(DUBAI) A new law that defines the rights, responsibilities and obligations of all parties in jointly owned properties in Dubai will comfort investors but will do little to boost demand for properties in the short term, analysts say.
Guidelines implementing the long-awaited Strata Law were published by the Land Department on Tuesday, in a bid to help the emirate on its path to mature market status, but comes against a backdrop of residential and office oversupply.
'An instant pick-up in transaction activity is not expected on the back of this new legislation,' said Sana Kapadia, vice-president of equity research at EFG-Hermes in Dubai. 'While these clear and transparent rules will undoubtedly give buyers more comfort over their purchase decision, demand is only likely to be positively impacted in the medium to long term,' she said, adding the bank expected an overall decline in house prices and rents of up to 10 and 15 per cent respectively this year.
Dubai's residential market, already oversupplied by about 20 per cent, will gain 41,000 more homes between now and the end of the year, while office space will rise to about 6.4 million square metres by the end of 2011 from about 3.6 million sq m at the end of 2009, according to Colliers International.
The framework, which offers guidelines for all types of property, sets new rules for general regulation, jointly owned property declaration regulation, constitution regulation and survey regulation.
Additional rules include regulation on the setting up and collection of service charges without the clearance of the Real Estate Regulatory Authority (RERA), the emirate's property watchdog. 'This move should put a cap on some of the unreasonable charges being levied by some developers currently,' Ms Kapadia said. -- Reuters
Source: Business Times, 27 May 2010