Dubai issues decree to regulate the use of commercial lands

His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, has issued Decree No. (23) of 2022 regulating the grant of ‘Musataha’ rights on commercial lands in Dubai.

The Decree regulates the use of commercial lands in Dubai by granting the right of ‘Musataha’ to develop real estate projects. The new legislation forms part of the emirate’s efforts to consolidate Dubai’s status as a preferred global real estate investment destination.

As per the Decree, the ‘Musataha’ agreement creates a real property right that entitles its holder to construct a building or invest in, mortgage, lease, sell, or purchase a plot of land belonging to a third party for a period of up to 35 years.

The agreement can be extended to a maximum of 50 years. The request for renewal has to be submitted two years ahead of the agreement’s expiry date.

The holder of the agreement has to abide by a number of rules and regulations. These include not changing the use of commercial land without obtaining the prior approval of the owner. Additionally, the holder of the agreement should register the agreement with the Dubai Land Department registry or the Dubai International Financial Centre (DIFC) registry.

The Dubai Land Department is mandated to specify the terms and conditions, and responsibilities of parties in ‘Musataha’ agreements. Its other functions include identifying commercial land plots for which ‘Musataha’ agreements can be signed, in coordination with relevant government entities.

The Dubai Land Department is authorised to conduct inspections of commercial land plots to ensure full compliance with the ‘Musataha’ agreement.

The Dubai Land Department is also tasked with facilitating the amicable resolution of any conflicts that may arise due to complaints and grievances, without violating the provisions and amendments of the Government Claims Act No. (3) of 1996.

The Decree stipulates the establishment of a specific registry for ‘Musataha’ agreements at the Dubai Land Department. It also lists fines that will be charged for failure to issue a certificate of completion for projects built on commercial land under the purview of the agreement.