law?
We did not introduce penalties in the property law as they are covered in the federal laws that govern real estate. In this regard, any angle not covered by the local laws is covered in the federal laws. However, we came up with penalties concerning the escrow accounts to prevent developers from defrauding and selling fake properties.
When are you going to force developers in the freehold areas to register their properties with the department?
This year, we are going to enforce Article 9 of the Property Law No7 for the year 2006, under which all developers have to register their properties with the Lands Department. We have given property owners a grace period until June this year to register their land and properties. Currently, we charge them a two per cent fee on the price at which they bought the properties. After the grace period is over, we will charge them a fee of two per cent on the prevailing market rate.
What is the importance of registering land and properties with the department?
Property registration with the department is very important to prevent fraud. In areas where properties are not registered with the department, many cases of fraud have taken place. For example, some people have sold one property to many buyers. Because of the absence of registration with the department, people do not realise that they have been conned until it’s too late. Even developers are unaware of this problem, as each one of them is focused on their own projects and they don’t know about the fraud cases that take place in other projects.
Is there any proposal to put a cap on the price increase in real estate?
No. As the price increase in the real estate sector is based on demand and supply factors, it is not possible to put a cap on the price increase.
Property laws are different in each emirate. Are there any plans to unify them?
There is co-operation among all the emirates regarding the property law. We fill the gaps in our laws by learning from each other. However, there is no intention to unify them because each emirate has its own procedures and laws.
When are you coming up with the property index?
The property index will be announced soon. This will help a lot in putting a range on the increase in rent in a given area.
What about the building classification system? How is it going to help the sector?
In this system, which will be ready before the end of the year, residential buildings will have a grading system that will reflect on their commercial value. The system will be a replica of the one used by the hotel industry, with the lowest category given one star and the top seven-star status.
This classification is a prelude to establishing the index system in the rental market as well, which will contribute to streamlining rents for buildings in various parts of the emirate. Currently, rents of buildings in the same area are almost similar despite the discrepancy in the material used in the buildings and the services that a particular building may be providing.
We will give different ratings to buildings, depending on the quality of materials used and services provided. The top-end buildings will get a seven-star status with the lowest getting only one star. The benefit of the rating system is that it will differentiate the top-quality buildings from the poor quality ones. Landlords can then use this rating to get an appropriate rent limit.
Sultan bin Butti bin Mijrin
Director-General Dubai Lands Department
Sultan bin Butti bin Mijrin was born in 1962 in Dubai. He holds a bachelor’s degree in Shariah and law, which he gained from the UAE University in 1986.
He began work at Dubai Lands Department soon after graduation and has worked in almost all its departments. He was promoted to head of investigation section, to assistant director-general in 1997 and to director-general in 2006.
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