Tuesday, March 23, 2010

Reduction in litigation cases in Dubai realty sector

Litigation cases in Dubai's property sector have actually narrowed down following the aftermath of the property crash. Further, the new property law likely to be announced soon, will help in improving market transparency, further, revealed a lawyer at an international law firm.

Following the initial wave of claims, there has been a reduction in the number of court disputes, said Clyde & Co's Richard Bell.

With the developers making efforts to accommodate purchasers in the light of economic meltdown, including lowering selling prices, and offering installment payment options towards completion of projects, the numbers of litigation cases have reduced, he said.

Prices in the real estate sector of Dubai, which includes the world's tallest tower Burj Khalifa, had fallen by 60 percent from its peak in 2008, with billions of dollars worth projects being either cancelled or suspended owing to global economic recession.

The numbers of litigation cases were on the rise, and the Dubai-based contractors agreed that they owned millions of dollars by the state-linked developers.

However, a new legislation to be announced by the Dubai Executive Council, likely to be implemented in the market soon, will include provisions granting the Land Department the right to investigate delayed projects and determine the manner to proceed.

The new legislation will also include a set of criteria, through which a development would be assessed, and provisions enabling purchasers to terminate their contracts under certain circumstances.

According to Bell, such a law aims to bring in more clarity about projects that are not making progress.

The Land Department and Dubai's RERA (Real Estate Regulatory Authority) are taking measures to strike a balance between purchasers and developers.

This, followed by another decree that regulates ownership of industrial and commercial plots granted to UAE nationals, will help in improving market transparency, the main factor in attracting investors who continue to shun Dubai property sector favouring more mature stable markets.

Bell pointed out that transparency is improving in Dubai real estate market, which is way ahead of several other Middle East markets. The Land Department is one among the more transparent government departments.

"The Land Department is listening to purchasers. Probably not as much as purchasers would like, but it is surely trying to catch-up with market conditions as they actually are," he concludes.

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