regulatory_shares – Syria Report

Syria’s state-run SANA news agency reported on September 8 that the Implementation Directorate in charge of implementing Legislative Decree No. 66 of 2012, which operates under the Damascus governorate, delivered about 47,438 ownership deeds for zoning shares to property owners in Basilia City — out of 93,829 owners. The directorate’s head, Al-Muhandas Diab, urged the remaining owners to visit the directorate to complete the necessary paperwork for the deeds and hand them over, “allowing trading to commence as soon as possible.”

This statement appears odd since the Implementation Directorate already allowed the trading of zoning shares in Basilia City for a full year last May. This discrepancy might be due to a lack of actual trading activity on the ground, sources told The Syria Report. These sources affirm that the only entity showing “theoretical interest” in buying shares is a group of real estate brokers active on social media, especially on WhatsApp groups. They claim to be willing to pay between SYP 2-3 per share.

Legislative Decree No. 66 of 2012 established two zoning areas within the jurisdiction of the Damascus governorate. One of these is an area located to the south of the southern ring road, known as Basilia City, covering an area of 954 hectares, with more than 100,000 ownership deeds. As per Decree No. 66 and Law No. 10 of 2018, properties in the area are redistributed to rightful owners via zoning shares. These are essentially common shares in designated building plots.

According to Decree No. 66, the value of the lands and properties in the area are appraised in Syrian pounds before being converted into a common shared ownership among rightful owners. Then, the value of the designated building plots is calculated in Syrian pounds, and subsequently, the value of these plots is divided among the rightful owners in the form of zoning shares.

Not all previous inhabitants of the area receive these shares. Property owners residing in their licensed properties before rezoning, receive zoning shares and the right to apply for alternative (albeit paid) housing. If an owner did not reside on property, they only receive zoning shares. If they are merely an occupant, they get the right to apply to alternative, paid housing.

In July 2021, the Damascus governorate stated that rightful owners would receive 35,000 zoning shares per square meter of their original properties. The governorate invited owners to collect their share ownership deeds throughout 2022. After distributing these deeds, the share trading phase began in mid-May 2023.

The Decree No. 66 Implementation Directorate then unofficially set the initial price for a single zoning share at SYP 1. The Damascus Finance Directorate set a two-percent tax on each share, adding reconstruction and war effort fees amounting to 20 percent of the tax value, making the total share value SYP 1.024.

A correspondent for The Syria Report noted signs suggesting that real estate brokers interested in buying zoning shares might be working for a single, currently undisclosed entity. The price offered by these brokers remains nearly constant, despite half of the legal trading period having passed. The majority of shareholders do not prefer selling at this price, waiting instead for it to improve or for other developments that might increase the price, such as the demolition of some real estate areas in some locations within Basilia City or the completion of any of the alternative housing towers.

Some shareholders residing in Damascus stated that the Basilia City project remains a theoretical venture. All administrative measures, including distributing ownership deeds for zoning shares and distributing shares among heirs, are still on paper. Sources informed the correspondent that there have been no actual sales of the zoning shares to date, with one describing the situation as a “game of finger biting” between shareholders and undisclosed “investment entities.”

One shareholder, Mohammad, told The Syria Report that the situation in Basilia City “does not bode well,” expressing surprise that no well-known or credible companies or investment entities have expressed interest in investing in Basilia City. This would allow shareholders to communicate directly with them, sell shares and sign partnership agreements. Theoretically, a shareholder has three options under Decree No. 66: convert their shares into a zoning plot, sell their shares at a public auction or form or join a closed joint-stock company.

Mohammad added that despite the significance of the Basilia City project, its location in the western part of the capital, and its vast size, the Implementation Directorate has not yet outlined a clear plan for completing the multi-phase project, nor provided a vision for its funding and implementation.

A local source currently residing in the area confirmed to The Syria Report that most areas under zoning in Basilia are still inhabited. An exception to this is Al-Asali area, where the authorities have not allowed residents to return since it was retaken by regime forces in mid-2018. The source pointed out that none of the inhabited areas in Basilia have been evacuated so far, and no evacuation notices have been issued to the residents.

Meanwhile, Mohammad stated that any move to evacuate these areas and demolish them would prompt many residents to be displaced once again. There are no indications that state-owned construction companies are nearing completion of any of the alternative housing towers for eligible residents of the zoning area.

Mohammad said he would not sell his shares at the current proposed price, even if he “had to donate them to charitable endowments.” He explained that an apartment of average size costs around 40 million zoning shares, based on plans. This estimate does not include execution costs, which, when factored in, could significantly raise the price. Mohammed added that he owns 55 million shares, and if he sold them at the current rate, he wouldn’t be able to purchase a single room in Damascus or its surroundings.

The Syria Report was unable to determine the mathematical relationship between common shares, zoning shares, and the size of the original property.

In early 2011, Ibrahim bought a small piece of land in the Bayader Nader informal settlement near Kafr Sousseh in Damascus. He built a small unlicensed house on the land, but was forced to flee the city because of his political activities against the regime. While he was gone, someone else seized his house and sold it. Then, the entire area became subject to rezoning as part of the second zoned real estate area in Damascus, established via Decree No. 66 of 2012. This area would come to be known as Basilia City. Ibrahim lost his house, and it is now difficult for him to claim his rights as laid out in Decree No. 66.

Ibrahim is originally from Deir-ez-Zor, and the 95-square-metre piece of land he bought in Bayader Nader was worth SYP 45,000 (about USD 1,000 in 2011). As with all informal settlements built on private agricultural land, construction is technically illegal — that meant Ibrahim had actually just purchased a share of the original agricultural property. This made Ibrahim merely one among dozens of shared owners of the property, most of whom were also from Deir-ez-Zor. Common ownership means there are two or more owners of one property — their individual shares are not subdivided, which makes them shared owners of a single piece of real estate. Agricultural lands like the one Ibrahim built his home on cannot be subdivided, nor the common property can be terminated. The only proof of ownership in such cases is through a notarised sales contract that specifies which share the buyer now owns. It may also include a statement specifying the location of the land, and a description of the property if there has been construction. In all cases, buildings constructed on lands that were sold in this manner, as well as sales of such buildings, are not formally recorded in the Land Registry.

The original owner of Ibrahim’s land comes from a family that works in contracting, construction and real estate, and some of the family members have good relations with influential figures in the regime as well as Hezbollah officials. According to Ibrahim, the family utilised these relationships to solve some complex real estate issues. When the Syrian revolution began in 2011, Ibrahim decided to build on his piece of land without a construction permit. Ibrahim took advantage of the municipality’s relative laxity in halting unlicensed construction during that time and benefitted from services provided to him by the owner of the land, who is also a contractor. Within just a few months, the contractor built a one-storey house with three rooms and a salon, as well as a kitchen and bathroom. The construction costs totaled SYP 700,000, which Ibrahim paid to the contractor. He also obtained electricity and water meters for the house.

Ibrahim’s story is not unique. During that same period, Ibrahim’s contractor built dozens of identical, unlicensed houses on small plots of land in Bayader Nader for dozens of people, most of whom were from Deir-ez-Zor like Ibrahim.

Ibrahim did not end up living in that house, as his opposition to the regime meant he had to leave Syria after he became wanted by the security services. In order to maintain the house while he was away, he leased it to someone he knew. Others from Deir-ez-Zor who had also built unlicensed houses in the area took similar measures.

In 2012, the Decree No. 66, was issued, which stipulated establishing two zoned real estate areas within the general plans for Damascus city. One of those zones, Basilia City, had an area of 954 hectares that included the Bayader Nader informal settlement. However, implementation of that zoned real estate area did not begin immediately due to ongoing battles on the ground.

Ibrahim’s contractor belonged at this time to the pro-regime National Defence militia and became a leader of its local group in Bayader Nader. Clashes approached the area in 2013-2014 as the opposition took control of the neighbouring Yarmouk camp and Al-Qadam areas. After making sure he was gone, the contractor evicted the tenant from Ibrahim’s house then leased it instead to one of his own acquaintances, taking advantage of the general chaos in the area. He did the same with other absentees for whom he had built previously unlicensed houses in Bayader Nader, by extorting its occupants and then leasing them to other people.

Ibrahim, who could not return to Syria, nevertheless discovered by chance in 2015, that someone from Idlib governorate had bought his house. When one of Ibrahim’s relatives visited the house, the occupant showed that they had a sales contract from the contractor, who was also the original owner of the agricultural land.

Because Ibrahim’s ownership is technically just a share on a commonly owned, non-subdivided property, it could be located anywhere on the original plot of land. This means that the extorter — in this case the contractor — can sell the same property over and over, so long as the sales contracts are not recorded in the Land Registry, and so long as owners like Ibrahim are unable to return and prove their ownership via the judiciary.

With the return of relative stability to the area, and after regime forces retook control in 2018, the Damascus governorate began work on the Basilia City project. This included preparation of large parcels of land, including parts of Bayader Nader, whose residents were evicted.

Under Decree No. 66 and the subsequent Law No. 10 of 2018 that amended it, real estate properties in Basilia City are distributed to rights holders after zoning via shares, according to the results of the work of the inventory and Description Committee. Those who owned agricultural land within the area and didn’t construct anything on it can receive financial compensation, to be set by the governorate, and this was the case of Ibrahim.

Ibrahim, was unable to find out what happened to his house, and whether it had been evacuated and removed, or it was still standing and being rented to strangers. His name was on a list for those entitled to receive only financial compensation — this is because he was a joint owner of a share of agricultural land before the zoning process. And because Ibrahim is wanted by the security services, he is afraid to return to Syria in order to claim his rights and prove via the judiciary that he owned an unlicensed house, a process that could allow him to obtain organisational shares in Basilia City.

Under Decree No. 66 the occupants of their own properties in the area before the zoning process can obtain these shares as well as the right to apply for alternative housing, albeit at their own expense. However, those who only owned their real estate without living on it are only entitled to organisational shares. Those who were occupants but did not own the real estate can apply for alternative housing.

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