Basilia City: The Cumbersome Shares Distribution Scheme

On July 9, the Damascus governorate announced that it had published the nominal values of the new equitysharesand plots dueto rights holders in Basilia City. The governorate called on rights holdersto check the nominal values published on its public bulletin board, on the governorate website, and in service centres.

Under Decree No. 66 of 2012, the so-called Distribution Committee (DC) must submit a list of names of rights holders in the development zone to the Damascus governorate. Those rights holders hold common ownership over plot shares in the zone. The governorate must then publicly announce those lists one week after receiving them. The DC is formed by the Damascus governorate. Leading the committee is an advisory judge appointed by the Minister of Justice, with members including two real estate appraisal experts appointed by the Minister of Public Works and Housing and two experts to represent property owners.

Internal dwellings within the development zone constitute common property shared among those holding rights therein in shares equivalent to the estimated value of the property for each, and the in rem rights which they possess.

The lists published by the Damascus governorate include each property’s real estate number, the names of the owners after implementation of judicial rulings, the original property ownership share - also called real estate equity share under Decree No. 66 -  and the new equity shares - also called development zone equity share.

The real estate equity share is an owner’s percentage share of the original property that was in the area replaced by Basilia City. In Syria every real estate property is divided into 2,400 shares. The new equity share refers to the shares distributed in the Basilia City development as compensation to former owners. According to the estimated values of real estate properties issued by the Real Estate Appraisal Committee in February 2021, every former owner will receive 35,000 shares in the new development for every square metre he or she previously owned. For example, an individual who owned 2,400 shares of a 100-square metres flat will now own 3,500,000 shares in Basilia City (35,000x100).

This value is lower than in Marota City, which set 100,000 shares per square metre.

The Real Estate Appraisal Committee completed its work in 2020, nine years after its formation. After receiving anticipated objections to the appraisals, the Dispute Resolution Committee (DRC) begins examining them, as well as claims of ownership or real estate rights over properties within the development zone. The Damascus governorate announced on January 12, 2021 that the DRC had completed work in Basilia City and called on rights holders to visit the Decree No. 66 implementation headquarters to obtain certified copies of the committee’s decisions.

Next is the DC. In theory, the DC does not begin its work until after the DRC finishes resolving disputes. This was confirmed in a statement by the head of the Decree No. 66 Implementation Directorate. According to the statement, the DC does not issue its nominal value lists until after the completion of various lawsuits and their legal implementation. The lists include language that explicitly states “the names of the owners after implementation of court rulings,” according to a document seen by The Syria Report.

The Syria Report has confirmed the timeline of the process in previous reporting on the response of the Court of Appeals in Damascus to hundreds of cases challenging the rulings made by the DRC. The court rejected the appeals because they were submitted after the five-day deadline. Consequently, it has become impossible for rights holders whose cases have already been decided, or whose cases have been rejected, to make new appeals, given that the judgments issued by the Court of Appeals are final. For the impacted rights holders whose names were not mentioned in previous cases, new cases may only be filed before the ordinary judiciary.

After issuing the lists of names, the next step is to issue deeds for the shares and distribute them to the beneficiaries according to value and number within the lists.

The governorate has also announced the nominal values of plot shares in Basilia City. These are plots of land prepared for construction within the development plots. There are 567 such plots, divided into three categories: 312 residential plots, 64 residential/commercial plots and 191 plots for investment. The number of storeys built on these plots range from 13 to 20. Owners of shares in the development will be able, theoretically, to exchange these for part of the plots.

After issuance of the final distribution lists, owners of regulated shares are entitled to trade their shares commercially, provided that any transactions are recorded in the Land Registry. The governorate does not accept the transfer of rights until after issuance of share deeds. For every such transaction, the governorate charges a share equal to 0.5 per cent of the nominal values in circulation. It is still too early to determine the trading prices per share. However, according to black market sale and purchase advertisements, which The Syria Report reviewed, the value of one share ranges between SYP15 and 25. Often, small-time shareowners sell their shares, which are now concentrated in the hands of a few big traders and investors.

Owners of new equity shares may choose one of three ways to dispose of their commonly owned plots: exchanging their shares with plots of land that are prepared for construction “appurtenance real estate”; establishing a joint stock company under the applicable companies law or the Real Estate Development and Investment Law in order to built, sell and invest in the plots; or sale through a public auction. Holders of regulated shares must notify the governorate of their choice.