The New Urban Renewal Law in Syria
It is not the first time that a Law 10 has garnered so much attention in Syria. In 1991, the People’s Assembly, the Syrian Parliament, approved the Investment Law 10/1991, which was ratified by the then-President Hafez Al-Assad. Back then, the Investment Law was enacted with the goal of stimulating private investments in a range of sectors after almost three decades of state control. The Cold War was coming to an end and relations with the United States and Western countries were improving. Syria had also come out of an economic crisis that hit the country’s foreign reserves in 1986, its public sector was not performing up to standard and the oil sector alone was an unreliable source of growth in the long-term. The Investment Law at the time seemed like a logical response to the prevailing situation.
Less than 30 years later and another Law 10 is making even more headlines in a world where social media reporting has become entrenched. Much has been written about Syria’s new Urban Renewal Law 10/2018 in various media outlets and social media postings. The narrative in Western circles has been to frame this piece of legislation as an attempt by the Syrian government to muscle vulnerable communities opposed to it out of their rightful properties. The pick-and-choose approach that a number of journalists and observers have adopted when considering the provisions of the Urban Renewal Law in their articles or posts is quite conspicuous. They have failed to present a full comprehensive overview of the Law and mention the safeguards it contains. Rather, these writers have either mistakenly or dishonestly opted to portray the rationale behind the Law as a means to steal land belonging to opposition sympathizers and refugees who emigrated overseas while attempting to redraw demographic boundaries throughout Syria’s cities.
The Urban Renewal Law was passed as an Act of Parliament. It was approved by the People’s Assembly on March 19th and ratified by President Bashar Al-Assad on April 2nd. Before its enactment, and most certainly after, various media outlets were carefully following its progress as it moved through the legislative process not least because its predecessor Legislative Decree 66/2012 had aroused similar interest. Even before its contents were known, a lot of premature conclusions had been drawn and were being propagated, which has been the case with countless events in Syria since 2011. Due to this current state of affairs, the Syrian Law Journal has deemed it fundamental to provide its readers with a more objective reading and analysis of the Law.
The enactment of the Urban Renewal Law and the preceding Legislative Decree 66/2012, which is discussed below and on which it expands, is in response to a number of challenges. Firstly, there is a need to rebuild war-torn parts of Syria. Secondly, the problem of informal housing has long been on the government’s agenda even before the current conflict erupted. Various laws have been passed that attempt to address this issue, such as the Real Estate Investment Law 15/2008, Decree 9/2008, Law 33/2008 and Legislative Decree 40/2012.
While the Real Estate Investment Law makes references to attempts to ease the problem of informal residences by promoting affordable housing, Decree 9/2008 clarified the government’s position before the war that it was no longer willing to tolerate the expansion of illegal housing units. Rather, it would seek to have their construction ceased. While it clarified that it did not target existing units, this Decree was to apply to all new projects. Law 33/2008 even sought to establish a process to begin the registration of illegal housing units, which would allow certain owners of informal residences to obtain title deeds to their properties. In all, the effects of these pieces of legislation have been limited as illegal construction continued during the current conflict. However, efforts were made to deter such actions by enacting Legislative Decree 40/2012, which imposes possible penalties against offenders. The idea today is that if reconstruction is going to move forward, it would logically follow that local authorities throughout Syria should start zoning areas appropriately where rebuilding will take place.
A third reason for the passage of the Urban Renewal Law is that as long as the conflict in Syria is ongoing, there is a need to stimulate some economic activity in the country. The unfortunate reality is that war limits options when evaluating which sectors require investments. Before the conflict, Syria’s economy traditionally depended on the energy, industry, agriculture, tourism and services sectors. Given the present circumstances, it is unrealistic to expect investments in all of these sectors. Nevertheless, in areas where the state is able to provide security, investments in the real estate sector could serve as a means to support economic growth, which is necessary in Syria today and which will have knock-on benefits in other sectors of the economy as well.
In order to have a clearer picture of how the Urban Renewal Law actually works, it is worth recounting its provisions in more detail so that readers can draw their own inferences from a primary source being the Law itself rather than focusing on unreliable secondary sources. A legal analytical approach to assessing and studying a Law is much more appropriate than a political one where divergent opinions and conflicting agendas can cloud the facts. Unlike other events that have taken place throughout the Syrian war, the one relating to the Urban Renewal Law can be examined by referring to the Law itself, which is a public document and is easily accessible. In other words, no facts or provisions can be fabricated as far as the Law is concerned. One allegation in particular that must be immediately rejected at the outset is the false statement that all Syrian property owners have to prove their ownership in order to avoid being deprived of their rights as such a malicious claim could not be further from the truth.
It is paramount to firstly acknowledge to what precisely the Urban Renewal Law applies while appreciating its background before delving further into its provisions to decipher its objectives. It provides that one or more zoned areas may be established by decree on land subjected to local planning regulations located throughout Syria’s local districts for the purposes of regeneration and development projects. The issuance of such a decree can only be made based on a proposal from the Minister of Local Administration and the Environment. The Law has the effect of extending the provisions of Legislative Decree 66/2012, which only sanctioned the establishment of Marota City and Basilia City in Damascus, to all of Syria and empowering local authorities in the development of such projects. Practically speaking, the Urban Renewal Law amends Legislative Decree 66/2012 to the extent that it shall apply to all of Syria and not solely to Damascus.
It is essential to grasp that the power to establish these regeneration and development projects lies with the local councils governed by the Local Administration Law provided for in Legislative Decree 107/2011 and not the central government in Damascus. While the central government exercises some oversight in the form of a proposal by the Minister of Local Administration and the Environment, it is crucial to appreciate that the bulk of the decision-making process is retained by the local councils. Of all of Syria’s state institutions, the local councils are considered the most democratic relatively speaking. Local councils are elected directly by the people and there have never been any preset quotas for any political parties in such elections. In fact, in the first vote held in March 1972 under the previous Local Administration Law, the Baath Party and their allies witnessed defeats at the polls.
The Urban Renewal Law thus comes in light of a governmental policy to advocate decentralization and the devolution of certain powers away from the central government to the local councils where ordinary people have more influence. One consequence of such a strategy will be to improve a system of local governance while adopting corporatization as a public policy. The latter has been given legal effect by Legislative Decree 19/2015, which is discussed in more detail below. Since decentralization has been considered on many occasions both before and during the conflict in Syria, it is safe to conclude that the Urban Renewal Law is yet another piece of legislation similar to the Local Administration Law and Legislative Decree 19/2015 which are attempting to realize this goal.
A brief historical background concerning Legislative Decree 66/2012 and the subsequent measures that followed it in the build-up to the enactment of the Urban Renewal Law is beneficial. The purpose behind the issuance of Legislative Decree 66/2012 is to initially carry out an urban redevelopment project in informal parts of southern Damascus. It lays down zoning requirements for the Al-Razi area, which became Marota City. The passage of Legislative Decree 66/2012 in September 2012 followed clashes in certain suburbs of the capital that came to an end in the summer of that year.
A few years after Legislative Decree 66/2012 was issued, Legislative Decree 19/2015 also followed suit. It permits the establishment of private joint stock companies on the basis of social, economic and regulatory studies with the aim of managing and investing the assets belonging to the various local councils within Syria. Such private joint stock companies can be set up by local councils as holding companies, thus giving effect to the policy of corporatization. In order to incorporate such companies, approval must first be sought from the Minister of Local Administration and the Environment based on a proposal from the relevant provincial council. Such companies will consist of a chairman and members of local councils and their resolutions will have to be ratified by the governor of the province where the local council is located. Following the passage of Legislative Decree 19/2015, the first such private joint stock company Damascus Cham Holding (not to be confused with Cham Holding) was incorporated in 2016.
Damascus Cham Holding was launched with a share capital of SYP 60 billion and one of its objectives is to undertake development projects in Marota City. Damascus Cham Holding is wholly owned by the Governorate of Damascus and the Governor of Damascus serves as its Chairman. It is important to clarify that Damascus Cham Holding does not own the Marota City project but rather has been contracted to build the underlying infrastructure in return for shares in the plots of land that comprise the development. More details on shares in the plots of land follow below.
While the Damascus-centric Legislative Decree 66/2012 will make it possible to develop Marota City and another project named Basilia City in the capital and its outskirts, the Urban Renewal Law has the effect of sanctioning similar developments throughout all of Syria, not just in Damascus. Consequently, once a decree has been issued establishing a zoned area where a new development will be undertaken, the relevant local council has one week to request from the competent real estate authorities a list of all pre-existing owners who hold title to land located in that zoned area. The competent authorities shall prepare the list of pre-existing owners within 45 days of receiving the request so that these owners can obtain shares in the new development.
The local council shall within one month of the issuance of the decree provide notice via media outlets for any interested persons whose ownership rights are not recorded in the Land Registry to declare their interests in any land located within the respective zoned area subjected to development. Alternatively, they can have a relative or authorized representative make such a declaration on their behalf. The owners whose proprietorship is not recorded in the Land Registry shall declare their interests within 30 days of such notice being published via the media outlets and shall submit all of their relevant documents to substantiate their ownership.
A key provision of the Law is that no person has to prove their property ownership until a new zoned development in which they originally owned land is established by decree and this requirement will only apply to persons whose ownership is not recorded in the Land Registry. Thus, the Law requires persons whose ownership interests are not registered in the Land Registry to prove their ownership only once a zoned development has been established by a decree. For the sake of certainty, it is worth reaffirming that no person has to take any action until land in which they possess property rights and interests has been zoned accordingly. The rationale behind these procedures is to verify the persons with ownership interests in the lands subjected to development but not recorded in the Land Registry so that they can be provided with shares in the upcoming development. In fact, this requirement to prove ownership could be interpreted as an attempt to safeguard the property rights of owners whose interests are not recorded in the Land Registry for whatever reasons.
As for those persons whose ownership interests are recorded in the Land Registry, then they do not have to undertake any further action. Their ownership interests are already registered and they will be provided with shares accordingly if the land in which they possess ownership rights is subjected to a development project. It is therefore essential to reiterate and confirm that the need to prove ownership does not apply to all properties in Syria but only where property rights fall within a zoned area that is set for regeneration like Marota City and Basilia City. For that reason, readers are urged to reject the allegation that all Syrian property owners have to prove their ownership as such rights are already constitutionally protected.
In areas where the land registries were burnt down or title deeds and other documents were lost, stolen, damaged or destroyed, a new Law has been enacted to deal with these circumstances. In light of legislative reforms in anticipation of reconstruction, the People’s Assembly approved a bill giving legal effect to the status of real estate documents that were lost, stolen, or partially or totally damaged during the war. The bill became Law 33/2017 and it regulates the process of re-issuing the respective real estate documents. It also threatens imprisonment for any person who steals or damages real estate documents. Prior to the enactment of this Law, the Land Registry Law and its executive regulations did not address such circumstances where real estate documents were affected in this way. According to a judge in the Real Estate Court, 70% of property documents were lost, stolen or destroyed during the conflict. Though it will take time to assess, the Law is expected to resolve 80% of problems associated with missing real estate documents, which should be reconstructed and given legal effect.
The areas identified in a decree set for regeneration in accordance with the Urban Renewal Law undergo a process whereby the land is initially zoned but for the purposes of giving pre-existing landowners shares in the zoned area that will comprise the new development. Having obtained shares in the development, the owners can no longer claim their original specific piece of land. The amount of shares they receive should be in proportion to their former landholding in the area before it was rezoned for development purposes.
Such a shareholding will correspond to an ownership in a specific plot of land, or part of a plot, in the new development. Furthermore, every plot of land in the development is assigned a number of shares. The pre-existing landowners who become land shareholders so to speak can partner up with other land shareholders to develop one or more plots depending on the size of their shareholdings. Based on the number of shares they all hold in aggregate, they could potentially be designated one or more plots, whether totally or partially, whose assigned shares equal their total shareholdings. If an individual’s shareholding is sizable, he or she can take ownership over one or more plots on his or her own if the shares correspond accordingly. Supposing that the shareholding is not substantial to constitute one or more plots, he or she will receive shares in part of a plot.
It is crucial to emphasize that the Law does not permit expropriation of private property. Rather, it converts a proprietor’s land ownership into shares in the new development. Owners of these shares can then decide whether to hold or sell them. For the owners who obtain and consequently maintain shares in the land subjected to the new development, the value of those shares is expected to increase as construction gets underway. As demand for real estate units in these projects grows, so will the value of the shareholdings.
Once a decree has been issued authorizing a development, an immediate freeze is imposed on the sale of land in that area. In other words, pre-existing owners who hold title to land located in an area set for regeneration cannot sell any of their properties from the instance the decree is issued. Rather, they have to wait for the respective local authority to carry out the required zoning procedures, carve out the plots and assign the relevant shares to the registered proprietors. Once the shares in the development have been assigned accordingly, then the pre-existing owners can start selling their shares as they see fit. The point is that during the period between the issuance of the decree and the distribution of shares, no assignment of property rights can be executed.
The relevant local council authority is responsible for carving up the zoned area into plots. In fact, the Urban Renewal Law provides that the respective local council shall set up one or more committees to survey the zoned area within one month of the issuance of the decree sanctioning the development. With respect to Marota City and the provisions of Legislative Decree 66/2012, the Governorate of Damascus was the competent local authority to zone the Al-Razi area and carve up the land into plots.
Bearing in mind the legal background, it is worth studying the case of Damascus Cham Holding, which is technically just another investor in Marota City even though it is wholly owned by the Governorate of Damascus. In return for its commitment to secure the underlying infrastructure works for Marota City, Damascus Cham Holding was awarded with shares in the development, which were enough to comprise several plots. Damascus Cham Holding then entered into joint ventures with private investors to develop these plots. The joint ventures were incorporated into private joint stock companies whereby Damascus Cham Holding would contribute 49% of the share capital in kind by providing the underlying plots and its counterparty would fund the remaining 51% in cash and develop the plot. The model described above envisages a public-private partnership between local councils on the one hand through corporatized structures and private investors on the other, which falls in line with the new economic direction of the country. It is expected to be replicated throughout Syria following the issuance of the Urban Renewal Law.
The Marota City development is predicted to start witnessing construction in 2018. Since 2017, Damascus Cham Holding has signed several contracts with private investors. On August 27th, the company signed a contract with a leading Syrian investor worth SYP 150 billion to build and invest in three towers and five residential plots in Marota City. It has also reached an agreement valued at SYP 108 billion with an expatriate Syrian businessman based in Kuwait to invest in a mall and six buildings. The move gives the larger share in the joint venture to the private investor over the public sector for the first time reportedly. Damascus Cham Holding is also prepared to sell five plots in the development to the same businessman. The strategic partnership between Damascus Cham Holding and this investor is expected to be among the most significant in Marota City and will turn the development into the commercial center of Damascus, which will house homes, hotels, shops, restaurants, businesses, financial institutions and so forth.
More recently, Damascus Cham Holding announced the incorporation of a new private joint stock company called Rawafid Damascus with a share capital of SYP 25.9 billion. The joint venture is in partnership with four other companies, one of which is owned by a leading and prominent pre-war businessman. Rawafid Damascus will invest in three residential plots in Marota City. Damascus Cham Holding will contribute 49% of the share capital in kind in the form of the land while the other four partners will own the remaining 51%. Damascus Cham Holding has additionally entered into other similar joint ventures. In light of all these new planned projects, the Governorate of Damascus has advised developers in Marota City that they need to start applying for building permits and commence construction or face penalties contained in the Land-Use Planning Law provided for in Legislative Decree 82/2010.
Marota City is not the only regeneration project of its kind. In 2018, the Governorate of Damascus approved the zoning of a new development to be named Basilia City. Following the passage of the Urban Renewal Law and its objective of extending the provisions of Legislative Decree 66/2012 throughout Syria, proposals are being put forward to establish new projects. There are currently discussions to potentially regenerate the Damascus suburbs of Mezzeh 86, Qaboun, Jobar, Tadamon and Harasta, the Homs suburb of Baba Amr, which witnessed substantial clashes in 2012, and the suburbs of Aleppo city in accordance with the Urban Renewal Law.
Another consequence of the passage of Legislative Decree 66/2012 and the Urban Renewal Law is the issue of finding alternative housing for residents of the informal areas that were subjected to regeneration. Residents of the Al-Razi area who lived in unauthorized housing units were provided with cash consideration to lease alternative accommodation with the amounts being reflective of the value and size of their previous residences in Al-Razi. While they rent these alternative residences, new accommodation will be built and allocated in Marota City to which they can eventually move to once construction has been completed. However, it is expected that these residents will be required to pay the prices of the new residences through installment payment plans. Moreover, it is anticipated that the prices of these new residential units will be discounted to the extent of the value of the former informal residences in Al-Razi depending on each resident’s circumstances. In addition, if any residents who lived in the informal areas possess legal title to any of the land in Al-Razi, then they will have been allotted shares in the Marota City development accordingly.
Despite all this available information, many media outlets and social media postings continue to frame the Urban Renewal Law as part of a predetermined narrative that defames its objectives. It is only fair to pass judgment on it once its provisions have been correctly assessed and comprehended. One may draw several conclusions afterwards but it is clear that the Law has been issued as part of a package of reconstruction legislation. It takes into consideration the need to rebuild war-torn parts of Syria, alleviate the complications associated with informal housing, stimulate economic activity in the country and encourage private sector investments in the process much like the Investment Law sought to achieve in the 1990s. Such a model is not necessarily alien in modern times as countries around the world have found comparable ways to address the problems of informal areas and bolster the real estate sector through urban renewal projects. After all, what the Syrian government is doing through this Law is not that different to what happens in other countries. Regeneration initiatives are sometimes accompanied by compulsory purchase orders in the United Kingdom or eminent domain in the United States. At least under the Urban Renewal Law, expropriation is not being pursued in Syria. The main point of this article is to convey an honest understanding of how the Urban Renewal Law works according to its provisions and to communicate the facts accurately so that readers can draw their own legitimate conclusions.