Decree_66 – Syria Report

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Confusion Surrounds Allocation of Properties in Basilia City

26-11-2024/in HLP, News /by Rand Shamaa

The initial sessions to allocate residential plots in Basilia City, organised by the Directorate for Implementing Decree 66 in Damascus Governorate, have been marred by unclear procedures and a lack of regulatory framework. This led the governorate to cancel the results of the first allocation session held in early October, calling on eligible stakeholders to restart the process. The decision added to existing confusion and disarray.

Basilia City is the second zoned real estate area established within Damascus under the provisions of Legislative Decree No. 66 of 2012, covering an area of 954 hectares. Allocation refers to an agreement between the Damascus Governorate and the holder of zoning shares, granting the latter a specific, ready-to-build plot with a defined location and specifications, while clarifying the conditions and obligations between the parties. People eligible for allocation, or reallocation, must have documented ownership of zoning shares in the area – typically individuals who owned properties there before the zoning took place and who are able to prove ownership.

On August 19, the Executive Office of the governorate issued Decision No. 985 to begin allocating residential plots to zoning share owners in Basilia City. The decision outlined the process for submitting allocation requests. Following a review of these requests, allocation is either determined by a draw when multiple applications exist for the same plot or granted directly if only one request is received. The allocation process takes place in the form of sessions for which there are no clear rules. Decision No. 985 did not specify a minimum number of plots to be offered for allocation or a minimum number of requests required to initiate an allocation.

The Directorate for Implementing Decree 66 announced the start of the allocation process for the entirety of Basilia City on September 1, set to last for a full year. By September 24, the directorate had accepted 130 allocation requests out of 161 submissions and granted applicants a one-week deadline to complete their documentation. On October 1, it announced the results of the documentation review, and on the following day it held the first allocation session, using either direct allocation or a draw.

According to The Syria Report’s local correspondent, this led to 30 objections from applicants, who cited insufficient time to submit applications and complete their paperwork, resulting in their exclusion from specific plot allocations. According to our correspondent, these objections could have been resolved without cancelling the session’s results. The cancellation, however, angered those who had already been allocated plots, as they found the decision unjustified and blamed the governorate’s mismanagement for the errors.

The Directorate has set October 7 as the new date for receiving the allocation applications, but has not yet set session dates.

One such shareholder, Khaled, told The Syria Report that he sold his shares after his allocation was cancelled. He cited the complexity and lack of clarity in the procedures, along with his inability to wait any longer – seven years after his home in Kafr Sousseh was demolished. Khaled sold his shares for approximately SYP 600 million (around USD 40,000), enough to buy a small apartment on the outskirts of Damascus, he said.

Sources told The Syria Report that the reallocation provided an opportunity for brokers to pressure shareholders into selling at low prices. Brokers used two main arguments to persuade shareholders. The first argument is based on the fear of missing out: shareholders were warned of losing their chance at allocation or having their requests deferred to later stages. Brokers emphasised the slow pace of allocation, with lengthy intervals between sessions, and suggested that any mistakes by shareholders or the governorate could result in their applications being postponed or rejected entirely. This argument resonated particularly with those holding small shares or facing financial difficulties due to ongoing rent payments after the demolition of their homes. The second argument is the high costs of licensing and construction: brokers highlighted the high costs associated with obtaining building permits and developing the plots. For instance, the licensing fees for a single residential plot in the neighbouring Marota City reached SYP 3 billion (around USD 200,000).

Our correspondent noted that many of these brokers are wealthy building contractors or real estate office owners in Damascus. They employ sales agents and transaction facilitators to acquire zoning shares, further complicating the process for individual shareholders.

Allocation of Residential Plots Begins in Basilia City

17-09-2024/in HLP, News /by Rand Shamaa

On August 19, the Executive Office of the Damascus Governorate issued Decision No. 985, allowing the allocation of residential building plots in Basilia City to start. This is the second development zone established within Damascus, in accordance with the provisions of Legislative Decree No. 66 of 2012, and covers an area of 954 hectares.

Allocation refers to an agreement between the Damascus Governorate and the holders of shares, regarding the allocation of specific, ready-to-build plots, with known locations and specifications. This agreement outlines the conditions and obligations of all parties involved.

Legislative Decree No. 66 of 2012 created two development zones in Damascus: the first is Marota City, and the second, located south of the Southern Ring road, is Basilia City. The Damascus Governorate manages both zones through the Directorate for the Implementation of Decree No. 66 and the Damascus Cham Holding Company, which is owned by the governorate. A large number of committees worked on implementing the provisions of Decree No. 66 in Basilia, and the results of their work were gradually issued as decisions by the Damascus Governorate, starting in 2021 – after a delay of nearly nine years in implementing the decree.

In February 2021, the Damascus Governorate released the estimated values for 4,200 properties that existed in the area before 2012. After that, the entire zoned area became jointly owned by the rights holders. Subsequently, in line with the area’s zoning plan, the values of the residential building plots were calculated. Each of these plots is referred to as a “zoning plot” to distinguish them from service or investment plots, which the governorate is entitled to develop on land deducted for free from the zoned area.

Afterward, the zoning plots were distributed among the rights holders based on their shares, which were themselves based on the value of their ownership in the 4,200 properties that existed in the area before 2012. Based on this division, each rights holder received shares, referred to as “zoning shares.” Those entitled to these zoning shares are property owners who have proven ownership through documents and records, meaning owners of licensed properties located in zoned areas, and therefore registered in the Directorate of Cadastral Affairs. However, those who built unlicensed homes on public land or on private agricultural land where construction is prohibited, may be allocated alternative housing but are not entitled to zoning shares.

In July 2021, the governorate released the values of the zoning shares owed to property owners, as well as the share values of the residential zoning plots in Basilia City. According to the zoning plan, Basilia includes 567 zoning plots, divided into three categories: 312 residential plots, 64 residential/commercial plots, and the rest are investment plots, in which the governorate has the right to invest in, including selling or renting it for commercial or service purposes.

At the end of 2021, the governorate began distributing ownership deeds for zoning shares to the rights holders. Under Decree No. 66, a shareholder has three options: to convert their shares into a zoning plot, to sell the shares at a public auction, or to form or join a joint-stock company. In any case, the process of distributing the shares has been slow, and by the end of 2023, the Damascus Governorate announced that only 47,438 ownership deeds for zoning shares had been issued, out of 93,829 rights holders. This means that there are 93,829 rights holders for the 4,200 properties that previously existed in the area before it was zoned. To explain this large number of rights holders, it is important to note that a single property may consist of a building with several floors and many residential units. Additionally, many properties have not been subdivided in the Directorate of Cadastral Affairs, meaning that a single property may have a large number of heirs among the rights holders.

The governorate authorised the trading of shares in Basilia City, starting from May 15, 2023, for a period of one year only. Trading shares means that ownership of the shares can be transferred between owners or to others, either partially or fully. The purpose of trading is to consolidate zoning shares in the hands of a few owners, which would facilitate their allocation of ready-to-build zoning plots. It was expected that once the share trading period ended in May 2024, the allocation of zoning plots would begin.

Accordingly, the recent Damascus Executive Council’s Decision No. 985 of 2024 outlined the provisions for how holders of zoning shares can apply for allocation of specific zoning plots, within a one-year period ending in September 2025. Upon registering their application, the applicant receives a notice known as the “queue system.” If more than one application is submitted for the same plot after the one-year period, a draw will be held to decide. It is not allowed to apply for more than one plot in a single application, but shareholders can submit multiple applications for different plots.

There is a specific format for the application, attached to Decision No. 985, which includes details about the applicants, such as the serial number of applications, zoning share ownership deed numbers, names of the owners, the number of shares applied with, the signatures of the owners or their representatives, the total number of shares applied with, confirmation that there are no legal impediments to obtaining a construction permit, and the designation of up to three owners or their representatives to attend the allocation committee meetings. These representatives will also be present for the draw, sign its record, reclaim ownership deeds if no allocation is made for any reason, and agree to the procedures set by the governorate. Additionally, they are prohibited from taking any actions that would affect the ownership rights of the other shareholders in the application.

Private Company Contracted to Implement Alternative Housing in Basilia City

02-04-2024/in HLP, News /by Rand Shamaa

The Damascus governorate has provided two plots to a construction contractor to erect buildings designated for alternative housing within Basilia City, Muamar Al-Dakak, the director of the Technical Studies Directorate in the Damascus Governorate, stated during a session of the Damascus Governorate held at the beginning of March.

Mr Dakak added that if the experiment is successful, it will be expanded to accomplish the remainder of the alternative housing projects. He explained that the contractor will start work within two months, and six months thereafter, the governorate would be able to assess the effectiveness of this new method.

The inability of public sector construction institutions to implement alternative housing projects was probably the motivation behind the Damascus Governorate’s choice of a private contracting company.

Damascus Cham Management Company, which is the executive arm of the Damascus Cham Holding Company owned by the Damascus Governorate, signed an agreement in mid-February with Platinum Contracting Company to implement alternative residential towers in Basilia City, local sources told The Syria Report. The agreement was signed by Damascus Governor Mohammad Tariq Kreishati, in his capacity as the Chairman of the Board of Directors of Damascus Cham Management Company, and Zuhair AbdulAal, the General Manager of Platinum Contracting LLC.

The decision of the Minister of Domestic Trade and Consumer Protection No. 2871, dated December 14, 2017, published in issue 6, part 2 for the year 2018 of the Official Gazette, ratified the Articles of Association of Platinum Contracting LLC. According to the Articles, the company’s purpose includes executing contracting, infrastructure, implementation, and delivery works, trading in all construction and finishing materials, participating in tenders and auctions with the public, private, and joint sectors, as well as owning, selling, and investing in real estate. The Articles state: “The company is not entitled to build homes, sell them, or trade in them regardless of their type,” which is a standard clause found in all Articles of Association for contracting companies. No amendment has been published in the Official Gazette regarding this clause up to the current date.

Contrary to Mr Dakak’s comment about delivering two plots to a contractor, The Syria Report has learned that Platinum will build six towers for alternative housing on 16 plots in Basilia City. According to the agreement with the Damascus Governorate, the company will construct these towers over four years, after evacuating the occupants from the area. This means that the company will not start work before the Damascus Governorate evacuates the occupants, which has not yet happened. After that and during the construction period, Platinum will pay rent allowances to those entitled to alternative housing.

It is also noteworthy that the Damascus Governorate does not seem to have published an announcement of a tender for the implementation of the alternative housing project, nor did it announce a call for proposals from contracting companies. In the absence of any details on the administrative and procedural mechanisms, it seems that what occurred was akin to a direct awarding of the project to Platinum by the Damascus Governorate, according to The Syria Report’s sources.

Legislative Decree No. 66 of 2012 created two zoned real estate areas in Damascus; the first extends southeast of Mazzeh, known as Marota City, and the second south of the Southern Ring Road, named Basilia City. The Damascus Governorate manages these two zoned areas through the Directorate for the Implementation of Decree 66 and through Damascus Cham Holding Company, which is affiliated with the governorate. Alternative housing is one of the social housing programmes implemented by public institutions and can be paid for in instalments. Rights holders within the zoned area can apply to it.

According to Decree No. 66, the alternative housing projects were supposed to be completed by 2018. However, Law No. 10 of 2018, which amended Decree No. 66, modified the deadline for delivering alternative housing to the end of 2019. Yet, to date, none of the alternative housing towers, which were supposed to be built by the General Company for Building and Construction, the General Company for Roads and Bridges, the Military Housing Establishment, and the Military Construction Establishment, under the supervision of the General Company for Engineering Studies, have been completed. All these companies are state-owned. The work of these institutions and companies has been stalled for reasons related to the fuel crisis, changes in construction material prices, inflation, and supply chain issues, according to official authorities.

The Damascus Governorate had previously decided to consolidate the plots designated for those entitled to alternative housing in Marota City, into Basilia City only, contrary to the provisions of Decree No. 66, which stipulated that each regulatory area should have its alternative housing for its deserving residents. Thus, all alternative housing projects in the two regulatory areas are now confined to Basilia City alone, on land appropriated by the Damascus Governorate for its use.

The Damascus Governorate funds the alternative housing project. However, the entitled beneficiary is the one who pays for their alternative housing in instalments with interest, based on the estimated construction costs. Due to the significant changes in the exchange rate of the Syrian pound over the past years and the rise in construction material prices, the executing construction institutions, led by the General Housing Establishment, are raising the values of monthly instalments without prior agreement with the subscribers, as well as increasing the estimated values of the social housing units, including alternative housing.

Explained: Zoning Shares and Who Gets Them Under Decree No. 66

08-08-2023/in Analysis & Features, HLP /by Rand Shamaa

Legislative Decree No. 66 of 2012, which established two zoned real estate areas within Damascus governorate as part of the general plan for the capital city, compensated some rights holders with zoning shares in these two areas. This article explains what is meant by “zoning shares” and how people obtain them.

Decree No. 66 clarified that those entitled to zoning shares are owners of built properties within the zoned real estate area who have proven their ownership with official documents and endorsements. This mainly refers to owners of properties that were registered and documented in the Land Registry prior to the establishment of the new zoned real estate areas. However, non-compliant owners who have built on public lands, or on private agricultural lands where construction is prohibited, might instead be allocated not free alternative housing but will not be entitled to zoning shares.

As for renters, Decree No. 66 stipulated that tenants of properties within the zoned real estate area whose rental agreements are subject to the provisions of the old Tenancy Law No. 111 of 1952 are also entitled to zoning shares. Essentially, this means that the property is officially documented in the Land Registry. In such a case, a tenant occupying the property is entitled to a share equivalent to 30 percent of the estimated value of the residential property they occupy, and 40 percent for a tenant occupying commercial property.

The 2012 decree also stipulated dividing the zoned real estate area into plots, which are jointly owned by the owners within the zone. The value of the plots are estimated and then distributed in the form of joint shares, or zoning shares, amongst the rights holders by a distribution committee. This committee is formed by a decision of the governor and is chaired by an advisory judge appointed by the Minister of Justice. It also includes two real estate appraisal experts appointed by the Minister of Housing, and two representatives from amongst the area’s property owners.

The zoning shares for each rights holder are calculated according to complex processes carried out by several committees, in accordance with Decree No. 66. To put it simply: an initial committee estimates the value in Syrian pounds of the properties owned by rights holders, which were constructed before the establishment of the zoned real estate area based on prevailing prices at the time of the procedure. Subsequently, the area becomes joint communal property of the rights holders, though each person theoretically retains their share. Following this, another committee calculates the Syrian pound value of the plots intended for construction, specifically designated for rights holders, as per the zoning plan. Each of these is referred to as a zoning plot. The Damascus governorate is entitled to allocate large areas within the zoned real estate area, free of charge, for the establishment of service or investment plots. There are no clear criteria for valuation, as these plots have not yet undergone construction. After the valuation, the value of the zoning plots is divided among the rights holders, who each receive their zoning shares.

The distribution committee issues its definitive final decision, which includes the names of those entitled to shares of the zoning plots as joint owners. The Damascus governorate also releases nominal data about the joint zoning plot shares and delivers them to the owners based on the distribution committee’s tables. This data should list the name of the zoned real estate area, the names of the shareholders, the number of shares, and the total count of shares for the zone.

Owners of the zoning plot shares can begin trading their shares within a year after the governorate announces the final distribution scheme. However, initially, the rights holder’s share ownership must be registered with the Damascus governorate. Subsequently, anyone can access ownership information of the shareholders from the share registry and obtain a certified copy in exchange for a fee set by the governorate. The governorate also charges a five percent fee of the traded share value for every share trading transaction.

The process of transferring and registering the ownership of zoning plots is conducted in the Land Registry, in accordance with the current status of the joint share owner. If someone has a large share, they can apply for an independent zoning plot that is equivalent in value to the shares they own. The executive office in the governorate then issues a decision to allocate the plot and register it under that person’s name. This decision is announced on the governorate’s notice board and a copy is sent to the Directorate of Cadastral Affairs for the property registration procedure.

For those who own smaller shares that don’t equate to an independent zoning plot, Decree No. 66 allows them the option to establish a joint-stock company under the Companies Law. In this scenario, the governorate issues a decision to allocate the shares to the company, announcing it on their notice board. The governorate also sends a copy of this decision to the Ministry of Economy and Trade for establishing a joint-stock company and another copy to Cadastral Affairs for registering the plot ownership under the company’s name. Properties within the decree’s zone of implementation are exempted from land registration fees.

Decree No. 66 prohibits the ownership and allocation of more than one zoning plot, whether by individuals or companies. If it is not feasible to establish or join a company, the only option left for a small shareholder is to sell their shares via public auction. In such cases, the Damascus governorate forms a special committee, in accordance with Contract Law No. 51 of 2004, to sell the zoning plots. The proceeds from the sold plots are then deposited in the Damascus governorate’s account at the Central Bank of Syria, labelled as a “trust account”. The governorate may not use the funds of the owners of the sold zoning plot shares. This group of zoning share owners is the most adversely affected as they are forced to sell at auction prices that builders compete for.

The Directorate for Implementation of Decree No. 66, which is affiliated with the Damascus governorate, announced the commencement of share trading for the second regulatory zone south of the Southern Ring Road, called Basilia City, starting from May 15, 2023. The trading period will last until May 15, 2024. A square metre consists of 339,615 shares, according to the the Finance Directorate of the Damascus governorate. Article 25 in Decree No. 66, set the price of a single share at SYP 1.

Trading Begins for Shares in Basilia City

23-05-2023/in HLP, News /by Rand Shamaa

The Damascus governorate’s Directorate of Decree No. 66 Implementation announced earlier this month that trading would begin for shares in Basilia City as of May 15, 2023, and would last for one year. Such tradition involves the partial or total transfer of shares’ property between owners. Such trading aims to consolidate the shares in the hands of a few owners, which will ease the process of allocating designated plots for construction.

Decree No. 66 of 2012 stipulates the establishment of two zoned real estate areas in Damascus governorate within the general plan for Damascus city. One of the zones (the second one) was to be located south of the Southern Ring highway and known as Basilia City. It would have an area of 954 hectares and more than 100,000 ownership deeds. Under Decree No. 66 and the subsequent Law No. 10 of 2018, real estate in the area would be redistributed to rights holders after zoning via shares. Any property owner who occupied their piece of real estate there before this zoning would receive shares and the right to apply for alternative housing, which they would pay for out of pocket. Those who were living on properties they didn’t own would receive only the shares without the option of alternative housing.

The number of shares given to each rights holder is calculated according to a complex set of processes carried out by multiple committees, according to Decree No. 66 of 2012. First, but to simplify the process, an initial committee appraises the lands and properties existing in the area before zoning in Syrian pounds. After this, the zoned area is converted into common ownership, shared between the rights holders. Then, after deducting the Damascus governorate’s share, another committee calculates the value of the organisational plots allocated for construction to the rights holders based on the zoning plans prepared for the area.

Afterwards, the calculation of the value for these plots is also done in Syrian pounds, albeit without any clear criteria yet in place. Then the value of these plots is divided among the rights holders according to their individual shares. This is how each rights holder receives what is called organisational shares.

Under Decree No. 66, a share owner has three options: convert their shares into organisational plots, sell them via public auction or establish or join a joint-stock company.

In July 2021, the Damascus governorate announced the nominal values of these organisational shares due to the property rights holders and the nominal values for organisational plots in Basilia City. In practice, rights holders received about 35,000 shares per square metre of their original properties on the site, according to the estimated values of the properties as announced by the Real Estate Appraisal Committee in February 2021. The governorate invited rights holders in Basilia City to receive their title deeds for these shares throughout 2022. Following the distribution, the trading period for these shares began.

A correspondent for The Syria Report spoke with an informed source familiar with the work of the Directorate of Decree No. 66 Implementation, who said that the directorate unofficially set the initial price per share at SYP 1 as an initial offering. According to the correspondent, this initial price is not related to the actual trading price, which is subject to supply and demand during the trading period. The price per share currently starts at SYP 10 and goes up to SYP 200.

Most of the shareholders have organised themselves into groups, some of which operate over social media platforms, aiming to gather as many shares as possible and sell them at reasonable prices or allocate them and acquire plots for construction. Those who own only a small number of shares tend to sell them, while owners of many shares have usually consolidated or coordinated with others to allocate one or more complete subdivisions. These groups have also aimed to regulate share prices to improve negotiation opportunities with contractors or real estate companies seeking to purchase the shares.

According to the correspondent, no actual sales transactions have taken place yet, as the process is still entirely at the stage of negotiation over prices concerning supply and demand. On average, though, the going rate per square metre of apartment space (unbuilt yet) within residential plots in Basilia City is 350,000 shares. Put more simply, a 100-square-metre apartment in Basilia city is worth 35 million consolidated shares. (The correspondent added that some real estate companies have offered up to 48 million shares as an initial price per 100-square-metre apartment). And suppose the trading price per share remains at SYP 10. In that case, a 100-square-metre apartment in Basilia City would equal about SYP 350 million (about USD 39,000 according to the current black market exchange rate of SYP 9,000 to the dollar). Notably, these apartments and plots have not yet been constructed.

There is a clear disparity between shares before and after zoning: The Damascus governorate has appraised each square metre in the area before zoning to be worth 35,000 shares, while the value per square metre after zoning is 350,000 such shares. Subsequently, every 100 square metres of original pre-zoning real estate in the area is now equal to just one square metre of an apartment in a residential plot.

Trading conditions

According to the Directorate of Decree No. 66 Implementation’s website, people wishing to trade their shares must first address any obstacles to property transfer, such as mortgages, liens, expropriation, and termination of common property ownership, if applicable. However, the Director of Cadastral Affairs in Damascus governorate indicated that any such obstacle can be removed after the concerned party submits a special request to the directorate for individual study based on a review of the property documents and that property’s Land Record. Then the necessary decision will be issued to either approve the request or refer it to the relevant judicial authority.

Afterwards, the applicant must submit a file to the Directorate of Decree No. 66 Implementation containing the following documents:

A title deed for the organisational shares issued by the Directorate of Decree No. 66 Implementation;
A clearance certificate from the Directorate of Finance and the Damascus governorate;
Two copies of the organisational shares trading contract.
A copy of the contractual parties’ IDs;
A storage mechanism to preserve the documents.

Notably, the validity period for the clearance certificate is just one month.

However, the directorate does refer to some exceptional cases. For example, if a seller cannot show up, an authorised agent may attend the sale on their behalf. In the case of a purchase based on a court order, the documents required to complete the transfer of ownership may vary. However, the directorate did not specify these documents. And regarding share owners who have not been able to receive their title deeds for various reasons, such as common ownership between inheritors, they must follow the legal procedures in place and acquire them during the trading period. Removal of some endowment rights registered in the Land Record for certain real estate properties can be done through the governorate’s Directorate of Endowments after the directorate acquires five percent of the total shares or their current value.