Explained: Executive Instructions for the New Investment Law

The Council of Ministers has issued executive instructions for Law No. 2 of 2023, which amends Investment Law No. 18 of 2021. The executive instructions were issued by two resolutions of the Council of Ministers on October 15, bearing the numbers 1575 and 1576. It is not clear why two separate resolutions for the executive instructions were issued, as there is no legal justification for having more than one set of executive instructions for a single law. This could lead to further complications in their implementation, especially since Resolution No. 1576 repeats some of the provisions of Resolution No. 1575.

Law No. 2 of 2023 expanded the scope of application of Investment Law No. 18 of 2021 to include real estate development and investment projects, which were previously regulated by the now-repealed Real Estate Development and Investment Law No. 15 of 2008.

Official and semi-official media outlets have described the executive instructions as contributing to the revitalization of the real estate development sector and addressing certain shortcomings in the old laws regulating real estate development.

Resolution No. 1575

Resolution No. 1575 provides executive instructions regarding the conditions for creating real estate development and investment zones, their objectives, surface area and the mechanism for preparing their general and detailed zoning plans. It also outlines how to secure the necessary land for these plans, the mechanisms for implementing real estate development and investment projects, how to deal with the resulting plots from the implementation of the projects, and permits.

Resolution No. 1575 modified some definitions and terms found in the Investment Law and its amendments, as well as introducing some new modifications. For example, Resolution No. 1575 provides a definition for a developer and real estate investor as a person licensed to engage in real estate development and investment activities, and to whom the same regulations that apply to investors are applicable.

It states that the specialised zone, which is a geographically defined investment area where specific economic, production, service, or investment activities are conducted, now includes what it calls special service areas for the purpose of development and real estate investment. These are defined as zones that comprise the establishment of advanced special service projects (medical, educational, commercial, sports, technological, industrial, craft and others).

It also stipulates that its scope includes investment projects undertaken by investors and investment companies, the public sector, the cooperative sector and projects for development and real estate investment, as well as areas for real estate development and investment within the forms of special economic zones.

However, the connection between advanced special service projects and real estate development is not clarified.

Furthermore, Resolution No. 1575 clarifies that areas of real estate development and investment can be created both outside and inside urban zoning plans or within their protected zones. It should be ensured that these areas are selected outside of restricted and prohibited areas such as military zones, airports, and ports, and that they do not conflict with the directives and data of regional planning, and do not include an area created according to the provisions of the urban planning regulation of Law No. 23 of 2015.

Such areas are created either to provide and prepare the necessary lands for establishing protected urban areas, or for the demolition and reconstruction, or rehabilitation and renewal of existing areas, or for the establishment of advanced special service zones. These projects are considered to have social dimensions if they aim to house specific segments of society under facilitated conditions.

The measure also defines the minimum size of the real estate development and investment area as no less than 15 hectares in Damascus, Aleppo and Rural Damascus, and 10 hectares in other governorates, if they are outside the urban zoning plans. If the area is within the urban zoning plans, it can be established regardless of its size, whether its plans are executed or not, including in informal settlements.

Resolution No. 1575 introduced a new clause not found in previous laws, stating that the rights of violators occupying public or private state lands before the enactment of the law are limited to taking only the rubble of their buildings. At the same time, the authority responsible for the real estate development and investment zone is obliged to allocate alternative housing for these individuals from what is available to them, inside or outside the area, even if the violators who built in informal housing areas did so on state property.

Despite the fact that the investment law and its amendments repealed the provisions of Law No. 15 of 2008, which addressed informal housing areas by creating them as real estate development zones, Resolution No. 1575 gave administrative bodies the freedom to apply other urban planning laws or the new investment law, and to cancel the guarantees that had been granted to owners of unlicensed homes when applying the Law No. 15 of 2008.

Resolution No. 1576

In turn, Resolution No. 1576 laid down executive instructions for the obligations of the developer and real estate investor, the contractual relationship between them and the authority responsible for the real estate development and investment area, the timeframes for project execution and their implementation and handover programs, and the mechanisms for executing infrastructure projects in the covered area, as well as the processes of property subdivision, registration, and deregistration in the Land Registry.

It repeated some of the definitions contained in Resolution No. 1575, but added one new definition: the basic finishes related to the building facade and the sections, parts, and common facilities, both inside and outside the building and in its surroundings.

The scope of application of Resolution No. 1576 is limited to real estate development and investment projects planned to be implemented through a profit-sharing approach on state property lands, public entity properties, or properties owned by the administrative unit, as well as properties owned by the real estate developer or their delegate.