The Dubai Land Department (DLD) has introduced two initiatives, Tayseer and Tanmia, to revive and support the real estate market in Dubai.

Tayseer aims to support certain projects in Dubai through the arrangement of financing via local banks. Tanmia — an initiative by Real Estate Investment, and Promotion and Management Centre (REIPMC) under DLD — aims to reduce the number of incomplete projects, reignite stalled projects and improving Dubai's appeal for investment.

Tayseer, launched in July 2010, aims to facilitate financing for purchasers in certain pre-qualified projects in Dubai. The qualification process is essentially as follows:

n The DLD identifies individual projects, which are then qualified to be backed by the Dubai Government. The main criteria is that the project should be 60 per cent sold; 60 per cent of the construction is complete; there is an escrow account and construction is moving as per the schedule approved by the Real Estate Regulatory Agency and under a competent contractor capable of timely delivery.

n The DLD signs agreements with local banks to arrange financing for purchasers in the qualified projects; and

n The Dubai Government backs the financing offered by the local banks to the purchasers.

The objectives are to allow purchasers in qualified projects to avail financing to complete their purchase so the developer will receive funds from the purchaser or bank in a timely manner and thus facilitate completion.

We understand from the DLD that the introduction of Tayseer will enable the Department to raise the level of confidence in the sector, support and facilitate the financing of freehold projects, increase investment to attractive levels, create new opportunities and provide further options to investors.

The DLD informs us that to date seven local banks and one financial institution have signed agreements with the Department to offer finance for Tayseer-qualified projects. Since July 2010, 40 projects in Dubai — in Jumeirah Lake Towers, Dubai Marina and Business Bay districts — have been approved and currently registered under Phase 1 of the initiative.

The Land Department has advised us that 26 projects are under study and 215 investors have benefited from financing facilities offered.

It is envisaged that projects endorsed by Tayseer would do much to restore the faith in the investment community. Any bank or financial institution in the UAE can sign up with DLD to be a part of the initiative. The DLD is willing to provide a primary copy of the Tayseer Agreement to an interested bank or financial institution for consideration.

There have been numerous occasions where projects have stalled due to developers absconding or investors failing to pay instalments. Accordingly, investors or developers can approach the REIPMC to discuss the inclusion of their project under Tanmia.

REIPMC was established in September 2011 and has not yet published a definitive procedure for projects to be thus included. However, we understand it is intended that a three-stage process will apply.

Stage 1

Proposal for the project to be included under Tanmia is submitted by a developer or investors to REIPMC, which will give a decision whether this be done. The application form requires details of the project including whether there are any claims against the developer.

REIPMC's criteria for approval may include a legal opinion from the DLD's legal counsel. In the case of an absconding developer (where the proposal is from investors or the proposed new developer) it is highly likely a legal opinion will be required.

Stage 2

Upon the initial approval, a technical report for the project will be implemented (at the cost of the developer). In the case of absconding developers, fees may be paid by REIPMC and then reimbursed by the new developer later.

By virtue of the technical report, all outstanding issues in relation to investors, old and new developers, master-developer, escrow account and financiers are considered by REIPMC. This may require meetings to take place with all concerned parties present. Upon satisfaction, it will create and implement a strategy for the relevant project.

Stage 3

Currently, we are informed that 16 projects are in stages One and Two, and only one project has reached the final stage and been implemented. It is worth noting that the majority of the 16 projects being considered are proposals by developers for existing projects rather than proposals by new developers or investors.

We believe both Tayseer and Tanmia are positive initiatives to support and revive Dubai's real estate market. Further clarity, additional information and public awareness of these schemes will help spread awareness.

 

The writers are with the law firm of Hadef & Partners.