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We are excited to share the latest edition of the Law Update, beautifully and appropriately titled “Sustainable Horizons: The Saudi Arabian Vision.” Giving special honor to the Kingdom’s 2030 vision, this update focuses on a collection of both informative and inspiring articles.
For those in construction, you can learn about how the tendering environment impacts risk-pricing for contractors, the updates on the legal framework of the construction industry and how contractors can protect themselves against financial difficulties.
There is good news too from the kingdom’s banking sector, from which the practice of “Open Banking” is being pushed for! But what is open banking? We’re answering that too.
Also . . . Are there any women trail blazers in Saudi Arabia you can name? We’ll help you with that. We cover how the Middle East has been making strides in empowering women in the entrepreneurial space,most notably in STEM fields.Read the full edition
Murad Sawalha - Associate - Corporate / Mergers and Acquisitions
However, developments in the law since 1963 allow for certain exemptions to this general prohibition, such that non-Qataris may invest and own property in certain designated areas only, and subject to certain restrictions as set out below.
In 2002, Qatar introduced Law No. 2 of 2002 ‘Regulating Property Ownership of Gulf Cooperation Council Nationals (the “2002 Law”) allowing natural persons of Gulf Cooperation Council (“GCC”) nations to own no more than three real estate investments in residential areas in Qatar. The three areas specified for freehold ownership by GCC nationals are Lusail, Al Khuraj and Jabal Thailab.
However such investment is subject to the following restrictions:
The 2002 Law further provides that where the real estate comprises vacant land, the owner must ensure that construction of the residential property is completed within six years of the land being registered in the owner’s name; failure to comply can result in the Ministry of Agriculture and Municipality Affairs having the right to dispose of such real estate, subject to the owner being compensated, to the value of the property at the time that the land was acquired or at the value of the property at the time of disposal, whichever is lower.
In addition, the 2002 Law also affords both natural as well legal GCC persons the right to own real estate in order to practice their vocation or licensed economic activity (“LEA”) provided that the real estate be limited in use for the purposes of such vocation or LEA, and that the area of the property is appropriate for such vocation or LEA. The disposal of any property acquired for such purposes is not permitted until such time as the owner has (a) discontinued the vocation or LEA; or (b) relocated the place where such vocation or LEA is being practiced.
Usufruct rights were also afforded to both natural and legal GCC persons under the 2002 Law for purposes of LEA. Usufruct is a legal term which means that the holder of a usufruct, known as a usufructuary, has the right to use the property and enjoy its benefits. Nevertheless such usufructuary will not be an outright owner of the same, it being akin to a leasehold interest but has the effect of discontinuing any rights of the freehold proprietor until such time as the usufructuary has come to an end.
The 2002 Law also stipulates that individuals who have acquired a GCC citizenship may only own real estate after the elapse of five years from the date of obtaining such GCC citizenship. In order for a company to be considered a GCC legal entity, 100% of the shareholding must be held by GCC persons.
In 2004, Qatar opened up designated areas of the real estate market to non-Qataris (which for the avoidance of doubt includes GCC nationals) by virtue of Law No.17 of 2004 and the subsequent Cabinet Decision No. 20 of 2004 ‘Concerning the Organization of Ownership and Use of Real Estate and Residential Units by non-Qataris’ (together referred to as the ‘2004 Law’). The 2004 Law allows non-Qataris, GCC nationals or otherwise, to acquire a freehold interest in lands and residential units in the areas of the Pearl, West Bay Lagoon and parts of Al Khor.
The 2004 Law further stipulates that a non-Qatari may acquire the right of usufruct for a term of 99 years renewable on similar terms in certain specified investment areas. Such investment areas are outlined in the Law No. 6 of 2006 ‘Setting Terms and Procedures for Usufruct Rights of Non-Qataris in Real Estate and Residential Units’, the investment areas being defined as specific zones within Msheireb, Fariq Abdul Aziz, Doha Al Jadeeda, Al Ghanim Al Atiq, Al Rifaa / Al Hitmi Al Atiq, Al Sulta, Bin Mahmoud, Rawdat Al Khail, Al Mansoura/ Bin Dirham, Najma, Umm Ghuwailina, Al Khalifat, Al Saad, Al Mirqab Al Jadeed / Al Nasr, Doha International Airport, Al Qusar / Al Dafna / Onaiza and Lusail / Al Khuraj / Jabal Thailab.
The 2004 Law provides that a non-Qatari’s usufruct right will not be recognised unless such right has been registered. A registered right of usufruct is transferable to any heirs and shall terminate upon either of the following:
Non-Qataris are also permitted to own real estate for the purpose of Arab and foreign missions pursuant to Law No. 1 of 1980 ‘Concerning Regulating the Ownership of Real Estate by Foreign Missions in Qatar’. Foreign missions are defined by law to include regional and international bodies, organisations and agencies. Notwithstanding the foregoing, any such real estate subject to acquisition by a foreign mission has to meet the following conditions:
Whilst primary laws were introduced in 2002 and 2004 to allow foreign ownership of property in Qatar, it is only in recent years that formal transactions with non-Qataris are more common place. Many developments in the areas specified for foreign ownership comprise off-plan apartments, however a registration system for apartment ownership has yet come into place or be legislated for. Whilst the Real Estate Registration Department of the Ministry of Justice has commenced issuing titles for apartments, it has yet to have in place any system whereby a strata title can be issued to individual apartments and to establish an owners’ association for the common use components of the developments.
Interest in the real estate market of Qatar by foreigners arose after the introduction of the 2004 Law and for GCC nationals arose after commencement of the Lusail project, which is a major development related to Qatar’s hosting of the 2022 FIFA World Cup. However, with the significant numbers of apartments and compounds being constructed, the development of a strata title law is an issue that the authorities will need to address in the immediate future.
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