Real Estate, Construction and Hotels & Leisure Focus
Sofian Nawaiseh Associate, Corporate Structuring
As part of reforming the legal regime in Qatar, legislators have introduced several laws and regulations and amended existing laws relating to real estate ownership to adapt with the changing needs of the market and to further help promote Qatar as a place to do business.
This article will provide a brief overview of the history of laws and regulations concerning ownership of real estate in Qatar and will also touch upon the recent developments in the Qatar Financial Centre (the “QFC”) addressing the issue of owning real estate by legal entities established in the QFC and the QFC’s practical response towards such an issue.
The Law No. 05 of 1963 on the Prohibition of the Acquisition of Foreigners of Ownership of Immovable Property in Qatar was enacted. Under such law, non-Qataris, whether natural or legal persons, were prevented from acquiring ownership of immovable properties including ownership of any lands, buildings or any other immovable properties. The only exception was owning immovable properties in Qatar under the condition that the purpose of such ownership is to facilitate the performance of a public service or to achieve a public benefit.
In 1980, a law was issued to regulate the ownership by foreign missions of real estate in Qatar (the Law No. 01 of 1980). Under such law, Arab and foreign governments were allowed to own real estate in Qatar, provided that there is a reciprocal treatment in place and certain other conditions to be fulfilled. It is worth mentioning that the Emir of Qatar has recently issued the Law No. 03 of 2022 Regulating the Ownership of Real Estate by Diplomatic and Consular Missions. The new law repeals the law No. 01 of 1980 and includes similar provisions about the ownership by foreign missions of real estate in Qatar. In addition to rules included in the old law, the new law determines specific areas where foreign missions can own real estate, which are; Lusail, Qteifan Island, West Bat Lagoon and the Pearl. In addition, the new law also establishes a special committee within the Ministry of Justice to be specifically concerned with regulating the ownership of real estate by diplomatic and consular missions. At the beginning of the 21st century, Qatar issued the Law No. 13 of 2000 regulating the investment of non-Qatari Capital in the Economic Activity, which was then repealed by the Law No. 01 of 2019 (the “Foreign Investment Law”). The Foreign Investment Law opened the doors for reforming the Qatari policy on restrictions relating to foreign ownership of real estate. Following the enactment of the Foreign Investment Law, Qatar issued the law on the Organisation of Property Ownership by Citizens of the Gulf Cooperation Council (in 2002) and the Law Regulating Ownership and Use of Real Estate and Residential Units by Non-Qataris (in 2004). Both laws gave the citizens of GCC countries and other foreign countries the right to own the freehold or the usufruct rights (leasehold for 99 years) of real estate in Qatar under certain conditions.
Finally, in 2018, Qatar issued Law No. 16 of 2018 Regulating Non-Qatari Ownership and Use of Real Estate (the “Foreign Real Estate Ownership Law”). The Foreign Real Estate Ownership Law repealed the laws of 1963, 2002 and 2004 mentioned above. Furthermore, it allowed for non-Qataris to own the freehold and usufruct rights (leasehold for 99 years) in real estate in certain designated areas in Qatar. The designated areas were determined by a resolution of the Cabinet and included (without limitation) the areas of West Bay Lagoon, the Pearl, Al Khor, Al Dafna and Lusail (“Designated Areas”). Any real estate property outside of the Designated Areas is restricted to Qatari nationals only. This also applies to corporate entities, allowing them to own the rights over real estate outside of the Designated Areas only if such entities are wholly owned by Qatari nationals.
The QFC is a business and financial centre that was established in 2005 with the aim to enhance growth and diversification of Qatar’s economy, and to provide an attractive platform for foreign investors to conduct business in Qatar and the region. As part of the flexibility offered by the QFC to foreign investors, foreigners are allowed to own 100% of the shares of companies in the QFC without any restrictions.
However, the flexibility offered by the QFC imposed a challenge in terms of owning real estate properties, especially in properties outside of the Designated Areas, i.e., in the areas restricted for Qatari nationals. Such a challenge extended even to entities established in the QFC that are wholly owned by Qatari nationals.
Regarding properties in areas restricted to ownership by Qatari nationals, the Land Registration Department at the Ministry of Justice had some reservations regarding the transfer of title of real estate to entities established in the QFC even if such entities are wholly owned by Qataris. This was on the basis that the QFC does not impose any restriction on the ownership of the shares, and at any point of time, the shares of such companies may be transferred to foreigners, allowing (in theory) the restricted property to be indirectly owned by non-Qataris.
Late in 2021, the QFC issued the Real Estate Ownership Regulations (the “Regulations”). The Regulations, to a great extent, mirrors the Foreign Real Estate Ownership Law. The Regulations define designated areas as “areas designated by the Foreign Real Estate Ownership Law as areas where non-Qatari Persons may own Real Estate or have usufruct over Real Estate.” The Regulations allows QFC companies that are wholly owned, directly or indirectly by one or more Qatari nationals to own real estate properties in any area in Qatar. Companies that are not wholly owned, directly or indirectly, by one or more Qatari nationals are only eligible to own rights over real estate properties in the Designated Areas.
As a response to the limitations imposed by the Real Estate Registration Department, the Regulations introduced an application form to be submitted by QFC companies that are wholly owned by Qataris to the Companies Registration Office (“CRO”) at the QFC to own or obtain a usufruct right in real estate that is located outside of the Designated Areas. Before granting its approval, the QFC Authority will impose a restriction on the QFC company’s licence such that a transfer of ownership of any shares in the QFC company to third parties may not be registered without the written consent of the CRO, so that it can ensure the company remains wholly owned by Qataris. It also provided that any registration of a transfer of ownership of any shares in a QFC company that owns real estate located outside the Designated Areas made without the written consent of the CRO shall be null and void.
The solution introduced by the QFC will give more comfort to the Real Estate Registration Department to finally allow QFC companies wholly owned by Qataris to own rights over real estate outside of the Designated Areas.
The historical development of real estate ownership in Qatar started in the 1980 where only foreign missions and consulates were allowed to own real estate. There was some progress in this space in 2002 and 2004, until the legal framework was reformed in 2018. Foreign entities and individuals are now allowed to own properties in 9 areas and usufruct rights in 16 other areas.
The recent development of laws and regulations in Qatar regarding real estate has opened doors to foreign investment (although still partially restricted) and provides a solution to tackle a practical issue as in the example of the QFC companies.
For further information, please contact Sofian Nawaiseh.
Published in July 2022
