Mitigating the impact of the pandemic on Real Estate sector

  • Challenges in the Real Estate Sector
In the heat of the current battle between the humans and the global coronavirus pandemic; one of Dubai’s leading law firms, Abdulla Alawadi & Associates, has been fighting against this pandemic for its clients, by providing guidance, and sound legal advice on a timely basis. Our law firm has been closely following all businesses and legal developments and their subsequent impact on industries, thus preparing all stakeholders in the struggle against this pandemic. The pandemic caused an imbalance in the country’s economy in general and the real estate market in particular, due to the suspension of construction projects. The registered transactions dropped significantly in the last quarter, largely as a result of movement restrictions put in place to combat the spread of this pandemic.                 However, in this article, we are addressing the impact of this situation on the real estate market, specifically rental contracts within the UAE.
  • IMPACT ON THE RENTAL SECTOR: COMMERCIAL AND RESIDENTIAL
The pandemic had a massive impact on the rental sector, which eventually fell into the ‘force majeure’ category. The other challenge that emerged during this scenario was regulating the relationship between tenant and owner both in the commercial and residential sectors. While there were many challenges that surfaced due to Covid-19, the real and serious ones were basically the possibility of terminating the contractual relationship between the parties. This actually meant, that companies and other commercial establishments would have to incur huge economic and financial losses. Secondly, the other serious concern was in the residential sector where individuals were terminated from their jobs and they were not able to pay their rents on time. Tenants affected by salary reductions and job cuts were looking to downsize and move to more affordable locations. A recent judgement by Dubai's Rental Dispute Management Centre (RDC) confirmed that leases can be terminated in two cases, one was force majeure or emergency circumstances. This was a new rule that came into existence during the pandemic. Furthermore, there were several ‘cheque bounce’ cases that were recorded during that time and which further led to a disruptive imbalance in the contractual relationship between the tenant and owner. Therefore, all existing rental dispute resolution centers in the UAE were required to form reconciliation committees to resolve such issues during the pandemic.
  • OUR APPROACH:
Abdulla Alawadi & Associates during this phase was able to extend its services and provided sound legal advice in all matters related to rental disputes, both to tenants and owners. The firm represented many institutions and individuals before the judicial authorities for rental disputes, across the country and helped them solve the situation. As per the corporate policy, the firm also provided both parties to the rental relationship a sound and documented advice as per the applicable law, before proceeding with any judicial process. If you are facing any similar challenges, as an owner or tenant, due to this unprecedented situation, then Abdulla Alawadi & Associates will be able to support you in resolving your cases in this domain.
  • Hesham El-Samra, Senior Associate – Litigation