A new law that defines the rights, responsibilities and obligations of all parties in jointly owned properties in Dubai will comfort investors but do little to boost demand for properties in the short term, analysts say.

Guidelines implementing the long-awaited Strata Law were published by the Land Department on Tuesday, in a bid to help the emirate on its path to mature market status, but comes against a backdrop of residential and office oversupply.   

'An instant pick-up in transaction activity is not expected on the back of this new legislation,' said Sana Kapadia, vice president of equity research at EFG-Hermes in Dubai.

'While these clear and transparent rules will undoubtedly give buyers more comfort over their purchase decision, demand is only likely to be positively impacted in the medium to long term,' she said, adding the bank expected an overall decline in house prices and rents of up to 10 and 15 percent, respectively in 2010.

Dubai's residential market, already oversupplied by about 20 percent, will gain 41,000 more homes between now and the end of the year, while office space will rise to about 6.4 million square metres by the end of 2011 from about 3.6 million square metres at the end of 2009, according to Colliers International.   

The framework, which offers guidelines for all types of property, sets new rules for general regulation, jointly owned property declaration regulation, constitution regulation and survey regulation.   

Additional rules include regulation on the setting up and collection of service charges without the clearance of the Real Estate Regulatory Authority (Rera), the emirate's property watchdog.   

'This move should put a cap on some of the unreasonable charges being levied by some developers currently,' Kapadia said.

While Rera has taken a number of steps to improve regulation and transparency of the emirate's property sector, such as laws for property maintenance, more needs to be done to tempt overseas investors back to Dubai after the market collapsed as a result of the downturn.

Further clarity on the mortgage law and visa regulations are among further steps that need to be introduced, analysts said.

'The implementation of Strata Law shows growing maturity in the market, but this takes time to develop,' said Chet Riley, an analyst at Nomura.

Dubai's once-booming property market has been hit hard by the downturn, as house prices slumped some 55 percent from their peaks in the third quarter of 2008. Billions of dollars worth of projects were put on hold or cancelled, and jobs were slashed.- Reuters