The Dubai Land Department has defended the new escrow accounts amid rumours of “grey areas” and discrepancies for foreign developers registered as offshore.
Marwan Bin Ghalita, technical administration director, Dubai Land Department told Arabian Business that no amendments had been made to the escrow account since its inception at the beginning of the month.
He also denied that a special arrangement had been made for companies registered as offshore. “Nothing has been changed with the escrow accounts. We were in constant talks with the developers throughout the entire escrow planning process. The only thing we did wrong was launch during the summer when everybody is away.
“There have never been any grey areas with the escrow – it is simply that people didn’t ask about it. People often don’t wait for the official translation or the memorandum and translate it themselves,” he continued.
The Dubai Land Department set the record straight following reports that amendments had been made after several legal experts pointed out that a licence required to develop land and sell and purchase property in Dubai are only granted to free zone companies and by the Dubai Economic Department to UAE or GCC nationals – not companies registered as offshore.
Offshore companies can apply for the licence by submitting a number of certificates including an official certificate from an authority in the country where the company is registered.
Ghalita added that so far the response to the escrow accounts has been good. “We didn’t anticipated the response we have had so far. Some developers were already practicing their own escrow accounts by themselves but those that weren’t have all rushed to the Dubai Land Department and have created an account. We have already approved four developments and many more are currently in process.”
Escrow accounts were launched at the beginning of the month in a bid to increase transparency within the regional property market. The introduction of the account was set up as a result of Law No 8 which asserts mandatory use of the account when buying an off-plan property. So far three banks have announced the introduction of the accounts, HSBC, Dubai Islamic Bank and Badr Al-Islami, the Islamic banking division of Mashreq. Since the escrow’s launch, property developers and buyers have been quick to praise the new arrangement.
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