Tim Elliott
Welcome to Lawgical, the UAE’s first—and still the only—regular legal podcast in the Emirates. My name is Tim Elliott. Lawgical comes to you from the Dubai-based legal firm Yamalova & Plewka. As always, here’s Ludmila Yamalova, the managing partner.
Ludmila Yamalova
Great to see you, Tim.
Tim Elliott
Now, you don’t have to be an expert in international real estate to know that the UAE’s real estate market is often described as “hot.” It’s a buoyant economy, a great place to live, with plenty of sunshine. That means a lot of people are moving here or relocating, which drives demand for housing, often leading to high rents and developers keeping busy with real estate projects.
Not all projects, however, come to fruition. So, in this episode of Lawgical, we’re looking at canceled projects and what the law says about real estate developments that don’t go ahead.
The real estate market in Dubai is booming, Ludmila. Anecdotally, I’m sure you see that all the time with the number of real estate clients you work with. But canceled projects are still part of the narrative, aren’t they?
Ludmila Yamalova
Yes, Tim, but the expectations around canceled projects today are very different from how they were in the past. You and I go way back in terms of our time in the UAE. I arrived here in 2008, just as the global financial crisis hit. That event ultimately burst the real estate bubble in the UAE.
Before the crisis in late 2008, the UAE real estate market was incredibly hot. It grew rapidly in popularity and pace but had very little inventory of completed properties. Many developers, or even wannabe developers, launched projects and sold them off-plan.
Tim Elliott
For those who may not know, what does “off-plan” mean?
Ludmila Yamalova
Off-plan refers to projects being sold before they’re built, often based on sketches or conceptual designs. At the time, many of these projects weren’t even registered with the relevant authorities. Developers would create plans for a building—let’s say a 15-story tower—and then start selling units before breaking ground or even securing the necessary funds to build.
The system relied heavily on collecting money from investors to start construction. Developers would use those funds to begin building while continuing to sell more units to finance the rest of the project.
Tim Elliott
That sounds risky.
Ludmila Yamalova
It was. The market wasn’t well-regulated, and there was a flood of global investment pouring into the UAE during that period. Many developers launched projects without sufficient capital, relying almost entirely on investors’ payments.
When the financial crisis hit, investor confidence evaporated. People stopped making payments, and many developers found themselves unable to continue building. Some projects stalled, some developers abandoned them entirely, and others simply disappeared.
Tim Elliott
So, what happened to all these stalled projects?
Ludmila Yamalova
Since 2009, the UAE has implemented various regulations to address stalled and abandoned projects. Dubai, in particular, introduced measures to better regulate the market. For example, in 2013, Dubai issued Decree No. 21, forming a special judicial committee to oversee the liquidation of canceled real estate projects and settle related rights.
This committee evaluates projects to determine which ones should be restructured and completed and which should be canceled altogether.
Tim Elliott
When we talk about canceled projects, are we referring to Dubai specifically?
Ludmila Yamalova
Yes. Real estate in the UAE is regulated at the Emirate level, not federally. Each Emirate manages its own real estate market, and Dubai has been the most active in terms of development and investment. The Dubai Land Department (DLD) is the primary authority for overseeing real estate in Dubai, with agencies like RERA (Real Estate Regulatory Agency) and RDC (Rental Dispute Center) operating under its umbrella.
For canceled projects, the 2013 decree and its subsequent amendment in 2020 (Decree No. 33) are specific to Dubai.
Tim Elliott
If someone invested in a project and hasn’t heard anything in a while, how would they find out if it’s been canceled?
Ludmila Yamalova
The Dubai Land Department maintains a list of canceled projects, which can be accessed through its online platforms. One tool investors can use is the Dubai Rest mobile app. Under the “Services” tab, there’s a section for incomplete and canceled projects.
Investors can search for their project by name. If it’s on the list, they can register their interest by submitting documentation, such as identification, proof of payment, and the sales agreement.
Tim Elliott
Does an investor need to file a court case?
Ludmila Yamalova
No. Under the current framework, you don’t need to file a court case. The judicial committee for canceled projects operates under the DLD and handles all matters related to liquidation and settlement. There are no fees to register your interest.
The process is much simpler than it used to be. You just submit your documents, and the committee investigates the liabilities and assets of the project.
Tim Elliott
What are the chances of investors getting their money back?
Ludmila Yamalova
It depends on the specific project. Once a project is officially canceled and the committee is involved, investors will typically receive something. The amount, however, depends on factors like:
- The value of the project’s remaining assets (e.g., partially built structures, land, funds in bank accounts).
- The total liabilities, including unpaid contractors or land costs.
- The number of investors and their respective claims.
In some cases, investors might receive a full refund, while in others, they may get only a percentage of their investment.
Tim Elliott
Are the decisions of the canceled projects committee final? Can they be appealed?
Ludmila Yamalova
The decisions of the judicial committee are final and cannot be appealed. This is explicitly stated in the law. Even if an investor disagrees with the amount they’re awarded, they cannot challenge the decision in court.
Tim Elliott
It seems like the market has come a long way since the early days of UAE real estate.
Ludmila Yamalova
Absolutely. The market today is far more regulated. Developers must meet stringent requirements, including financial guarantees and project registration with the relevant authorities. The likelihood of new projects being canceled is minimal.
The canceled projects we’re discussing today are largely legacy projects from the pre-2009 era. Current investors can feel more confident in the system, as it has evolved significantly over the past decade.
Tim Elliott
That’s another edition of Lawgical—canceled real estate projects in the UAE. As always, thanks to our legal expert, Ludmila Yamalova, managing partner here at Yamalova & Plewka.
Ludmila Yamalova
Always a pleasure, Tim.
Tim Elliott
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