Dubai issues new law to regulate grant of Musataha rights on commercial lands

DLD is mandated with setting rules and standards for ensuring the optimal use of commercial lands approved for Musataha rights

Dubai ranked first in the world for improving property transparency in the 2020-2022 period, a report said. Reuters
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Dubai introduced a new law to regulate the grant of ‘Musataha’ rights on commercial lands in the emirate, aimed at promoting Dubai’s status as a preferred global real estate investment destination.

The law issued by Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, intends to regulate the use of commercial lands in Dubai by granting the right of Musataha to develop real estate projects, the Dubai Media Office said in a statement on Wednesday.

A Musataha is a specific type of investment partnership between the public and the private sectors, granting an investor rights to develop a particular plot of land for a defined period of time.

As per the law, the Musataha agreement creates a real property right that entitles its holder to construct a building or invest in, mortgage, lease, sell, or purchase a plot of land belonging to a third party for a period of up to 35 years. The agreement can be extended for a maximum of 50 years.

The request for renewal has to be submitted two years ahead of the agreement’s expiry date, the statement said.

The holder of the agreement has to abide by various rules and regulations, it added.

For example, they should register the agreement with the Dubai Land Department (DLD) registry or the Dubai International Financial Centre registry and they cannot change the use of commercial land without obtaining the prior approval of the owner.

The UAE property market posted strong growth in 2021, with a similar trend continuing into this year as the country's economy recovers.

Economic support measures and government initiatives — such as residency permits for those who have retired and remote workers, in addition to the expansion of the 10-year golden visa programme — also helped to improve market sentiment.

Dubai also ranked first in the world for improving real estate transparency in the 2020-2022 period, followed by Abu Dhabi, France, the Netherlands, the US, Germany and India, a report released last week showed.

Under the new law, DLD is mandated with setting rules and standards for ensuring the optimal use of commercial lands approved for Musataha rights. Besides identifying commercial land plots in co-ordination with relevant government entities, it will also ensure the amicable resolution of any conflicts that may arise due to complaints.

The decree, which is effective from its date of publication in the official gazette, stipulated the establishment of a specific registry for Musataha agreements at DLD. It also listed fines that will be charged for failure to issue a certificate of completion for projects built on commercial land under the purview of the agreement.

On Tuesday, Dubai introduced a law to promote the growth of real estate investment funds in the emirate.

The law granted certain privileges to real estate investment funds, as part of efforts to strengthen the emirate's position as a global destination for real estate investment and to provide incentives to attract more funds into the emirate.

Updated: July 20, 2022, 4:20 PM