Property law and infrastructure projects attract realty investors to Ajman

Property law and infrastructure projects attract realty investors to Ajman

The objective of this week's write up is to inform readers about the latest trends in Ajman realty market. Ajman recently implemented the much awaited property law following the footsteps of Dubai. So in this issue, we bring to you in detail the law that will safeguard the investor's interest. Also included are the various infrastructure projects currently underway in the emirate that will give a big boost to Ajman's real estate sector.

The smallest of all seven emirates of the UAE, Ajman is witnessing the maximum activity in the real estate sector partly due to investor-friendly property laws and partly due to affordable projects. According to latest studies, the investment in Ajman's property sector has now exceeded the AED 400 billion mark. In the year 2008 itself, the emirate has witnessed property price appreciation of almost 40%.

Property Law

Ajman is the second emirate after Dubai to introduce freehold property as early as in 2002. Finally, the law has been implemented in the emirate, boosting investor confidence in its real estate sector that has witnessed remarkable growth over the last few months. HH Sheikh Humaid Bin Rashid Al Nuaimi, Member of the Supreme Council and Ruler of Ajman, issued Amiri Decree No 7 and 8, 2008, to regulate the emirate's land and properties sector. The decree comprises 34 articles that legalize freehold ownership of land and property for UAE and GCC citizens and companies wholly owned by them as well as to the public stock companies.

Freehold Property in Ajman
The law allows non-GCC developers and buyers to own freehold land and property in designated areas determined and approved by the ruler. Apart from GCC nationals, other expatriates could obtain property on a freehold as well as 50-year leasehold basis that is renewable in areas designated by the ruler.

Role of Land Department
According to the law, the Department of Land and Property will regulate the sector, survey areas, approve the land map and the fees for the services provided by the department and register all properties. It is solely assigned to register property rights and long-term leasing contracts.

Inheritance Law
The inheritance notification must be registered with the property register, in case heirs have property rights within their inheritance. No dealings will be admitted unless registered.

Security for Investors
Dubai's Law No. 8 of 2007 on Guarantee Accounts of Real Estate Development (Escrow Account or Trust Law) has significantly contributed in streamlining property purchases in the emirate.

His Highness Sheikh Mohammad Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, has issued Law No 14 for 2008 that will regulate property mortgages and the relations between mortgage issuer and the borrower. The 35-article law includes all procedures concerning a mortgage and its legal effects on the concerned bodies, as well as execution procedures on the mortgaged property and the relations between the mortgage lender and borrower. The law makes property insurance mandatory.

The law makes all mortgage deals that are not registered with the Dubai Land Department null and void, allowing the department to better regulate property and mortgage transactions. It also regulates relations between both parties involved in the mortgage process and the Dubai Land Department, which is responsible for implementing the law and ensuring the rights of both parties. The law stipulates the invalidity of any property contracts that are not registered with the department. The law allows mortgaging of properties from sold off-plan or those that are still under construction, on the condition they are registered with the land department.

In the similar lines, Ajman has introduced the bank guarantees to safeguard investor's interest. Bank guarantees must be deposited for those who wish to invest in Ajman and that money must be used only for the project itself. An amount of 5 per cent of the project value will be frozen and will not be released until completion of construction of the project. The developers will be responsible for maintaining the project for 10 years following handover.

Infrastructure Development Projects

In an effort to evolve as a world class city, Ajman is investing on the development of its infrastructure. The value of infrastructure projects in Ajman has touched AED 1.4 billion in 2008. The infrastructure projects will support the speeding up of real estate development in the emirate.

Sewerage System
The government of Ajman has allocated AED 800 million for the sewerage system. The new sewerage system is set to enhance Ajman's economic development and significantly improve the health and environmental standards in the emirate. It will also help to lengthen the lifespan of buildings in the emirate and lower maintenance costs through the environmental improvements.

Road Network
The Ajman government plans to spend AED 3 billion over the next three years to develop the emirate's roads. There are more than 12 proposed projects worth AED 408 million concerning road development and improvement in Ajman to be completed by the end of 2011. The projects include widening and lengthening of several roads, construction of bridges and providing additional road lighting.

Electricity
In order to bolster its power segment, Ajman has signed AED 7.34 billion deal with Malaysian Mining Corporation (MMC), Malaysia-based power producer, which would bring Middle East's first coal-fired power plant of the region into the emirate. It would generate one gigawatt of electricity as early as in 2012. Two other power plants to be built by the Federal Electricity and Water Authority (FEWA) in Ajman will begin operating in the next few months in order to supply electricity to the existing real estate developments until the MMC plant is commissioned.

Airport
Ajman International Airport worth AED 12 billion will shortly take shape in Ajman to further enhance its business potential. The construction of the airport is set to commence in the second half 2008 and to start operations by 2011. The airport, spread over more than 60 million sq ft of area located 3.5 km from Al Manama, will be built by a consortium of private developers.

The airport will accommodate commercial aircraft with a capacity of 1 million passengers a year rising up to 10.4 million by 2046, as well as cargo of at least 400,000 tonnes and corporate aviation among other infrastructure capabilities. Several residential and commercial properties will be developed adjacent to the airport.

Public Transport
Ajman is all set to launch a low-cost taxi and bus transport system as part of its AED 1.5 million project that will service two fixed routes for a nominal fee. The project will be implemented in two phases. The first phase will see the operation of 6 taxis and 4 buses from Mushairif intersection to Lulu Hyper Market, through the City Centre, the University Roundabout, Al Gerf Industrial Area and the emirate's downtown.

The second phase will connect the Ajman town centre near Al Kuwait Hospital to the Industrial area, passing the old Passport Building, Galfa and Al Humaidia bridges and the vegetable market. Extra vehicles will be launched during this phase, including more trips to Sharjah. Plans are also afoot to extend the service to Umm Al Quwain and Ras Al Khaimah.

Hospitality Projects
Ajman boasts of a tranquil and serene environment, thereby enhancing its tourism potential. Due to tremendous rise in tourist flow to the emirate, Ajman has announced major tourism infrastructure projects totaling AED 5.55 billion. Two of the major hospitality developments in the emirate are the AED 3 billion Ajman Marina and AED 50 billion Al Zorah.

Ajman, being the third largest property market in the UAE, has all the characteristics to woo the potential investors. According to the Ajman Chamber of Commerce and Industry, over 33% of development projects in the emirate are owned by foreign nationals as against the 11% in other emirates.