A Dubai court issued a precedent-setting ruling last month that may be a game changer for the emirate’s real estate market. When the housing bubble burst and Dubai’s properties lost an average of 52 percent of their value, many homeowners fled the country to escape mortgages that had become worth more than the value of their homes. But British bank Barclays, in the court judgment on January 11, won the right to repossess these properties and auction them off in traditional foreclosure proceedings. The ruling is the first application of Dubai’s 2008 foreclosure law, which had yet to be put to use. Until 2008, the United Arab Emirates’ legal system made foreclosure and repossession difficult if not impossible, leaving banks with the options of settling loan defaults out of court or simply waiting for the economic climate to improve so that they could begin collecting from their debtors again.
