DLA Piper Real Estate Gazette Issue 31

ISSUE 31 | www.dlapiperrealworld.
com
REAL ESTATE
GAZETTE
KENYA
THE DIGITALIZATION
OF LAND REGISTRIES IN
KENYA
THE NETHERLANDS
SEISMIC SHIFTS: GOING
WITH THE FLOW IN
AMSTERDAM
SWEDEN
THE VIVA PROJECT—THE
STORY OF A CUTTING
EDGE SUSTAINABLE
HOUSING PROJECT
UK
BLOCKCHAIN: OVER-
HYPED FAD OR
TRANSFORMATIONAL SEISMIC SHIFTS: HOW INNOVATION,
JUGGERNAUT?
DIGITALIZATION AND THE NEXT
USA GENERATION ARE CHANGING THE
INNOVATION REAL ESTATE INDUSTRY
EVERYWHERE ...
2 | REAL ESTATE GAZETTE
A NOTE FROM
W
THE EDITOR
e would like to welcome all our readers to
Issue 31 of DLA Piper’s Real Estate Gazette.
The theme of innovation explored in Issue
30 is taken up again in this issue. This time
round, we are turning the spotlight on the impact of digitalization
on the real estate industry and the changes we can expect to see
in the future. Blockchain is a concept that crops up in several of
the articles. The second of our UK articles (page 46) describes a
blockchain as a distributed digital ledger of transactions which is
agreed upon by everyone who uses it. Our Kenyan article (page
18) outlines the advantages of the blockchain technology, including
transparency and security. A third advantage is the avoidance and
possible eradication of corruption: blockchain cannot be controlled
by any one entity and has no single point of failure because the
The thirty-first issue blocks of information are identical across its network. There are
of the DLA Piper Real numerous uses for this technology, and our Italian article (page 14)
Estate Gazette looks gives several examples of these, including new payment methods
and due diligence activities. It is indeed striking that so many authors
at the innovations chose to focus on this concept and perhaps lends credence to the
currently shaking UK authors’ assertion that “the widespread use of blockchain is a
up the real estate case of when, not if ”.
industry. This issue also features (page 22) an interview between DLA
Piper’s partner in Amsterdam, Rutger Oranje and Marco Vrijburg,
co-founder of TBD (ToBeDeveloped) B.V., which has developed
a state of the art office building in Amsterdam called “The Flow”.
Mr Vrijburg describes the features of this building, explaining
how everything he has learned from the IT industry has been
incorporated into its design and why he believes tenants will be
willing to pay more money for additional services.
Our General section covers various topics including strategic
partnerships for public-sector construction projects in Denmark
(page 58), the impact of a recent CJEU ruling on VAT refunds in the
case of vacant properties in The Netherlands (page 66) and land
occupation in Tanzania (page 70).
“
The 31st issue of the DLA Piper Real Estate Gazette proves that
the future is exciting, and the digital future especially so. We look
forward to keeping you abreast of developments in this, and other
The concept of areas, in the real estate sector in forthcoming issues.
blockchain crops up
in several articles.
”
Olaf Schmidt, Co-Chair of the Global Cross-Practice Real Estate Sector
ISSUE 31 • 2018 | 3
CONTENTS
SEISMIC SHIFTS: HOW INNOVATION,
DIGITALIZATION AND THE NEXT GENERATION
ARE CHANGING THE REAL ESTATE INDUSTRY
BRAZIL
06 CO-WORKING: THE COLLABORATIVE ECONOMY AND

THE BRAZILIAN REAL ESTATE MARKET
06
GERMANY
10 THE EVOLUTION TO DIGITAL AGREEMENTS AND

SMART CONTRACTS UNDER GERMAN (REAL ESTATE)
LAW
ITALY
14 BLOCKCHAIN—PRACTICAL APPLICATIONS IN THE

ITALIAN REAL ESTATE MARKET
KENYA
18 THE DIGITALIZATION OF LAND REGISTRIES IN KENYA
22
THE NETHERLANDS
22 SEISMIC SHIFTS: GOING WITH THE FLOW IN

AMSTERDAM
NORWAY
26 NEW CONCEPTS AND OUTDATED LEGISLATION
PORTUGAL
30 THE TRANSFORMATION OF PORTUGAL—AND HOW

IT CAN CONTINUE
30
SPAIN
34 TOURISM AND THE RESIDENTIAL MARKET:

REGULATING THE SHARING ECONOMY REVOLUTION
ISSUE 31, 2018
SWEDEN
38 THE VIVA PROJECT—THE STORY OF A CUTTING EDGE

SUSTAINABLE HOUSING PROJECT
UK
42 DISRUPTION IN THE REAL ESTATE INDUSTRY—DON’T
38
LEAVE THE LAWYERS BEHIND!
46 BLOCKCHAIN: OVER-HYPED FAD OR

TRANSFORMATIONAL JUGGERNAUT?
52 THE INTERNET OF THINGS AND THE REAL ESTATE

SECTOR
USA
56 INNOVATION EVERYWHERE ...
GENERAL REAL ESTATE
46
DENMARK
58 STRATEGIC PARTNERSHIPS FOR PUBLIC-SECTOR

CONSTRUCTION PROJECTS
MOZAMBIQUE
62 TEMPORARY ACCESS TO URBAN AND RURAL

TENEMENTS IN MOZAMBIQUE
THE NETHERLANDS
66 CJEU:VAT REFUND FOR VACANCY
TANZANIA
70 LAND OCCUPATION IN TANZANIA 70

ISSUE 31 • 2018 | 5
SEISMIC SHIFTS | BRAZIL
CO-WORKING: THE
COLLABORATIVE ECONOMY
AND THE BRAZILIAN REAL
ESTATE MARKET
RAFAEL JORDÃO BUSSIÈRE, RIO DE JANEIRO
A
long-term effect and collaborative business work spaces remedy an array
of the 2008 structures. In this changing of vacancy problems, such
financial crisis world, asset-sharing was a as empty desks, underused
is that markets natural development for the meeting rooms and substantial
have innovated to focus more real estate business. maintenance costs. In
on sustainability, cost mitigation Complex collaborative addition, co-working spaces

with aggregated ancillary consequence being observed

service packages help smaller in Brazil is that long-term
companies and freelancers to engagements (eg lease
focus on their main business agreements) are being
activities, while scaling up replaced by flexible legal ties.
the administrative office The current challenge in
services they are able to Brazil is to define the legal
enjoy. Such spaces also create framework applicable to such
an environment of business collaborative work spaces,
development and cooperation which combine concepts of
among users. short-term commercial lease
The first shared workspace with service rendering—a
appeared in New York during hybrid form of contract that is
the 1990s; collaborative so far lacking any supporting
spaces quickly became a legal framework.
here-to-stay trend. One A federal collaborative
recent survey indicates that, workspace bill, No 8.300/2017,
as of December 2017, 18,900 now moving through the
co-working spaces, with an House of Representatives, aims
average of 130 members per to govern such co-working
workspace, were operating activity. The bill has not yet
worldwide. While the shared undergone formal review
co-working market is still and amendment, but in its
largely dominated by specialist current form, it provides that
companies, it is now engaging a manager of a co-working
traditional real estate players. spaces is a service provider
In Brazil, co-working and not a lessor.
represents a disruption to the The existence of this bill
customary use of real estate is a sign that Brazilian law is
property. Currently, there are considering the co-working
over 1,000 co-working spaces industry in much the same
generating more than 5,000 way that it regards the
“
direct jobs and over one million hospitality sector: that is, the
indirect jobs in Brazil. business activity is mainly a
Shared office services with service rather than a lease
tailored short-term contracts relationship. One consequence A manager of a co-
have benefited individuals, of this approach is its impact working space is a
startups, small companies on taxation. service provider and
and even incubator affiliates With regard to tax levying
not a lessor.
”
of larger corporations. and related fiscal obligations,
As this trend grows, one it is important to highlight
ISSUE 31 • 2018 | 7
that service providers businesses, established that co- municipal authority.

in Brazil are subject to a working providers are deemed The latter law generated
municipal service tax. jointly and severally liable for significant opposition given
In addition, a recent São Paulo the payment of services tax that the co-working service
Municipality Law 16.757/2017, with regards to the users of providers would assume a
intended to tighten the shared spaces that are not supervisory role with regard
tax control on emerging registered with the São Paulo to the respective user as well

co-working as a service—also relationship between the users.

aligns the co-working providers’ Considering the lack of
interests: the Brazilian Lease legislation on the matter, it is
Law, 8.245/1991, is quite prudent business practice to
protective to lessees. ensure that relevant contracts
In general, while the Lease are well-drafted, including a
Law generally allows lessees detailed scope of services (if
to terminate a lease without any) and use conditions, to
cause during the lease term—
help ensure that multi-users
subject to payment of a
may operate in appropriate
small penalty—termination
work conditions and to avoid
by a lessor requires specific
disputes concerning each
conditions, such as (a) a
user’s licensing, employment
contractual breach by the
lessee; (b) lack of guarantee; and tax regimes.
(c) government determination It is widely accepted that
of urgent need for works; or because the concept of co-
(d) specific circumstances, in working itself is constantly
the case of a sale of the real expanding, the need for further
estate asset. directives is also growing.
There are also certain Meanwhile, co-living projects
conditions under which a lessee in Brazil are taking baby
has the right to the automatic steps. A project in São Paulo
renewal of the commercial is integrating collaborative
lease in order to protect the co-working spaces and
goodwill of the business. temporary residences, mostly
Therefore, the categorization for freelancers and startup
of co-working as a service entrepreneurs wishing to have
in the bill is interesting, an establishment and network
from both the tax control
in the Brazilian financial capital.
and property management
In conclusion, although the
perspectives; but it should be
collaborative economy is already
remembered that this bill is
not yet formally law. a reality in Brazil, discussions
as potential tax liability. The about its impact and effects
While the formal approval
debate around taxation of the of other laws is pending, the will continue, as long as the
co-working industry is ongoing. definition of the co-working relevant tax treatment and legal
On the other hand, it is legal structure depends on framework remain uncertain.
interesting to note that the contract structure and the Campos Mello Advogados is an
the interpretation in bill documentation covering the independent law firm working in
8.300/2017—which treats use of the facilities and the cooperation with DLA Piper.
ISSUE 31 • 2018 | 9
SEISMIC SHIFTS | GERMANY
THE EVOLUTION TO DIGITAL

AGREEMENTS AND SMART
CONTRACTS UNDER
GERMAN (REAL ESTATE) LAW
PHILIPP MOSER AND LARS REUBEKEUL, MUNICH
T
he use of the on hard copy by both parties Getting better:
electronic/digital or a separate signing with digital contracts with
contract is on the subsequent exchange. electronic signatures
rise and looks By “digital contracts” we mean
set to replace many of today’s The beginning: text
contracts with electronic
conventional paper contracts. form and electronic
signatures that are entered
At the same time, there is much substitutes
into by parties through
talk about what is known as the In 2001, section 126b was corresponding declarations.
“smart contract”. This article added to the German In a classic contract, such
provides a brief overview of Civil Code (“BGB”). This declaration was always
the current legal position in acknowledged the agreement of evidenced by original signatures.
respect of such contracts under contracts by electronic means, Now, however, the electronic
German law. such as SMS, emails, pdf copies signature has replaced the
of signed agreements or the signature in the classical sense.
Old school contracts exchange of signature pages as It should be noted first that
Until 2001, German contracts long as the readable declaration the electronic signature can be
were entered into by mutual was permanently stored either legally validated by the parties
agreement, orally or in writing electronically on a server or themselves defining the form
unless they were required to was printed on hard copy. of the contract by means of a
be certified by a notary, in the Although this has facilitated form clause. Once the clause
case of contracts relating to the process by making it much is established, it is binding and
real estate. To save costs and faster, and has indeed become it can easily be integrated into
for evidentiary purposes, the the bed rock of e-commerce, the normal electronic signature
written contract was preferable. the lack of security involved is a process, as is often the case
However, it was often regarded big issue. After all, anybody with today. The conclusion of the
as a necessary evil, since it a free app on a smart phone contract itself can take different
involved the signing of contracts can alter a PDF. forms. Basically, the parties must

simply insert their electronic reference point is the email generated SMS code was sent
signatures either on the same address of the person who has is also archived. And last but
document or on two identical sent the signed document. In not least, there is a timestamp
copies of the same document. addition, a part of the IP address that fixes the process. Ideally
In order to make this digital is saved to allow the process of course, the electronic
contract secure, traceable to be assigned to a computer, signature is validated with an
and demonstrable, certain smartphone or tablet. When electronic certificate that the
information provided by the two-factor authentication is relevant document has not been
contracting parties must be used, the telephone number amended at a later stage. With
stored. In most cases, a first via which an individually this information, the parties can
ISSUE 30 • 2018 | 11
present the signature procedure noted that there are limits to

in a very transparent process. the use of the digital contract.
As with a paper document, the There are certain legal areas in
validity of the signature must be which the (normal) electronic
proven in court if there is any signature is not sufficient
dispute about it.Two points are for contracts. In principle,
especially important for this. these are areas in which the
First, the agreed form clause participants should be made
must be submitted, stating that aware of the serious and weighty
the parties agreed the contract consequences of their entering
was to be entered into with into contractual relations, for
electronic signatures. Secondly, example, family law matters, real
the party must be able to estate transactions, employment
document that this form has contracts and inheritance.
actually been complied with In these cases, special form
and that the parties have signed requirements apply, such as
the contracts electronically. notarial forms, the conventional
However, compared to a contract paper contracts or the qualified
entered into in the classic way, electronic signature.
the argument for validity might Secure: digital
turn out to be even easier than contracts with
with a paper document as the qualified electronic
contracting party can provide signatures
the electronic signature as a As noted above, the qualified
clear record, allowing the judge electronic signature partly fills
to verify that the contract has the gap. Under the German
actually been agreed. Digital Signature Act, a qualified
The advantages of the digital electronic signature (QES) secure storage of the certificate
contract are obvious: speed; is an advanced electronic so that it cannot be altered
flexibility for parties regarding signature based on a qualified inappropriately. Determining
the place of the conclusion of certificate and created by who applies for a certificate
the contract; and last but not means of a secure signature
must be done through a secure
least, the contract’s traceability. creation unit. The certification
For these reasons, the digital procedure, such as Postident,
service provider must comply
contract is becoming increasingly where the party is required
with, amongst other statutory
popular in Germany for (short- requirements, sections 4 to present his identity card
term) lease agreements that do to 14 of the Signature Act. or passport in a branch of
not have to comply with other These provisions are aimed the German Post Office. The
statutory requirements, namely particularly at ensuring the certificate can then be used
section 550 BGB. identity of the certificate to determine whether an
Nevertheless, it should be holder and to ensure the electronic signature actually

the blockchain technology,

which gives the agreement
a high degree of trust as
there is no central storing
of data. In principle a smart
contract follows the principle
of conditionality (ie “if ”,
“then”). Thus, regulations
can be created, which react
in certain circumstances and
automatically execute certain
reactions when particular
events occur. For example,
a smart contract could be
entered into where, on the
occurrence of certain maturity
requirements, another action,
for example, the making of
a payment, would take place
automatically.
One can imagine endless
applications of the blockchain
technology (such as, for
example, replacing the land
register by blockchain, as per
the Swedish experiment).
Taking this even further, one
belongs to the specific person. section 550 BGB are met. might dream about a digital
smart land purchase contract
In Germany, an electronic As these certificates and
that controls its own
document signed with a their security develops, it
specifications. Due to the
qualified signature can, under is conceivable that all legal
high levels of security enjoyed
section 126a BGB, replace transactions will become open
for digital contracts with qualified by the blockchain technology,
the written form required even a notary might become
by law or regulation, unless electronic signatures.
superfluous and registration
otherwise regulated by special Next generation: in the land register could
law. Therefore, even a long-term smart contracts be made securely by a
commercial lease agreement Smart contracts are basically blockchain transaction. The
can be entered into using an electronic agreements that future in this area is exciting,
electronic signature, provided execute themselves. The and it’s crucial to keep pace
the statutory requirements of basis for such contracts is with developments.
ISSUE 31 • 2018 | 13
SEISMIC SHIFTS | ITALY
BLOCKCHAIN—PRACTICAL
APPLICATIONS IN THE
ITALIAN REAL ESTATE
MARKET
ALESSIA BILOTTI AND PAOLO FOPPIANI, MILAN
T
he overall market blockchain technology in the at highlighting key developments
linked to blockchain banking, insurance and capital of the blockchain technology,
technology is markets sectors, and the Milan promoting European actors and
expected to rise Stock Exchange, which will use reinforcing European engagement
sharply, with an increase from the blockchain mechanism to with multiple stakeholders
the current $500 million to compile a register for the sale involved in blockchain activities.
nearly $8 billion by 2024. Many and purchase of shares of small Like all new technologies,
companies have already decided and medium-sized companies. blockchain brings new challenges
to implement solutions based The European Commission itself, to Italian operators who want to
on blockchain technology: for on 1 February 2018, launched remain among the top players in
instance, Accenture, which in Italy the EU Blockchain Observatory the market and, of course, also
already offers targeted advice and Forum with the support of brings with it possible risks that
on the practical application of the European Parliament, aimed require careful consideration.

What is blockchain? recorded therein are encrypted payment system, which uses a
Blockchain consists of a set of by an almost impenetrable peer-to-peer network”, based
single and separate units each system; finally, (iv) autonomy: on the voluntary acceptance by
containing specific data. This blockchain allows, without the market operators who, on the
system reduces the possibility need for verification by external basis of trust and independently
of tampering, since any data third parties, transactions to be of a legal obligation, receive it
contained within each block registered independently, since as consideration in exchange
is protected from possible each operation becomes a new for goods and services. Italy is
cancellations and alterations. block within the chain. ahead of the curve here: the
Any attempt to modify the
information would leave an Practical applications real estate company Gruppo
indelible and unchangeable in the Italian real Barletta S.p.A. was the first
trace. Further information estate sector company in the world to

It is clear that the advent of offer the possibility of buying
to the system can only be
distributed ledger technology apartments in Bitcoin. The
added with the prior approval
will improve the performance project, due to go live in
of “miners”, that is, subjects
October 2018, involves the
already active on the blockchain of the businesses in which it is
demolition and reconstruction
system endowed with particular implemented. It is also having
powers of approval. a significant impact on the of an eco-building with 123
Italian real estate sector as it apartments. Also, in Turin,
Features of blockchain can reduce the time taken to Bitcoins have been used in
Blockchain offers countless complete transactions and make real estate transactions: on
potential applications to industry, the process more efficient. 23 January 2018, the first
thanks to the technology on There are a number of possible real estate sale and purchase
which it is based and which uses for this technology. agreement in Bitcoin was
allows high levels of security made, before the notary public
and verification. In particular, 1. Payment method
Remo Morone. The agreement
the elements that would allow of Italian real estate
“
blockchain to become an transactions
additional fundamental tool Although the potential of
for “4.0 consulting” are (i) blockchain is quite different,
resilience, since, as a devolved the distributed ledger Italy is ahead of the
peer-to-peer network, it is an technology promotes the curve here: Gruppo
spread of cryptocurrencies
immutable and lasting register, Barletta S.p.A. was
and transactions, once registered as a means of payment. In
there, cannot be altered and (ii) this context, Resolution no. the first company in
scalability, as the computational 72/E of the Italian Tax Agency, the world to offer
capacity grows exponentially dated 2 September 2016, has the possibility of
as new “blocks” are added to stated that Bitcoin, the most
buying apartments
the system; (iii) blockchain is widespread and well-known
in Bitcoin.
”
characterized by high levels of cryptocurrency in the world,
security, since all transactions consists of a “decentralized
ISSUE 31 • 2018 | 15
provides that “the price has that the potential anti-money 3. Activities of due
been and will be paid, as per laundering risks connected with diligence
Euro … by means of transfer the use of cryptocurrencies Blockchain may be able to
of … bitcoins to the public constitute a material obstacle to facilitate the efficient and easy
address … of …, by means of a the widespread development of circulation of information
transaction identified under the transactions in Bitcoins (or similar related to tokenized property,
public number …”. However, it currencies) and this is a matter adding to a huge database
should be noted that according that businesses should consider countless pieces of information
to the Governor of the ECB, carefully before using them. related to each real estate
Mario Draghi, Bitcoin, for a 2. Tokenization of Italian asset and to its identification.
number of reasons, could not real estate properties Business lawyers and technical
represent a valid alternative to The success of blockchain is advisors will be able to carry
traditional currency. founded on the reliability of out due diligence on real
With reference to possible the data it contains. Real estate estate transactions directly on
anti-money laundering issues, assets in particular require the the basis of the information
the Italian National Council of inputting of a large amount of provided by the blockchain,
Notaries recently gave its opinion information—at least in the first thus transforming the
in a case in which the parties phase— into the ledger (such traditional analysis approach
intended to enter into a sale and as, eg, information on ownership, based on internal systems and
purchase agreement for a real any lease agreements in force, on the information received
estate asset at a price that, even constraints and burdens, the from the counterparty.
if determined in Euros, would cadastral identification of the 4. Smart contracts
have been regulated in Bitcoin. property, etc).The Italian National The contractual terms of a
The Italian National Council of Council of Notaries recently transaction could be written
Notaries was asked whether the initiated a project in partnership inside the blockchain in the form
payment of the purchase price of with IBM to implement what is of smart contracts, a particular
a property in Bitcoins (or other known as “Notarchain”, namely, way of drafting the contractual
cryptocurrencies) violated anti- a blockchain in which the provisions in computer queues,
money laundering regulations. information is not managed by which takes place through
The Council concluded that anonymous subjects, but by the the use of logical connectives
much still remained uncertain in same Italian notaries, throughout directly on the ledger.
this area and “the considerations the whole of Italy.This system The peculiarity of these new
reported must be considered would ensure, in addition to a agreements is their ability to
as mere hypotheses and general prior check on the identity of come into play automatically
indications”. However, the Council the parties involved, the veracity when certain events, previously
observed that, in this case, since of the data entered, and also the agreed between the players of
it was impossible to meet anti- possibility of transferring non- the transaction, occur, since the
money laundering obligations, a native data and information (c.d. execution can take place directly
“suspicious transaction” report tokenization) to the blockchain by on blockchain. An example of
may be considered appropriate. subjects with proven experience primitive smart contracts with
It seems clear, therefore, and professionalism. automated execution is that of

the parking contract: a coin is transfer from the purchaser’s lead to transactions having to be
inserted into a machine, the bar cryptocurrency ledger to the abandoned altogether. This is a
is raised, and you are entitled to seller’s cryptocurrency ledger. particular problem in the Italian
park. The potential capacity of Thus, any risk relating to payment market, which is historically
the smart contract is startling, and timing for the actual transfer bank-centric and offers little
and although real innovations of money, which often arise opportunity to use risk capital.
are probably some way off, at the time of signing, would The blockchain system could
staying with the automotive be avoided. Last but not least, remedy this problem by allowing
sector, think of the case where any risk of not registering the real estate assets to divided by
two vehicles collide: the injured units held by more than one
deed within the set timescale
driver could be automatically subject. In particular, due to
would be reduced (or cancelled
compensated in Bitcoin. the greater transparency and
altogether). And there are
Similar application could be certainty of the information
countless other examples of uses
made in the real estate sector, about the property provided
for the smart contract in the real
for example, when a property within the blockchain, the
estate sector.
is sold, transfer of title over eventual sale of the property
the asset, as well as the related 5. Purchases by units (through resale on blockchain
filing (“trascrizione”), could take The entry barriers to investing of units) will be easier and more
place directly on the blockchain in real estate can be high, immediate, further boosting the
register, upon completion of the especially for investors with less circulation of this type of asset
payment of the agreed price, by available capital. This can even divided by units.
ISSUE 31 • 2018 | 17
SEISMIC SHIFTS | KENYA
THE DIGITALIZATION
OF LAND REGISTRIES
IN KENYA
AMRIT SOAR AND WAMBUI MUIGAI, NAIROBI
I
ntroduction ii) applying for passports from facilitated doing business in Kenya.
In 2014 Kenya launched the Immigration Department; Now scheduled to join the
the e-Citizen Portal in a iii) registration of businesses/ digital sphere are the land registry
bid to bring public service corporations and obtaining services. It goes without saying
delivery closer to every Kenyan. company searches from the that land transactions contribute
Through the portal, Kenyans Company Registry; significantly to the economic
have been able to access a iv) applying for a certificate of activity, growth and development
number of services including: good conduct from the Criminal of any country.With a steady
i) scheduling driving tests and Investigation Department; and increase in population and the
renewing permits with the v) applying for single entry, transit devolution of land registries in
National Transport Safety and courtesy visas for foreigners. Kenya, land transactions take
Authority; In short, the portal has greatly place all over the country on a

daily basis. Efficient and effective of the land records also allowed The technology set to
land transaction processes are for easy manipulation and some transform the land registries is
therefore crucial. fraudulent transactions. Many lostknown as blockchain, the same
In April this year, the Ministry confidence in the veracity of the technology used to facilitate
of Lands and Physical Planning title deeds issued to them and Bitcoin transactions. Blockchain
Portal is set to go live. Phase One were generally discouraged by the works in the following way: when
of the launch begins with the high costs of land transactions. a digital transaction is carried
Nairobi and Central registries Third, the vast amount of out, it is classified together in a
with other regions expected to data collected resulted in bulky cryptographically protected block
follow soon after.The aim is to records, requiring significant with other transactions that have
roll out the online system to all amounts of storage space. Land occurred in the last few minutes
61 registries by 2020. If all goes registry employees complained and sent out to the entire
as planned, individuals will be of the heavy records that had network for confirmation. Each
able to conduct all land-related to be retrieved and the poor category of these transactions is
processes online, including conditions of documents as known as a block.The confirmed
transfer of ownership, registration block of transactions is then time-
many of them were very old.
of charges, discharges, cautions stamped and added to a chain
In response, the Kenyan
and withdrawals, payment of land in a linear, chronological order.
Government began to research
rent, stamp duty and capital gains The entire chain is consistently
land registration systems in
tax (where applicable), make updated so that every ledger in
other jurisdictions. With the
official land searches and apply for the network is the same giving
success of fully implemented
appropriate consents. each member the ability to prove
electronic registration systems
History in England, Wales and Canada, who owns what at any given time.
Since the colonial era, Kenya Kenya is now set to follow suit The blockchain technology
has operated a purely manual with efforts to improve the land has several advantages. Chief
registration system. This registration system. amongst these are:
system had several drawbacks, i) it promotes transparency
including first, the lack of a Current laws and the as the data are embedded
central repository for land Lands Information within the network as a
records. All data collected were Management System whole, meaning they are for
stored in different formats. This (LIMS) public consumption. This will
was not only confusing, but also The Land Registration Act was increase security and avoid
hindered data access. enacted to revise, consolidate corruption by distributing the
Second, the different processes and make consistent the maintenance of records to all
meant tedious amounts of registration of titles to land, parties involved, rather than to
paperwork and lengthy queues. to give effect to the principles a few. The blockchain cannot
This impacted the turnaround and objects of devolved be controlled by any single
time on transactions for lawyers governments in land registration, entity and has no single point
and led to the use of brokers and connected purposes. It of failure because the blocks of
by land owners to hasten the also repealed the previous land information are identical across
process.The standards of some registration statutes in Kenya. its network. Its structure
ISSUE 31 • 2018 | 19
makes it suitable for supply services and gives investors and even banks, separate from
chain management, identity quicker access to property, those of individuals.This allows
and database management. The allowing Kenya to compete individuals to appoint a law
latter function will also help globally due to its enhanced firm to act on their behalf in a
to streamline the land title business efficiency. land transaction and gain access
registration process. vi) It separates the process to information pertaining to
ii) Since the database is of land transactions from the that particular transaction.This
distributed across a network monetary procedure therein, appointment can be revoked at
of computers, the records reducing, if not eradicating, any point and access immediately
will be protected by codes corruption. restricted.The same procedure
(cryptography), which will The new electronic lands
be free from human error, registration system has been
editing or removal.The use designed with the end user
of smart contracts, which are in mind and supports the
programmable contracts that current flow of documents
self-execute when certain from one office to the next
conditions are met, would speed as would be done in a typical
up the registration process land registry. The language used
making land registries more on the interface is simplified
efficient and cost effective. making it easier for users to
iii) The technology can understand the procedure. The
document clear ownership and home page of each transaction
transfer footprints, weeding out includes an instruction guide
cases of fraud. The process will and videos for further guidance,
help link an individual’s land/ significantly reducing the training
property with their details. time required for this system.
Each property would be The portal is accessible from
uniquely coded and linked to a anywhere in the world, so users
smart key which would be held have constant access. The system
only by the owner. is linked to the user’s email and
iv) The blockchain database telephone number, thus with
has a massive storage capacity every step in the transaction
therefore it will be able to hold the user is notified and issued
as much data as is transmitted with a one-time password (OTP)
on a daily basis, without in order to approve that step.
crashing. This would promote The system also provides for
effective property management several payment methods from
as information can be reviewed debit and credit cards to mobile
in real time. banking facilities.
v) The technology further aids Further, the system provides for
in the devolution of public accounts for law firms, companies

can be applied to companies, interface and the hard copies of Such consistency is a key factor
banks, especially is respect of titles and deeds will eventually in the titling processes once the
charges and discharges, surveyors become redundant. portal is live.
and even valuers. In its initial Another major concern is the
Challenges
stages users will have to log into lack of technological knowledge
As the electronic land
the portal and verify their titles and experience in rural areas of
registration system is still in its
as entered by the registry by the country.This may hinder the
teething stages, some challenges
uploading their titles and deeds. registration facility or encourage
are to be expected. In order for
Thereafter this information will fraud if individuals from those
the system to work effectively
be permanently saved on the areas are assisted by people likely
the data entered into it must
be accurate: anything short of to take advantage of their details.
this and the system is rendered There is a lack of clarity
unreliable. In addition, data over the transfer of property
protection laws must be in place from those who are deceased.
and enforceable as a part of the Further, the interface needs
regulation of the blockchain to make provision for short-
technology. These are two issues term commercial leases. Lastly,
the Ministry must confirm once the Ministry is still working on
the portal goes live.
providing access to the online
The unified standards and facility for foreigners who own
date models in land registration
property within the country.
will have to be gradual,
given the multiplicity of laws Conclusion
governing land registration As was made clear at the start
in Kenya and the fact that of this article, the digitalization
different departments within of the land registries is but one
the Ministry of Lands apply aspect of a much bigger transition.
different filing systems and
It is hoped that eventually all
use different parameters
government services will have a
to identify land parcels. The
portal on the e-Citizen interface,
Ministry is still in the process of
with data from each department
designing standard formats and
being easily shared with reference
instruments of titling, property
and land registration so as to to each individual.The digital
make uniform all titles and land future is an exciting one.
information across the country. IKM Advocates is a member
The Director of Surveys of the DLA Piper Group, an
needs to be funded in order to alliance of leading independent
ensure the accuracy of surveys law firms working together in
and resurveys in a bid to make association with DLA Piper, both
consistent the cadastral maps. internationally and across Africa.
ISSUE 31 • 2018 | 21
SEISMIC SHIFTS | THE NETHERLANDS

WITH THE FLOW IN
AMSTERDAM
RUTGER ORANJE, AMSTERDAM
D
LA Piper’s partner in Vrijburg: Our latest in the IT industry will be fully
Amsterdam, Rutger development is a building in the integrated in this building.
Oranje, interviews Houthavens, Amsterdam, called: Most buildings have been built
Marco Vrijburg, co- The Flow. It was designed by to benefit the institutional
founder of TBD (ToBeDeveloped) B.V., Roberto Meyer (see: https:// investor. Those buildings are
which has developed a new office fd.nl/fd-persoonlijk/1246849/ highly efficient. The Flow is not
building using the next level of IT. roberto-meyer-je-kunt-als- only highly efficient (BREEAM
Oranje: Marco, you have architect-niet-zeggen-volgende- excellent) but will also get the
always been an innovative keer-beter). MVSA will move Well-building gold certificate.
entrepeneur. What is your latest its headquarters into The Flow. The building will serve its users
development? Everything I learned working and guests.

slight fragrance will be managed,

the acoustics are “like in a city
covered with a fresh dusting
of snow”, the content on the
huge led wall at the entrance
surprises everybody who enters:
all to get people who work in
The Flow really into the flow.
And then there are guests:
you arrive at The Flow and the
gate opens, your mobile device
will enter the superfast guest
Wifi network.You can open
doors with your mobile to the
place where you’ll have your
appointment. The hostess will
know your name and your
coffee preference. There will
be the latest AV-technology
to support your sound
presentation. Trust me, you will
want to come back to The Flow
as soon as you can.
Oranje: Is there appetite for
such properties in the lease
market, and are tenants prepared
to pay additional money for these
type of services?
Vrijburg: In most industries the
housing costs are just a fraction
IT will be offered at three facilities management—we use
of the payroll. Can you imagine
levels: (1) Serving the CIO of sensor technology everywhere
the savings when your workforce
our tenants—the network to you can imagine (even in the
is working more efficiently
and in the building will comprise soap dispenser) and data analysis
(because they have no problem
of redundant fiber network to on the use of all areas in the getting into The Flow), they have
assure continuity. Wifi is super building. Last but not least a place where they can connect
fast. The CIO of our tenants (3) the customer journey— and also where they can switch
can build its own network, with employees have the option off and relax. Fitness and social
its own security measurements (within certain thresholds) to aspects are also considered in
on the (layer 1) network The influence the climate, lighting The Flow.You can have a great
Flow will provide. (2) Serving will be adapted during the day, a party at the rooftop venue!
ISSUE 31 • 2018 | 23
Workers being off work due to to meet, and there is a great

sickness will drop significantly. communal boardroom.
Guests will prefer to come to Oranje: And how about
“
you (instead of asking you to investors? Are they
travel to them).The product interested in this type of new
is worth the additional money. development? Do they require
Are investors And the housing costs will not additional/unusual reps and
be significantly higher than warranties from the developer
interested in traditional buildings will generate: or is this just the start of
this new type of partly because you will need the next generation office
development? less space.There is an excellent buildings, which will come to be
”
restaurant serving healthy food considered prime assets?
for all tenants, there are spaces Vrijburg: I can’t disclose a name,

but we have significant interest Vrijburg: As sustainable as the largest energy consumer?
from an institutional investor possible.We will have BREEAM Oranje: How international
who has also expressed interest excellent certification.We have is your project? Would other
in developing with us several PV-cells,WKO, triple glazing, cities/countries be interested in
Flows in different European etc. But The Flow being a green developing similar projects or
cities. All these buildings would building is a result of the higher is this a typical Dutch or even
be connected to each other so goal: the wellbeing of all users Amsterdam design?
that a tenant who wants to use of the building.To combine the Vrijburg: We think that there
several locations of The Flow, will goal with being green is a real should be a Flow in every big city
have a happy CIO.The network challenge, but worth every penny. where companies are based that
can be developed. We will use cloud technology in are struggling with the so-called
Oranje: Is The Flow also a data centers that have adopted “war for talent”. So yes: this is a
sustainable (green) project? green IT. Did you know that IT is branded European concept.
ISSUE 31 • 2018 | 25
SEISMIC SHIFTS | NORWAY
NEW CONCEPTS
AND OUTDATED
LEGISLATION
GRO HAUGE, OSLO
I
ntroduction developments. Legislation residential property or business
Time keeps moving depends on classifying different premises, either a home or
on and new ideas activities and business, and a hotel. However, the new
and concepts arise does so based on how things concepts do not always fit into
and expand. In the real are or have been. Accordingly, these pre-conceived categories.
estate sector this includes legislation often presupposes This gives rise to a number
phenomena such as co-working that an activity or business of legal issues, and not always
spaces, apartment hotels and is either one category or clear answers. This article takes
broker concepts like Airbnb. another, typically either rental a brief look at some challenges
Legislation, on the other hand, of property or some kind of in regard to the three concepts
does not always keep up with service provision, either a mentioned above.

“
New concepts do not always fit into
”
pre-conceived categories.
Co-working spaces kitchens, restrooms, etc, but also promote innovation.

Co-working office space is office equipment and services Legal challenges with co-
a shared office space where needed in a workplace, like Wifi, working spaces lie not only in the
workers from different shared printing, copying and framing of a suitable agreement
companies gather to work. It is scanning facilities. This can make between the parties involved.This
typically relevant and practical for co-working a cost-effective must also take place inside the
individuals working independently alternative for small businesses. applicable set of rules. In Norway,
and small businesses. In addition co-working spaces the Norwegian Tenancy Act
The co-working space owners can be used to build an applies to agreements relating to
normally provide shared office intellectual community that can the right to the use of property
spaces, conference rooms and share ideas and knowledge and in return for remuneration. But if
ISSUE 31 • 2018 | 27
the most important purpose and/ applicability are not completely Apartment hotels
or element of the agreement is clear or decisive in Norwegian Another concept that can be
services other than providing the case law. challenging to legally define in
premises, the Act does not apply. In regard to office spaces, the Norway, is apartment hotels,
The main criteria for Act is mainly non-mandatory, also called residential hotels
considering whether an but will still apply when not or extended-stay hotels.These
agreement is a lease, regulated
agreed otherwise. Mandatory are normally self-serviced
by the Norwegian Tenancy Act,
provisions include protection apartments, rented for a relatively
will be the extent of exclusivity,
against unreasonably high short time period, through a
the duration, and the extent of
rent, requirements as to form hotel-style booking system.The
other services. Exclusive right
to dedicated spaces will strongly and procedure in relation to extent of services offered can
indicate that the Act applies, termination, and some other vary between different providers.
while not having a dedicated minor provisions. As long as the These concepts can be more
space will probably indicate parties consider the application challenging in regard to the
that the Act does not apply. of the Act, it should not result in Norwegian Tenancy Act, because
The precise limitations for its major problems. if and when the Act applies, in

relation to residential premises, number of the apartments in an Airbnb will be obliged to report
all provisions are mainly apartment building, for a shorter information on transactions to
mandatory for the benefit of the period than three months, will the tax authorities.
lessee.This includes provisions be illegal. Consequently the legal During the debates on the
that are not compatible with the purpose of a building should be new Property Unit Ownership
apartment hotel concept, such as considered thoroughly before Act, in force from this year, the
a prohibition against agreements making investments in this area. increasing incidence of short-
entered into for a period of less term rental of private homes
Short-term rent
than three years. was discussed. No decisions
of private homes—
Hotels are expressly exempted were taken however, and the
Airbnb
from the Act, but if the lease Government has yet to present
There are several broker-like
is for a longer period of time, any suggestions for reform.
services where one can rent out
without any extra services
an entire private home, a single Final comments
normally offered at hotels, it is
room in a private home, or even The three new concepts
likely to be considered a dwelling
just a bed.The most well-known, discussed here raise several other
within the remit of the Act.
at least in Norway, is Airbnb.This legal issues, which there is no
In regard to apartment hotels, is an online marketplace for such space to examine further. But one
zoning plans may also cause rentals, among other services particular issue is in regard to VAT,
challenges, because regulations related to tourism, that takes a cut where the distinction between
normally refer to either of every transaction they mediate. different usages of a property and
residential purposes or business Similar to apartment hotels, different businesses, can be crucial.
purposes.There are also defined this can give rise to the question The legislators are trying to
and permitted usages in relation of the extent to which a private keep up with new developments,
to building permits, and in home can be rented out before but going forward, we must
relation to permission to divide the usage is no longer consistent anticipate even more legal
a building into units under joint with residential purposes in dilemmas caused by new ideas
housing ownership. zoning plans or in the building and concepts, not foreseen when
Several apartment hotels in permit. Under a joint housing legislation was passed.
Norway have been established ownership, each unit will also be
in existing apartment buildings, permitted either for residential
regulated for residential or other purposes, and further
“
purposes. In several cases this details on permitted usage can
has been followed up by the local be set out in the articles.
zoning authority, and apartment These services have been widely
hotel businesses have been debated in Norway in recent In regard to
forced to change their terms years. Issues range from impact
of business.The municipality of on the residential environment
apartment hotels,
Oslo has stated that zoning for to tax evasion. According to zoning plans may
residential purposes demands new regulations, expected to cause challenges.
”
permanent residence, implying be passed within the next six
that renting a considerable months, broker services such as
ISSUE 31 • 2018 | 29
SEISMIC SHIFTS | PORTUGAL
THE TRANSFORMATION OF
PORTUGAL—AND HOW IT
CAN CONTINUE
LUÍS FILIPE CARVALHO AND JOÃO NEVES DE SOUSA, LISBON
T
he developments
seen in the
Portuguese real
estate market in
recent years could be explained
by opportunities created by
regular economic cycles, which
from time to time offer investors
low property prices with
interesting growth expectations
for the cycle to come.While
there is no doubt that such
general economic circumstances
have played their part in current
market dynamics, we would not
be painting the whole picture
if we attributed the significant
growth of Portuguese real estate
solely to this.
It is common sense that
challenging times force innovative
businesses to seek new ways
of improving their business
environment by looking at it from
a new perspective.And this is
exactly what happened in Portugal
after the serious economic crisis
of 2011, with an international
financial assistance program.
The need for foreign
investment, which at the

“
Portugal must promote its cultural
heritage in innovative ways and to an
”
international standard.
time was fairly limited due in the real estate sector, the
to Portugal’s poor economic impact of which was felt not
climate, forced public authorities only in the tourism sector but
and private agents to seek also in the residential, retail and
alternative and unprecedented offices sectors.
ways of attracting new investors. However, the biggest
The Golden Visa program, transformation occurred within
which grants the right to freely the tourism sector. Heightened
circulate within the Schengen foreign demand required urgent
area to non-EU citizens who action from the national players.
acquire a Portuguese real estate For example, different types of
asset for a certain minimum hotels—from the charming to
amount, is a great example of those describing themselves
how innovative thinking on as lifestyle hotels to boutique
legislation can affect the way hotels—have all been in the
investors perceive the market. spotlight, all claiming to offer
The local lodging regime, which accommodation which allows the
allowed the provision of short- increasingly demanding customer
term accommodation services to explore the cultural richness of
on private properties through Portuguese cities and its relaxing
a simplified administrative countryside.The discovery of
procedure, relieved some of the Portugal as a tourist destination
pressure the hotel sector was was boosted by security problems
experiencing due to huge demand in other traditional destinations,
for accommodation in Lisbon or such as North Africa and other
Oporto,Algarve, Douro, Madeira European capitals.There has also
and other tourist areas. been a rebirth of international
Increased efforts to market hotel brands offering innovative
Portugal as an ideal tourist services and products, which
destination contributed to will reinforce the quality tourism
a significant surge of activity experience on offer in Portugal.
ISSUE 31 • 2018 | 31
Portugal is now also being there is plenty of potential to

seen as an attractive destination work with, the cultural offering
for people to come and make has barely increased despite the
their homes here.The increased boom of visitors in recent years.
mobility of the population within This is also evident to foreign
Europe, together with Portugal’s residents, who find themselves
reputation as a beautiful, cultural running out of options regarding
city, offering an excellent work– cultural activities. Players in the
life balance, has caused an tourism sector should interact
increase in the numbers of young more often and in a more efficient
professional choosing to make manner with cultural service
Portugal their home.The very providers, such as operas, music
“start-up-friendly” environment concerts, ballet, painting and
created within recent years has museums.The same could be said
also contributed to this. of residential sector investors.
Portuguese universities are well Portugal must promote its cultural
thought of internationally and heritage in innovative ways and
this serves to reinforce foreign to an international standard, in
interest and investment in the order to reinforce the long-term
student accommodation sector. sustainability of the real estate
It is also important to highlight sector.
the significant lack of student It is also becoming even more
accommodation currently on evident that, in a quantitative
offer in the Portuguese market, way, what is being offered is not
which makes it an area ripe for sufficient to meet the demand for
real estate investors. cities like Lisbon or Oporto, in
In short, innovation has had particular for large conferences
a significant role in creating and events in order to compete
recent developments in the directly with other European cities
Portuguese real estate sector, such as Barcelona.A big event as a leading destination in Europe.
and now has an important role (such as the Web Summit, held in The residential sector also
in sustaining it. Investments in Lisbon for the last two years and needs to improve.Traditional
Portugal by Google, Amazon and again this year), together with the and historical buildings in Lisbon,
other successful IT projects will regular flow of tourists, is enough Oporto and many other cities
ultimately drive technology and to sell out every hotel unit in the must adapt to new technologies,
innovation in real estate. city. such as automation, artificial
As to the tourism sector, it is By increasing the offer, namely intelligence and interaction with
important to acknowledge the through investments in new units new ways to provide services
less than perfect dynamics of and through making the most of to residential units. Current
cultural activities offered in the the cultural landscape of the cities, properties are still not aligned
main tourist destinations.Although Portugal will cement its position with such changes and failure to

general rental market as there

is practically no accommodation
specifically directed to them.The
rise in rent (as a consequence
of increasing demand) has
further reduced accommodation
opportunities for students, and
this is an issue which needs to be
addressed in the near future.
On the other hand, the younger
generation takes a different
approach to the workplace, and
the notion of working in an office
in the main cities is becoming
outdated. Current and future
workplaces will face challenges
in adapting their premises, or
even searching for more modern
premises which will allow them
to provide the sort of conditions
their new workforce expects.
The increasingly dynamic start-
up ecosystem, together with the
opening of new infrastructures by
foreign companies, will result in
an increased demand for suitable
workspaces, a need which has
not yet been addressed.
adapt may mean that Portugal will in the sustainability of the real
In summary, Portugal needs to
not be able to meet customer estate sector in Portugal.This is
be what it always was: a place
demand. Portugal now has particularly evident in the areas
with a great cultural heritage,
tourists and foreign residents with of student accommodation,
welcoming people, delicious
strong financial capacity but who office spaces, cultural activities
food, a safe environment, and
are also much more demanding in and hotels, including the need to
terms of what they expect living invest in new sectors, such as the wonderful beaches.
accommodation to offer.The real “party-fun hotels”. However, it also has to bear
estate sector has to know how to As noted earlier, there are very in mind that innovation has
handle these targets. few options available for students, played a key role in transforming
The demands of the younger especially for foreign students. the country, and that such
generation is also a crucial factor Traditionally, students turn to the innovation must continue.
ISSUE 31 • 2018 | 33
SEISMIC SHIFTS | SPAIN
TOURISM AND THE

RESIDENTIAL MARKET:
REGULATING THE SHARING
ECONOMY REVOLUTION
INES CHAMARRO, MADRID
S
pain has long been the world (after France). the real estate bubble at the
a popular tourist Several other factors have beginning of the 2000s, many
destination, but the come into play which are people had invested in real
geopolitical situation having an influence on how estate, whether in first or holiday
around the Mediterranean over this tourism develops. Low homes or even apartments
the last few years has created cost airlines have made it much acquired for the express purpose
a setting where Spain has more affordable for people to of leasing them out. At the time,
become a particularly attractive travel, and therefore it is not the lease market in Spain was
destination by virtue of retaining just a matter of Spain receiving almost exclusively long-term
all its usual sunlight, beaches, tourism that was formerly going residential leases.
charm and good food while elsewhere, rather, people also Then the crisis hit. People
other traditional Mediterranean travel more, generally speaking. needed money desperately and
destinations are currently The new millennial travellers discovered they could make
unavailable or undesirable for seek the thrill of the experience some by leasing out their homes
safety reasons (Syrian war, and demand an “authentic” feel to tourists. It started as a couch
aftermath of the Arab Spring in of local immersion. Also, the surfing option, or renting a room
Northern Africa, political tension Airbnb revolution has created for the weekend, or leasing out
in Turkey, increased terrorism lodging alternatives for those the house during their absence
in Europe). As a result, Spain who want something different in the summer holidays—not
received over 75 million visitors from a traditional hotel. really business, more of a sideline
in 2016, a figure which soared to In Spain, Airbnb and other to bring in a little extra. And
82 million in 2017, making it the similar platforms arrived at a from there it grew. Some people
second most visited country in very interesting moment. During decided it made sense to move

into a rented apartment so

that they could rent out their
house to tourists full-time and
make a business of it. Others,
as the economy got a little
better, invested in a smallish but
centrally located flat or two,
and devoted these entirely to
tourist leasing. Later professional
investors started appearing, with
serious cash, acquiring complete
buildings in the middle of town
and turning the venture into a
long-term enterprise.
What could possibly go wrong?
Well, the rub is that tourists
pay much better than locals for
much shorter stays.This means
that owners of residential flats
in the heart of the city have an
incentive to rent to tourists and
make faster and easier money
with short-term stays rather than
finding a long-term tenant, who
will pay less and who has more
rights under the Spanish Urban
Lease Act, and is therefore a lot
harder to evict if anything goes
wrong.This implies that the local
population is being progressively
driven out of the heart of the
main Spanish cities (and main
tourist spots) due to the increase
in rents. Also, residential sale
prices in tourist destinations are
going up, for the same reason.
Recently published statistics
note that while residential prices
overall have increased by 4.95%
on average in 2017, the increase
is actually rather irregular in
ISSUE 31 • 2018 | 35
geographical terms, with tourist tourist-flat-renters than for hotel- political turmoil.
destinations seeing a steep move goers, but they use some public Faced with this situation, the
upwards.The top-ten higher services (such as transportation, local authorities in Barcelona and
price increases are in insular police or the health system) as Madrid have already intervened
cities, headed by Ibiza with much as locals, who do vote to impose temporary measures
24.76%, and Barcelona with an and contribute to taxes and the to curtail the uncontrolled
18.20% average price increase. long-term local economy. Long- proliferation of tourist flats.
This situation has caused term residents sometimes grow Barcelona acted first, imposing a
some concern. Devoting a large resentful of these transient users, moratorium in July 2015 which
number of residential units to whom they can perceive as being put a stop on new hotel and
tourist lodgings has an impact demanding, bothersome and touristic lodging projects until a
on the long-term occupation of making no effort at integration or global tourist accommodation
a city.Tourists don’t vote, they respect. Cities overrun by tourists, plan was approved for the city in
don’t usually stay long enough like Barcelona, have seen this March 2017. Now the city council
to pay significant taxes, the level backlash against visitors play a part of Madrid has also approved a
of spending tends to be less for in local elections and in recent moratorium (in February 2018),

which will last until a long-term which, depending on the statistics), hotel occupancy is at an
plan can be made and which region, tend to liken the lessor all-time high, proving to hoteliers
prevents the turning of residential to a professional hotelier that both systems can indeed
buildings into hotel or tourist (cleaning services, maintenance, co-exist in relative peace and
lodgings in certain specific areas reception services, physical inciting some hospitality players
of the city. Similar measures have characteristics of the property, to boldly go into the tourist
been taken up on a regional level insurance obligations), almost apartment segment themselves.
by the Balearic Islands, which have attempting to discourage Thus, Spanish operator Room
also frozen new tourist leases “amateur” owners leasing Mate now operates “Be Mate”,
until a plan can be drawn up for out their properties. Indeed, a brand of tourist apartments
each of the islands which ensures some regions such as Andalusia (owned by private owners but
proper residential possibilities have created categories of leased to tourists and serviced by
for inhabitants as well as visitors. residential touristic buildings the operator). Further blurring
One of the most interesting new where apartments owners the lines between tourism and
Balearic regulations forbids new may only occupy their
residential property, the Canalejas
buildings to be devoted to tourist properties personally for a
complex in Madrid is set to
leases until they have been used certain time per year and are
include branded apartments
for general habitation for at least obliged to lease them out for
serviced by Four Seasons, which
five years. the remaining months, with
will also operate a luxury hotel in
Generally speaking, tourist the obligation for the full
the same complex, and Mandarin
leases, which were initially largely building to be managed by
unregulated and were therefore Oriental recently announced that
a professional body. Specific
ruled by the will of the parties it would operate a development
regimes are also sometimes set
themselves and the Spanish of luxury residences in Barcelona
out for operating tourist flats.
Civil Code, are now governed (in a building where the owners
The reaction of the traditional
by regional tourism regulations, had intended to develop a hotel
hospitality industry to all these
which have imposed many but which the new regulations
developments has been mixed.
obligations on the owner/lessor. have made impossible).
The hospitality lobby was still
Since Spain has 17 regions and bemoaning the existence of online The residential hospitality saga
each is regulated autonomously, travel agencies (OTAs) when the is clearly not yet over. How
obligations are rather piecemeal Airbnb revolution arrived, and the events will unfold is still difficult
and depend on the location of initial temptation was to believe to predict, and will largely
the property, but most regions that the Apocalypse was nigh, depend on the new wave of
have established the following: legislation emerging at local and
especially as tourist performance
• administrative registers in the depths of the crisis in 2011– regional levels over the next few
where the lessor needs to be 12 was very low. However, tourist years. It is to be hoped, however,
registered; numbers have picked up to such a that a much-needed long-term
• minimum or maximum number degree since then that, even with balance can be found between
of nights per stay; all the tourist flats currently in the the living needs of the local
• certain rights for the customer market (approximately 134,000 population and the economic
and obligations for the lessor according to Spanish official incentive of tourism.
ISSUE 31 • 2018 | 37
SEISMIC SHIFTS | SWEDEN
THE VIVA PROJECT

—THE STORY OF
A CUTTING EDGE
SUSTAINABLE
HOUSING PROJECT
JOHAN FORSLING AND GUSTAF STRÖM,
STOCKHOLM
M
any people Piper, has, in collaboration with they have developed what they
believe that scientists, trade, industry, the call “Positive Footprint Housing”,
a building is municipality of Gothenburg and that is, environmentally, socially
sustainable if committed citizens, developed and financially sustainable housing
it is environmentally classified, the concept of “sustainability” areas.The award-winning Viva
but one of Sweden’s largest further.Through many years of project is one of Sweden’s most
housing developers, Riksbyggen, research on how to build and innovative housing and city
a long-time client of DLA live as sustainably as possible, development projects ever.

sustainability, financial sustainability, people, and this is why Riksbyggen

social sustainability, education and has built six small studio
housing projects interact with apartments for young adults
each other, in order to create a under the age of 30.The purchase
unique entity.Tools for examining price of these apartments is fixed
and defining important data at €9,500, which is substantially
regarding each of the above areas lower than for other apartments
have been developed to facilitate in Gothenburg of approximately
decision making at the same time the same size. On the other
as research and education on hand, the monthly fee per sq.m. is
these subjects have been financed. somewhat higher in comparison
The first completed Positive with the monthly fee per sq.m.
Footprint Housing project is for the larger apartments.The
the tenant owners’ association fixed and substantially subsidized
Viva (Brf Viva) in Gothenburg, purchase price of the studio
which is an inter-disciplinary apartments is a radical solution
knowledge lab as well as a aimed at making it possible for
demo project. The project was younger people to get their foot
initiated by Riksbyggen in co- on the housing ladder.
operation with Johanneberg In order to accommodate
Science Park, Chalmers people’s changing needs over
Technical University, University the years, the use of space in the
of Gothenburg, Göteborg larger apartments has been made
Energi (Gothenburg Energy), flexible. Depending on how the
the municipality of Gothenburg owners’ family or employment
and RISE (Research Institutes situation changes over the years,
of Sweden). Riksbyggen was the a two-bedroom apartment can
co-ordinator of the project as easily be turned into a three- or
well as being responsible for the four-bedroom apartment, or the
other way around.
construction of the buildings.
Viva means “to live” and Environmental and
this reflects the life in and financial sustainability
around the tenant owners’ The Viva houses are equipped
The objective of Positive association. The housing area with a solar energy plant, which
Footprint Housing is to build and consists of 132 apartments enables the housing association
develop houses that are good ranging from the 30 sq.m. ultra to produce its own energy. If the
for people, the environment compact studio apartments energy from the solar energy
and the economy, today as well to the 109 sq.m. duplex plant at one time or another
as in the future.All the various apartments and penthouses. is insufficient, environmentally
advantages of the project, such In Sweden there is a shortage certified electricity, mainly from
as research, environmental of affordable housing for young wind power, may be bought
ISSUE 31 • 2018 | 39
from local energy supplier, together with Volvo, Göteborg

Göteborg Energi. In order to Energi and Riksbyggen, has
use energy efficiently and to therefore developed a concept
save the environment as well for storing energy in apartment
as the residents’ money, other buildings through used batteries
considerations have also been from electric buses. Before
taken into account when planning recycling these used batteries,Viva
the project. For instance, different reuses them for power storage,
heating systems, like underfloor so that the batteries get a longer
heating, radiators and air life expectancy.This is, of course,
conditioning in combination with good for the environment at the
different frame and façade systems same time as saving the tenant
made of concrete and/or wooden owners money.
materials have been thoroughly Every detail inside as well
compared and evaluated.The as outside the Viva houses
design and construction of the has been thoroughly planned.
houses waste as little energy as The surroundings, with their
possible, since technical solutions, dramatic topography, have been service that enables the residents
such as extra thick isolation, left untouched as possible to to reduce their impact on the
energy effective ventilations and reduce any adverse effects of environment. Studies have shown
placing of the windows have been development on animals and the that car and bike pools reduce
considered early in the process, ecosystem. Every inch has been car transportation by between
without compromise.Through examined in order to conserve 30 and 60%, since people who
these active choices regarding and protect the wildlife of the don’t own their own car but are
materials and construction, area. Landscape architects have members of a car pool, tend to
at all times in compliance adapted walkways and yards plan their car journeys in advance.
with mandatory building and which work with the nature, At the same time they save
construction requirements, it and since plants bind carbon money on fuel, taxes, spare parts
can now be proven that Viva dioxide and regulate the water and repair costs, etc.
has a lower climate impact than cycle, roofs, façades and other Studies have also shown that
other properties. For instance, areas have been made green a shared laundry room is more
the total energy consumption in with planted vegetation. Nesting energy effective than equipping
Viva is about half of the energy boxes have been put up for every single apartment with
consumption in other houses woodpeckers.Trees and bushes washing and drying machines. For
used for comparison purposes. which are important to insects one thing, people living in houses
A plus energy house (that is, one and animals have been replanted with a shared laundry room
which produces more energy and green corridors have been wash their clothes less often. For
than it consumes), like the Viva created so that plants and animals another, the less machines that
houses, must be able to store have space to move around. are being produced the lesser
energy for rainy days.The tenant Viva offers its residents car the effect on the climate.To avoid
owners’ association, working and bike pools, which is another straining the environment more

than necessary,Viva has built a in gardening, playing sports, or with work spaces with desks and
shared laundry room with 12 repairing their bikes, they can Wi-Fi for those who want to or
washing machines equipped with meet in the allotment gardens, must work from home. In the
automatic detergent dispensers. the orangery, the winter garden, post and delivery room, where
at the sporting areas, or in the there are a number of intelligent
Social sustainability work shop. Near the orangery delivery lockers, the residents can
When planning the properties, it there is a lounge area, with a big pick up post, bags of groceries
was very important to consider screen TV and a computer, as well or other goods that have been
the tenant owners’ well-being, as a smaller kitchen to be used delivered to them.There is also
safety and sense of security. all year around for meals and a recycling room where people
In the houses and gardens of get-togethers, like for instance can borrow, exchange and/or
Viva there are many common board meetings in the housing leave clothes, shoes, sporting
facilities and opportunities for association.The winter garden is equipment, etc that they no
social interaction. Instead of perfect for parties and smaller longer want or need.
interior stairwells, the entrances barbeques. Social sustainability Although, taken individually,
to the apartments are reached also includes the possibility for the innovative features of
through exterior corridors. each person to influence decisions the Viva project may not be
Gardens, infrastructure, facilities and make a difference. Plurality groundbreaking, the aim and
and common areas have been and ensuring everyone feels actual implementation of a,
well-planned in order to meet the included regardless of education, more or less, complete list
residents’ needs and to facilitate age, background, etc are all issues of sustainable features makes
spontaneous meetings with which are very important to the the project one of the most
the fellow residents.Whether developer Riksbyggen and Viva. ambitious sustainable housing
the residents are interested The Viva houses are equipped projects in Sweden to date.
ISSUE 31 • 2018 | 41
SEISMIC SHIFTS | UK
DISRUPTION IN THE REAL

ESTATE INDUSTRY—DON’T
LEAVE THE LAWYERS BEHIND!
PAUL JAYSON, LONDON
L
awyers have a at ease amongst the hipsters
tendency to be and other millennials driving the
reactive—considering change in the use of property.
changes in statute The Use Classes Order which
and case law and applying that to neatly delineates and zones how
the current transaction of a client. space is used looks antiquated
The much talked of disruption and and questionably not fit for
change in the real estate industry purpose, given the way the use
necessitates a more forward of space has evolved in the
thinking and innovative approach, past decades. People now shop
predicated upon understanding from home and the office, eat
the real estate sector, the drivers at the shopping mall and work
of change and how ways of acting everywhere and anywhere.
and the application of technology This is particularly seen in high
are rapidly evolving. streets and areas in the heart of
All three main asset classes— cities, where multi-use spaces are
courier and home deliveries. An
retail, office and residential—are becoming more common.There
ex-board member of former
subject to the winds of change is a fusing of different-use classes,
US retailer Toys R Us recently
and in each there are areas making the whole process of
explained to me how online
where lawyers need to step away applying for and changing use
sales reduced by 70% when free
from precedent documents and more important and also more
shipping was not offered, but
complex and nuanced.
consider new ways to protect that the cost of subsidising that
clients and futureproof their Retail shipping wiped out profitability.
investments or operation of their It can no longer be assumed Realigning one’s retail footprint
business from a premises. that retail stores are used solely to act as “Click and Collect”
An example of this change is for the sale of goods. “Click and hubs makes that “last mile” of
seen in the Town and Country collect” now accounts for a the delivery chain. Similarly, “dark
(Use Classes) Order of 1987. substantial proportion of sales supermarkets” are being used to
Perhaps coincidentally, aged 30, and in some locations stores are package and prepare orders for
the Use Classes Order is slightly used primarily as a local logistics online deliveries. It can no longer
too old to be a millennial and warehouse, providing companies be assumed that retail means
perhaps that is why it looks ill with an effective alternative to A1 retail use. Lawyers need to

SEISMIC SHIFTS | UK
“
It can no longer be assumed that retail
”
means A1 retail use.
ensure the use is specific to that customers. Each delivery service something which parties and their
which their client has in mind will have a different payment lawyers will need to consider
for the premises.The shorthand structure but—in the context very carefully.What revenue is
of Al retail or B1 offices may of the turnover provisions of a generated, and where, is not as
not be sufficient, albeit that this lease—both landlords and tenants straightforward as verifying the
involves issues around planning must pay particular attention to EPOS system. Landlords and
permissions (see below). the extent of revenue derived tenants need to consider the risks
Whilst there is nothing new from the premises as well as the and rewards of turnover rents for
in landlords of shopping malls deductibles which can be set the future as well as for current
using turnover rents, the trends off against such revenues so as modes of customer delivery.
mentioned above bring the to capture those matters (and Finally, retailers and landlords
precise wording of the turnover only those matters) which were of retail premises are continuing
provisions of a lease to the fore. intended by the parties.The next to experiment with food and
This is accentuated with the rise innovation of delivery services beverage (F&B) offerings in an
of online food delivery disrupters, may include local kitchen hubs effort to increase footfall.Whilst
such as Deliveroo, which act as a whereby food is prepared off the such use is ancillary, no planning
conduit between restaurants and “demised premises” and this is issues are likely to arise. However,
ISSUE 31 • 2018 | 43
SEISMIC SHIFTS | UK
leases will need to grant sufficient The breakdown of traditional From a legal perspective, this
rights so as to allow flues and familial and other groups and has put pressure on ensuring
other service media to service their structures, combined that security of tenure is
a kitchen.Where premises end with increased mobility, has not inadvertently granted to
up being dominated by F&B over resulted in millennials searching members. In addition to the
retail, parties will need to consider for community. Co-working inconvenience and costs involved
the most appropriate use class for companies, led by visionaries in removing those claiming
the premises. Parties need to bear such as Miguel McKelvey and to have a tenancy, there is a
in mind that the rights granted Adam Neumann of WeWork, risk in co-working companies
and reserved need sufficient have created a community— of breaching the alienation
flexibility to futureproof the lease combining an online platform and provisions of their own lease,
given the rapid changes taking shared space. From a landlord which may not have anticipated
place in retail. and tenant perspective, this anything other than leases of
bundling of space and services whole or “permitted parts”
Office has further blurred the lease of an entire floor.Agreements
Perhaps even more than the versus permit divide, much more governing the rights of occupation
retail sector, offices and their use so than the first generation of must be drafted carefully, avoiding
continue to develop and evolve. serviced office provider. exclusive possession. Moreover,

SEISMIC SHIFTS | UK
caution needs to be exercised in than in objects. Perhaps of inter-company loans.

the operation of such co-working even greater importance is the As with any cash flow businesses,
environments, given that a lease impact of the trends mentioned owner operators will need to
can be deemed to exist regardless above—increased mobility be mindful of ongoing CapEx
of the content of the members’ and a breakdown of traditional requirements, much like a hotel.
agreement or permit.A lease can community. The usual (and more comfortable)
be created inadvertently and both Moreover, this generation has position of an FRI lease, which
landlords and operators need to been the first to experience passes the liability onto a tenant,
ensure that security of tenure is quality, branded student is not likely to apply where the
only obtained where intended. accommodation and expect owner keeps the risks and reward
Some community-based the same convenience and of PRS operation.
operators, particularly one US service when entering the The government consultation
brand yet to reach the UK, workforce. Private rental sector into PRS (otherwise referred to
highlight offerings aside from (PRS), co-living and micro-living as Buy-to-Rent) is now over and
office space including gallery have tapped into these trends, government intervention is likely,
space, restaurants and members’ bringing a product to market in order to promote the sector.A
events.This could be important which combines branded, quality new use class for PRS is unlikely
in terms of planning use and also accommodation, which may be (and won’t work for lenders were
for the ratings treatment for smaller but which boasts shared they to seek to enforce and look
the owner and the members. spaces to encourage community. to sell off units rather than keep
Every case is different, but parties
Unlike office, retail and these rented). Normal affordable
entering into agreements must
industrial investment housing provision does not work
ensure they are aware of what is
opportunities, which are very well where a development
actually going on at the premises.
underpinned by long-term rental scheme is intended to be retained
Residential incomes, residential investment by the owner/developer for
Margaret Thatcher, in her is viewed as a cash flow business. rental and we are likely to see
first speech as leader at the Normal rental cover tests versions of the Mayor of London’s
Conservative party conference do not apply in the same way. discounted rental requirements
in 1975, espoused the dream of PRS and micro-living schemes coming into play.
a “property owning democracy”. usually involve an element
Over 40 years after that of soft services (such as wifi, Conclusion
speech, we are finally seeing the laundry or a concierge) which Disruption is different from
erosion of home ownership means a service provider will other trends which affect the
as a key aim of young people. usually be involved. Duty of care built environment.Very few of the
The reasons are complex but agreements may be required by above drivers are anchored in
two of the most significant lenders where these services are legislation. Instead, they highlight
reasons are undoubtedly the being provided by third parties. the need for lawyers to stay close
fact that housing is simply too Parties also need to consider to and understand their clients,
expensive for most first-time their tax position relating to the sectors within which they
buyers and that millennials are interest deductibility both of the operate, and the way in which
more interested in experiences funders’ financing as well as any they are moving.
ISSUE 31 • 2018 | 45
SEISMIC SHIFTS | UK
BLOCKCHAIN:
OVER-HYPED FAD OR
TRANSFORMATIONAL
JUGGERNAUT?
ANDREW GRAY, LIVERPOOL AND ROB SHAW, SHEFFIELD
Introduction main features and benefits of the considerable time and effort
You may have heard about technology, before considering to ensure that their records
the digital currency known as how it is being implemented in are kept up to date and free
“Bitcoin”, a system of electronic the real world, and how it might from error.This brings with
cash that can be traded peer- affect the real estate sector in it a number of inherent risks.
to-peer solely via the internet. the future. What if an incorrect entry is
Whilst Bitcoin’s wild price swings inputted into the ledger? What
What is a blockchain?
and internet success have been if a malicious actor intentionally
At a basic level, a blockchain is a
the subject of a number of changes the records for their
distributed, devolved digital ledger
headlines over the past few years, own personal gain? What if the
of transactions, which is agreed
it is the backbone of Bitcoin’s ledger, and its contents, are stolen
upon by everyone who uses it.
protocol—a system known as (or hacked!) and come under the
Every day, the businesses we
the “blockchain”—which is really control of a third party?
interact with use ledgers to
causing a stir in a number of record the state of play in respect Blockchain technology
industries throughout the world, of particular assets. Banks record successfully deals these problems,
including in the real estate sector. what funds its customers have in allowing parties to transfer assets
Whilst blockchain seems their accounts and, between them, and value between themselves
to have become a bit of a make the appropriate adjustments in a secure manner, whilst
buzzword amongst innovation- to evidence the transfer of money simultaneously recording and
seeking professionals, it is often from one person to another. time-stamping these transactions
misunderstood by the public, Stock exchanges record the in a publically verifiable ledger. All
who can be quick to write it off sale and purchase of shares for of this takes place on a network,
as unnecessary and over-hyped. It different companies.The Land the users of which can rely on
is useful therefore to start with Registry records the transfer of pre-determined rules to agree
a basic understanding of the key title from seller to buyer. a single version of the “truth”
facets of the technology before In each of these cases, we in respect of the history of an
assessing its transformational place a degree of trust in those asset, with no need for a trusted
potential.This article looks at the institutions, who must expend intermediary in the middle.

SEISMIC SHIFTS | UK
How does this work? would need to agree upon of transactions) by “miners”,
There are a few key features of the change.This alone makes who must solve a complex
a blockchain: fraud much more difficult as computational problem and
clearly, it’s not easy to cheat the expend considerable computing
• Public
system if everybody is watching. power to do so.This is where
Every user of a blockchain has
the name “blockchain” comes
a copy of every transaction • Secure
from and, depending on the
that has ever occurred on the As a blockchain’s digital ledger
type of blockchain used,
network. If a person wishes to is shared between the users
transactions will be verified
make a transaction, it will be of the network, so too is the and added to the network in
visible to, and must be agreed history of the particular asset a matter of minutes, or even
by, everyone in the network. being transferred on that ledger. seconds.In this way, the blocks
This makes it incredibly difficult Transactions are grouped of transactions that make up a
for any one person to falsify into “blocks” and then added blockchain are interconnected.
the ledger, because every other to the network (by being Thus, if a malicious user wished
participant in the network appended to previous blocks to change the agreed history
ISSUE 31 • 2018 | 47
SEISMIC SHIFTS | UK
of an asset on a blockchain, The fact that an identical copy use interfaces, this raises the
not only would it have to of the ledger is shared across possibility that essentially anyone
change the relevant block every user in the network could transact using the network.
of transactions and resolve means that there is no single Bringing all of the above points
the relevant computational point of failure, unlike traditional together, you have a technology
problem, it would also have to web servers which are hosted that is nothing short of
resolve the problem attaching by a particular provider. revolutionary and which has the
to every subsequent block of Similarly, the process of potential to completely change
transactions in the chain, all in sending assets via the network the way business is done in a
the time it takes for the rest of takes place without placing number of arenas. Indeed, it
the network to verify a single trust in any single party or has been said that blockchain
block. authority, instead working on technology has the potential to
All of this would also need the basis of a consensus as to change the way we deal with
to be done in a way that the the pre-determined rules by value in much the same way that
network accepted and to do which the network operates. the internet transformed the way
so would take an immense This also means that there is we publish and share information.
amount of computing power, no downtime—the network is
so much so that it would always up and always available, Applications to real
probably remove any potential allowing people to transact estate
gain for a would-be fraudster. through it 24/7. Ultimately, wherever a process
• Devolved, trustless and • Programmable or business model relies on
persistent Each digital “token” transferred trust, there is the potential
“
via the network can represent for disruption via blockchain
an asset of some sort.There technology. This is clearly very
is the potential for each and much the case in the real
every one of these tokens to estate sector, where people
It has been said be linked to electronic code trust a whole raft of different
that blockchain (or “smart contracts”), which players to ensure property
technology has may control how, and for what, dealings are carried out as
the potential to the tokens can be used or quickly as possible. Throughout
change the way we which may specify particular a property’s lifecycle, property
circumstances in which those owners, construction
deal with value in tokens will be automatically professionals, banks, lawyers
much the same way transferred to other parties. and even government bodies all
that the internet • Accessible place some degree of trust in
transformed the Whilst the processes behind each other to move deals along.
way we publish and blockchain technology may be Through supplementing, or

replacing, key transactional
complex, the networks can be
share information. made accessible to anyone who processes with solutions based
”
has an internet connection.With on tamper-proof blockchain
the implementation of easy-to- technology, the need for this

SEISMIC SHIFTS | UK
trust is removed, opening the in a number of jurisdictions, by a required before transactions

door to both cost- and time- single registration record at the can be carried out.
savings for everyone involved. relevant land registry, a property Any transfer of the token
Whilst there are a number of can also be reduced to an entry, from party to party would
applications of the technology or token, on the blockchain. be recorded digitally, with
in the sector, and indeed these Ownership of the token would the transfer chronologically
could form the basis of another be evidenced by the ownership imprinted upon a blockchain
of a “private key” that allows for all to see.This would
entire article, some of the key
the relevant party to authorize allow the entire history of a
possibilities are set out below:
a transfer of the token to property to be tracked via the
• Tokenization of property
another.The blockchain also blockchain, which could reduce
The starting point for much of
permits control of these digital cases of fraud.
the potential of blockchain is tokens to be split, requiring a Tokenizing property and
the ability for physical items to digital “signature” from more transacting with property in this
be “tokenized”, that is, reduced than one party before the asset manner will obviously require
to a digital footprint on a is transferred.This is important the buy-in of governments and
blockchain. In a similar fashion in a property context, where regulatory bodies across the
to which physical bundles of title financial charges on assets will world.Whilst this is likely to
deeds have now been replaced often mean a bank’s consent is take some time, a number of
ISSUE 31 • 2018 | 49
SEISMIC SHIFTS | UK
companies have already made placed on property analytics. property could be reported
great progress in this area. For • Smart contracts and recorded via the
example Propy, a company Perhaps the most interesting blockchain, with automated
which aims to use blockchain and exciting use of the notifications then being sent to
to enable international transfer blockchain is to enable smart the relevant parties.
of real estate ownership, contracts, which draw upon The automation of contracts in
has recently partnered with a range of data sources to this way, based around secure
the Ukraine government to automate standard contract and chronologically time-
pilot a devolved land registry. provisions. Indeed, once an stamped records of events on
These developments are also asset has been tokenized the blockchain, could streamline
clearly on the mind of HM on a blockchain, parties can the resolution of disputes in
Land Registry in the UK, who implement a smart contract to contracts and reduce the need
recently announced that they set out particular conditions (in certain cases) for costly
are looking to trial the use which must be satisfied before intermediaries.
of blockchain as part of their the token is transferred. This has clear implications for
“Digital Street” initiative. For example, a simple smart the role of legal professionals. It
• Property and market contract might require the is easy to see a need for lawyers
information transfer of digital currency of the future to have both legal
As part of this tokenization, (such as Bitcoin) from one and technological skills, as they
information relating to the person to another in order to
property—such as records trigger the automatic transfer
relating to the construction of a tokenized property asset.
of the property, energy On a more complicated level,
efficiency and evidence of processes set out in entire
regulatory compliance— contracts could be automated
could all be linked to the through computer code
relevant token, essentially and accompanying systems.
allowing the blockchain to A lease smart contract
act as a central database might provide for regular
of all relevant information automated payments to the
relating to that asset. landlord from the tenant and
Various parties including for interest clauses to be
surveyors, lawyers, funders automatically invoked in the
and regulatory bodies might case of late payment (pulling
all input into this trusted interest rate data directly
public database. By opening from the relevant reference
up relevant property-related bank). Such smart contracts
information to the market, could be supplemented by
blockchain has the potential online contract management
to increase transparency and platforms, whereby issues
remove the premium currently relating to maintenance of a

SEISMIC SHIFTS | UK
might be required not only to are already creating tangible Atlant.io, which similarly seeks
advise upon the best way of solutions in this area. to “subdivide individual parcels
converting standard contract • Property funding of real estate into tokens” and
clauses into programmable The ability to tokenize property offer them for sale.
concepts, but also to audit assets on the blockchain also
such contracts to ensure they Closing remarks
brings with it the potential for
comply with the relevant legal The real estate sector is
ownership of property assets to
and regulatory framework. often subject to criticism for
be split amongst hundreds, or
A market for standard-form being relatively slow to react
even thousands, of individuals,
smart contracts, which are to technological change and,
all of whom would own a
acceptable in the market, might whilst there are a large number
“share” in the property. Such
also arise, allowing parties to of companies working on
shares would be recorded on a
simply purchase contracts that solutions involving blockchain
blockchain and would be easily
regulate more straightforward technology, it is likely to be
transferrable between parties at
transactions and removing the some time before these are
any time. cemented as an integral part of
need for lawyers to be involved This would enable the growth
at all. Indeed, this appears to be the real estate world. However,
of fractional ownership in there are real opportunities
the intention of companies such property developments, which
as OpenLaw and Agrello, who for blockchain technology to
could lower the barrier of entry disrupt and transform the real
into the property market for estate sector, reducing friction
smaller investors, whilst opening in transactions and introducing
up an entirely new pool of further transparency and cost-
liquidity for developers wishing savings. It seems, therefore, that
to fund the construction the widespread use of blockchain
of new developments. In is a case of “when”, not “if”.
essence, blockchain could It is advisable for key
take the crowdfunding of such stakeholders in the real estate
property developments to a sector to have a strategy in place
new level, removing the need to track, consider and, where
for dedicated third parties possible, implement blockchain
to manage investment funds, technology as it matures, to avoid
whilst also allowing automatic being left behind and to ensure
distribution of returns to that they rank in file alongside
investors. the disruptors, rather than the
There are already a number of disrupted. DLA Piper’s global
companies in this area looking blockchain group offers strategic
to exploit this market, such as regulatory and transactional
REAL, which offers a platform guidance to companies in nearly
whereby cryptocurrency every sector and can assist
owners can crowdfund new companies at every stage of the
property developments, and business lifecycle.
ISSUE 31 • 2018 | 51
SEISMIC SHIFTS | UK
THE INTERNET OF THINGS

AND THE REAL ESTATE
SECTOR
ROB SHAW, SHEFFIELD, NICHOLA DONOVAN, LONDON
AND ANDY GRAY, LIVERPOOL
A
s the fourth of everyday life, and they will A more connected
industrial only become smarter and more physical world
revolution connected with the world around Buildings are becoming a host
gathers pace, us as time goes on.Technological
for a wide range of Internet
even that most traditional and advances are transforming how
of Things based applications.
archaic sector of all, real estate, is the sector operates for all existing
Sensors are increasingly being
participants (such as landlords and
opening its arms to embrace the installed inside and outside
tenants) whilst drawing in new
technology that is infiltrating all buildings to gather a vast array of
players who have technology at
aspects of the built environment. the core of their business and are data, which can then be evaluated
Smart homes, smart buildings fast changing the rules of the real and exploited in order to make
and smart cities are now part estate game. optimum use of a building and

SEISMIC SHIFTS | UK
how its infrastructure is occupied and hot when they arrive!). In throughout properties, can
and operated. Examples of how the same way, connected cars push useful information and
the Internet of Things is already, will soon identify traffic jams notifications to visitors’ phones
or could soon, impact the real and automatically re-route at specific locations, allowing
estate sector include: drivers onto the quickest route for people to interact with
• Systems and buildings can before locating the nearest car the built environment in more
learn and react to the way park with free spaces. varied and exciting ways than
its occupants behave—not • Constant monitoring of how was previously the case. For
only in relation to the building space is used and occupied, example, retail stores can push
as a whole but down to from conference rooms, to advertisements and discounts
individual rooms. Instead of offices and even individual to a customer, whilst making
manually operated heating desks, allows businesses to use of location-based analytics
and lighting controls, HVAC make real time decisions about to track footfall and the success
systems can now adjust heat, how much space is needed of individual campaigns.
air conditioning and lighting (perhaps further promoting the • Sensors in dust bins will allow
in response to the presence global trend for a flexible office local authorities to send
or absence of occupants. The space) and can drive down refuse collection lorries to
longer and more extensively costs per square foot. locations where the bin is full,
any such system is used, the • Linking security systems to which helps to prevent wasted
more it is able to learn about smart phones, security passes journeys and ensure a healthier
usage patterns and, in turn, or wearables (such as a FitBit) environment for the public.
how to increase performance to allow facilities management As these examples show, the
and reduce energy costs. and the emergency services to Internet of Things is transforming
• Sensors embedded into a identify if a building is clear orthe real estate sector and has the
building’s infrastructure allow where those trapped are located. potential to deliver real benefits
for a proactive instead of • Digitized logistics management to everyday lives. However, as
reactive approach to repair can enable companies to in other sectors, those who fail
and maintenance.Allowing an ensure that their products are to adapt and embrace modern
occupier to address issues located where and when they technology risk being left behind
before they arise can avoid are required, as well as best and missing out on new revenue
disruption to operations and determine how they are stored streams or suffering reduced
the need for costly investigative and delivered.This allows non revenue as, for instance, tenants
works to identify where urgent products to be stored (now accustomed to modern
potential problems are located. further away where land costs ways of working) use connectivity
• Smart phone apps which are are cheaper, while products that and technology as key factors
integrated with a building’s are required as instantaneously when choosing where to locate
systems can guide occupants as possible can be located closer and how much rent they’re willing
to vacant desks or direct them to customers who are willing to to pay. Indeed, businesses now
to their next meeting by the pay a premium for that service, exist solely to measure and certify
quickest route possible (and thus increasing revenue. a building’s connectivity (much
ensure the coffee is brewed • Electronic “beacons”, placed like an Energy Performance rating
ISSUE 31 • 2018 | 53
SEISMIC SHIFTS | UK
certificate in the UK). Businesses technology in their buildings what happens when something
that do not embrace technological and infrastructure to collect fails. In a more interconnected
change will not benefit from personal data will need to system with a variety of
the advantages of adaptable, place privacy compliance at sensors and devices involved,
comfortable and healthy the heart of their operations the question of who bears the
workplaces and the opportunities, and ensure that this is an responsibility and the extent
such as increased productivity and inherent part of their Internet of any liability needs to be
employee retention, better space of Things solutions, or risk considered carefully.
usage and reduction of costs, that facing significant sanctions. A These issues need to be
a connected workplace can offer. privacy-by-design approach addressed in advance when
will enable businesses to contracts and terms and
Legal issues
quickly adapt their privacy conditions are prepared.
As with any technological
compliance measures to As with cybersecurity,
change the use of Internet of
cater for future changes in convincing people to take
Things in the real estate sector
technology and regulation. the next step with entrusting
throws up a number of legal
2. Security not only their data but, in
challenges and questions:
Users of connected solutions certain circumstances, their
1. Data protection and privacy
will need to be reassured that health and even their lives,
Internet of Things solutions
their systems will not be left could require the providers
have the potential to capture
open to attack by malicious of technology to share a
huge volumes and varieties of
third parties, potentially greater proportion of the risk.
data, including data that are
allowing access to private and The extent to which such
potentially private or personal.
valuable data or the ability providers are willing to accept
Not only does this need to
to disrupt the operation risk will of course depend on
be filtered to ensure that the
of, or even break into, the level of reward offered.
data collection is targeted
and efficient, but businesses buildings. Security must be a 4. Retrofitting
will need to ensure that primary focus for technology Although sensors can be small,
appropriate precautions against providers when designing retrofitting them into older
the misuse of data are an Internet of Things applications, buildings to make them “smart”
inherent part of the design of and operators will likewise can be a costly challenge for
the solution. need to implement strong developers, as sensors will need
The final countdown to the security measures (and to interact with equipment that
enforcement date of EU update such measures on an can be linked up. For instance,
General Data Protection ongoing basis) to prevent data old HVAC systems may require
Regulation on 25 May 2018 falling into the wrong hands. wholesale replacement and
is on, and with it comes a 3. Risk allocation and liability other alterations may require
new world of regulatory The possible implications permissions from landlords and
controls and scrutiny over and benefits from Internet of those in nearby buildings as
the way in which personal Things-based technologies well or planning consents from
data are collected and used. are fascinating and exciting local authorities.
Businesses that use connected but there remains the issue of 5. Service charge and

SEISMIC SHIFTS | UK
infrastructure services are used. fundamentally altering how the

With more and more tenants In stark contrast to the sector operates and what it can
expecting reactive buildings, unconnected tangle of deliver for land owners, tenants,
with high levels of connectivity, competing services, used by developers, lenders, the public
we can expect to see Internet individual tenants, that are often and government across all areas
of Things-related clauses found within today’s properties, including development, offices,
making their way into the it is likely that the expectation retail, industrial, infrastructure and
service charge provisions in will shift to landlords to install public spaces. Its onward march
leases. Services that were and maintain a central network will not slow down, and all those
traditionally for individual of connectivity throughout involved in the real estate sector
tenants to procure—such as properties from the outset. need to consider how technology
high-speed internet—could In turn, owners of investment
will impact their business and
increasingly become a standard properties will be expected to
how they will address the legal
service provided centrally by contract with a wider range of
the landlord, with provision issues it presents.
stakeholders than is generally
for the costs to be shared The authors would like to
the case at present.
amongst tenants and, going acknowledge the contribution of
further, perhaps even the Conclusion Conor Boyle and Imogen Palmer,
need for additional clauses The growing impact of trainee solicitors at DLA Piper UK LLP,
to regulate how the relevant the Internet of Things is for their contributions to this article.
ISSUE 31 • 2018 | 55
SEISMIC SHIFTS | USA
INNOVATION
EVERYWHERE ...
WILLIAM RUDNICK, CHICAGO
“
There are only two groups is news, of course: or at least an identifiable range
that do their jobs the • Alternative service providers, • Demand for more value—great
same way they did them such as companies like Axiom, legal work is the assumption;
50 years ago: ditch-diggers real estate brokers, insurance clients want insights, market
and lawyers.” David Glickstein companies and accounting firms knowledge, relationships and
As real estate lawyers, we • Pressure on rates—some risk assessments
face innovation threats from clients focus on the formula • Legal work being taken in-house
two directions. First, there are • Pressure on fees—some clients • Legal work being taken off-shore
threats to the legal industry, focus on the bottom line • Artificial intelligence
and second, there are threats • Blockchain
• Pressure on staffing—some
to the real estate industry.
clients don’t want law firms to Threats to the real
Threats to the legal staff with lawyers who are just estate industry
industry starting out, because they don’t Before we get to some of the
Following is a partial list of threats want to be charged for training things that are disrupting the real
to the legal industry; none of this • Demand for certainty of fees, estate industry, we should ask

SEISMIC SHIFTS | USA
why it matters that the industry each of us to do everything. But

we serve is being threatened.The this is as much about mindset
reason is that as our clients are as it is about specific tasks. It
disrupted and disintermediated, is more about framing than a
we suffer because those industry to-do list.
incumbents lose to insurgents. • Seek to understand what is
And unless the insurgents changing and why
become our clients, we’ll lose • Look for ways to be creative.
along with our clients. Specifically, think in terms
So here are some of the threats of the meaning of the word
to the real estate industry: “creative”, that is, create new
• Virtual employment relationships things, new ways of doing things
• Remote working locations • Follow the technology, for
• Less area per employee two reasons: (i) it helps us to
understand what is changing;
• Off-shore workers
and (ii) it gets us thinking about
• Companies that use space in
how technology can disrupt
different ways (eg WeWork,
• Talk with our clients. Learn
StarCity, Kennect)
what they are seeing and
• Driverless cars what they’re worrying about.
• Transit-based development And learn what opportunities
• Shorter, more flexible lease they see, and figure out how
terms we can help them change and
• Retail apocalypse and the take advantage of changes
repurposing of retail assets • Lead—no matter where each of
• An ageing population us sits.The future belongs to the
• Millennials, who buy experiences young. If you are young, lead now.
rather than stuff, who rent or Don’t wait to be told to lead, and
share rather than own, and who don’t wait for permission
change jobs more frequently • Our business is going to be
• Artificial intelligence cannibalized.We can do it to
• Blockchain ourselves, or we can wait for
someone to do it for us
“
So what’s a real The trick isn’t predicting the
estate lawyer to do? future; it is recognizing that the
In the face of these disruptions, future has arrived. It is time to
we real estate lawyers need start adapting ... and leading.And Talk with clients:
to reset our thinking and our remember that if we do start now, learn what they
approach. Specifically, here is we’re ahead, because most of our
are worrying
”
a list of things that each of us peers are stuck, afraid to move.
can do. The list is too long for Good luck! about.
ISSUE 31 • 2018 | 57
GENERAL REAL ESTATE | DENMARK
STRATEGIC PARTNERSHIPS
FOR PUBLIC-SECTOR
CONSTRUCTION PROJECTS
KURT HELLES BARDELEBEN, COPENHAGEN
I
n Denmark, public-sector as an isolated project. In prior to commencement
construction projects practice, this means that each of construction and on
are increasingly affected construction project has its own disagreements regarding time,
by budget overruns and dynamics and so the parties quality and payment during the
disagreements. At the same involved often try, from project execution of the projects.
time, politicians are calling for start to finish, to boost their It is essential to determine how
streamlining of these projects own finances without an eye to to establish fruitful collaboration
in order to make it possible to future projects, which may well between relevant public-sector
build more at the same cost in be awarded to competitors due construction administrations and
the long run. to the procurement rules. serious-minded private-sector
A characteristic of public- Dealing with each construction players to engender opportunities
sector construction projects is project in isolation results in the for innovation and development in
that each project is designed, spending of disproportionate the construction sector.
put out to tender and executed resources on tender processes Such cooperation obviously

“
The focus in the relationship is on
”
the construction project.
necessitates setting aims that • Use of shared knowledge and regular long-term relationship
go beyond the completion experience gained between a public-sector
of individual building and • Reduction of bureaucratic construction client and a
construction projects. In other processes consortium composed of relevant
words, there is a need for technical consultants, contractors
• Focus on innovation and
partnerships stretching out into and specialists that can participate
sustainability
the future and spanning several in the planning, design, execution
construction projects. • Fewer disputes and development of specific
In collaboration with other • Focus on development rather projects. It is, however, important
players within the REBUS than on tender processes and to bear in mind that a strategic
partnership (www.rebus. dispute resolution partnership makes heavy demands
nu) as well as with the City of in terms of structure and mindset
Copenhagen, we have developed a
Strategic partnership— on the part of both the private
concept for strategic partnerships key features players and the public-sector
encompassing all construction A strategic partnership is construction administration.
projects launched within a four- established under a framework Through the partnership, the
year period after contract award, agreement made following a strategic partner gains extensive
thus enabling the participating public call for tenders and an insight into the DNA of the
partners to gain experience intensive negotiation process, public-sector client group, and
and develop good working giving the parties the opportunity the public-sector client gains
relationships for the benefit of to balance expectations and insight into the affairs of the
several projects. adjust mutual requirements and partner. In other words, the
The main potential benefits of conditions for the setting-up, focus in the relationship is on the
strategic partnerships are: design and execution of major construction project, because
• Long-term collaborative construction projects. mutual positioning is put aside.
relations between the parties The partnership creates a A strategic partnership may
ISSUE 31 • 2018 | 59
accommodate uniform projects compliance with the costs defined

as well as projects serving for individual projects as well as
different functions or featuring compliance by the private player
different architectural styles. with the pricing principles agreed.
A fundamental element of a A requirement of innovation,
strategic partnership are the development and delivery at the
basic arrangements provided by agreed time and price is part of
the private players to assist the the concept.
public-sector client with regard Disagreements must, as far as
to clarification, budgeting, planning possible, be resolved through
and development up to the stage negotiation or, if necessary,
when each individual project can with the assistance of a
be defined in practical terms. mediator or umpire.
Collaboration within the The partnership
framework of the partnership agreement and calls
is managed in a process divided for tenders
into stages that are common As a result of the partnership
and well known in the building agreement, a large number of
and construction industry. Such construction projects which
systematic division ensures would otherwise have required
that the parties are formally to be put out to tender will
in agreement at the time of be carried out by the strategic
transition from one stage to partner without any prior call
the next. for tenders. In other words, a
Pricing under such an agreement public-sector client participating
model is based on a detailed in a strategic partner-ship will
financial model which ensures be able to design and execute

“
Disagreements must, as far as possible,
”
be resolved through negotiation.
billion-kroner construction
pro-jects without any prior call
for tenders. Consequently, it
is vital that, in concluding the
partnership agreement, the
partners comply strictly with the
procurement rules in force.
A call for tenders for a
partnership agreement must
define the specific framework
for collaboration, design
and execution of construc-
tion projects. This includes
clearly determined pricing in
accordance with the tender
submitted by the private player.
A partnership agreement is
usually awarded based on award
criteria relating to:
• Design and execution pricing
• The arrangements made up
by the private player for the
execution of the project
• The competencies available in
the basic structure
• The development and innovation
skills of the private player.
ISSUE 31 • 2018 | 61
GENERAL REAL ESTATE | MOZAMBIQUE
TEMPORARY ACCESS
TO URBAN AND RURAL
TENEMENTS IN MOZAMBIQUE
NUNO MIGUEL VICTORINO, MAPUTO
T
he real estate
sector in
Mozambique
has undergone
significant and rapid growth
over the last ten years. There
has been increased demand
for high-quality property, both
commercial and residential,
due particularly to the rise in
foreign investments, especially
in Maputo City. Other real
estate opportunities have
arisen in the country’s
provinces, for example, as a
consequence of more natural
resources explorations, with
particular emphasis on the
discovery of large quantities
of natural gas reserves in the
Rovuma Basin Area, at Cabo
Delgado Province (north of
Mozambique). This has led to
new investment in the country’s
urban and rural areas.
Under the law of Mozambique,
land is the property of the
state. Mozambicans and
foreigners may obtain access to

“
Mozambican law permits parties to
freely determine the rent in their
”
lease agreement.
land by obtaining a “right to use over such buildings and to use, with it and does not require
and enjoy land” title (commonly develop and dispose of it as the prior authorization of the
referred to in Portuguese as holder so decides. state. Second, there is the rural
Direitos de Uso e Aproveitamento Apart from acquiring land by tenement, which refers to land
da Terra, or DUAT). When the means of a DUAT, as outlined plots with infrastructures that
DUAT is issued for business above, there are other ways have no value independent
purposes, it is valid for a of gaining temporary access of the underlying economic
maximum period of 50 years, to land for investment and activity, but rather serve to
renewable for the same period, other purposes. There are support the activity carried out
and when it is issued for two relevant concepts in this on the surrounding land. The
residential purposes, it is valid area of law to be considered. transfer of rural tenements is
for an undetermined period. First, the urban tenement, which subject to approval from the
The DUAT holder can freely comprises those land plots same entity that authorized the
use the land over which the that do not depend on the DUAT application.
DUAT has been issued and geographical location of the It should be noted that a plot
these rights are protected by corresponding infrastructure of land without any economic
law against any third parties, but are, however, interpreted infrastructure cannot be subject
including the Mozambican State. as buildings affixed to the to a lease between parties.
In situations of compulsory ground, the source of income However, the legislation has
purchase in the public interest, of which depends principally created a similar concept with
the state must compensate the on the existing structure, and the same purpose, namely the
DUAT holder in accordance not on the land itself. In a assignment of exploitation
with terms defined by law. municipality, an urban tenement contract. Essentially, the
In addition to the rights can also include an unbuilt assignment of exploitation
mentioned above, the DUAT lot with defined borders that contract consists of a contract
holder owns any building and/ has been integrated in an entered into between the
or infrastructure erected on built-up area. When an urban DUAT holder and a third
the land and is entitled to tenement is transferred, the party, whereby the DUAT
offer or constitute a security DUAT is transferred along holder temporarily cedes the
ISSUE 31 • 2018 | 63
exploitation of its DUAT to a DUAT holder. The parties are that the law only provides for
third party under the terms free to define the terms and assignment of exploitation
and conditions to be agreed conditions that will satisfy both contracts in relation to rural
between the two, within the parties in this regard. areas (outside municipalities).
terms of the law. The parties This is a contractual However, if duly authorized
are free to agree on the arrangement that can bring by municipal authorities,
duration of such an agreement mutual benefits to the parties it is understood that this
provided it does not exceed and allows the DUAT holder arrangement may also be used
the period for which the DUAT to find partnerships to make in urban areas.
was issued (ie 50 years or money from the land while In the case of urban
less, subject to renewal). The the holder is not willing or tenements, the owner of the
assignment must be authorized financially able to do so. On building acquires a title deed
by the competent land the investor’s side, it gives them and can transfer or lease the
authority and, in the case of access to areas in good locations property at their discretion
DUAT of local communities, its that already have an authorized (without prior authorization
members must consent. After DUAT holder, allowing them to from the state). This means
the expiry of the contract, the implement their investment and then that the assignment of
buildings erected on the plot of see returns. exploitation contracts are
land in question revert to the It should be noted, however, only for those areas with no

buildings erected on them. same cannot be subject to limitations on access to

Mozambican law permits security (mortgages and land, but it also provides
parties to freely determine pledges) because it pertains protections and solutions that
the rent in their lease to land. This is a common
allow investments to be made,
agreement or the assignment concern in Mozambique
and ensures that profitable
of exploitation contract. given the particularities of
partnerships can be developed
our legal framework for
Mozambican legislation also in the area of real estate,
land. However, it is common
establishes different types of an area which continues to
practice, in these situations,
securities which are divided
for banks in Mozambique to expanding and develop in
in two main groups: personal
accept a promissory mortgage Mozambique.
guarantees (mainly sureties) and over the infrastructure to be
real guarantees (security in rem, erected on the land and other SAL & Caldeira Advogados Lda
namely mortgages, assignments arrangements can be made to is a member of the DLA Piper
of income and pledges) which Group, an alliance of leading
allow the access to the funds
are based on property, movable the investor may need to independent law firms working
or concrete rights. implement its project. together in association with DLA
For an assignment of As can be seen, Mozambican Piper, both internationally and
exploitation contract the legislation does place some across Africa.
ISSUE 31 • 2018 | 65
GENERAL REAL ESTATE | THE NETHERLANDS
CJEU: VAT REFUND FOR

VACANCY
DAAN ARENDS AND WOUTER KOLKMAN, AMSTERDAM, AND
ANA TERESA TIAGO AND JOANA PIRES DE MELLO, PORTUGAL
O
n 28 February property. This article examines these out. However, several
2018, the Court the ruling and the impact it may leases were terminated at
of Justice of have on business. the same time and, despite
the European Imofloresmira’s efforts to rent
Background
Union (CJEU) ruled in the these properties, including,
Imofloresmira case (Case The case involved a company
among other things, their
C-672/16) that the mere fact called Investimentos incurring trade promotion
that a company’s immovable Imobiliários SA (known as expenditure and lowering the
property is (partly) vacant, does Imofloresmira). Imofloresmira rent, (parts of) the properties
not affect its right to recover acquired two properties remained unoccupied for a
VAT with respect to that with the intention of renting period of more than two years.

had been claimed, constituted person in good faith could not

a ground for adjustment of be withdrawn by a member
the initial VAT deducted. On state retroactively except in
that basis, the Portuguese tax cases where fraud or abuse
authority issued an additional could be established. The
VAT assessment for those years Court further clarified that the
to claw back the initial input VAT. entitlement to deduction is not
Imofloresmira took the lost even where the taxpayer
matter to the Tax Arbitral is unable to use the acquired
Tribunal, which, in the course goods or services in the
of proceedings before it, made context of taxable transactions,
a reference for a preliminary provided the non-use is
ruling to the CJEU regarding attributable to factors beyond
the compatibility of the national its control. Holding otherwise
legislation with EU law. would introduce unjustified
differences and arbitrariness
CJEU considerations between businesses.
Referring to its earlier
jurisprudence, the CJEU Implications for
reiterated the importance of Portugal
the right of deduction in the This decision is of the utmost
scheme of the VAT Directive, importance for Portuguese
one of the main objectives taxpayers as VAT legislation
of which is to ensure fiscal is quite restrictive with
neutrality for businesses. The respect to deductions and
CJEU rejected the Portuguese the Portuguese tax authority
tax authority’s arguments takes a conservative approach
and held that the operation to situations similar to that
of the relevant provisions of discussed in the Imofloresmira
the Portuguese VAT law was case. It is important to bear
precluded by the VAT Directive. in mind the context here—in
During an audit, the Portuguese The CJEU noted that it the recent real estate crisis
tax authority discovered that is the acquisition of goods suffered by Portugal, many
Imofloresmira had not made any or services by a taxable taxpayers were faced with the
adjustments for deducted input person that occasions the termination of leases that led
VAT, even though the properties right of deduction and not to voluntary or compulsory (eg
had remained vacant for over its subsequent use, as that in the course of tax audits) tax
two years. Under Portuguese merely determines the extent adjustments.
VAT law, non-occupancy of a to which that right may be The Imofloresmira case
property for more than one year available. The CJEU held that provides taxpayers with much
by a business/taxable person, in the right of deduction which needed guidance on how to
respect of which VAT deduction had been acquired by a taxable claim VAT deductions in relation
ISSUE 31 • 2018 | 67
to vacant properties, based is able to establish that it has

on the taxpayer’s intentions. sought to carry on a taxable
Furthermore, this guidance can activity in the property.
be applied retrospectively and it
EU-wide implications
is possible to request a review
The decision of the CJEU
of the past four years’ VAT
is a welcome development
assessments, if VAT has been
and, although it is in line with
paid. If, on the other hand, the
local VAT rules in several EU
VAT has not been paid, there
Member States, nevertheless,
is no time restriction on this
the ruling strengthens the
request. Regardless of the time
position of taxpayers across
frame applicable, compensatory
the EU, as well as Portugal.
interest may be paid in addition
VAT deduction is generally
to the tax refund.
limited to the extent a taxpayer
However, given attempts made
undertakes VAT taxable
by the Portuguese government activities. With the Imofloresmira
for statutory time limits in this case, the CJEU has confirmed
area—on the basis that the loss that a taxpayer is entitled to
of the tax already adjusted or VAT deduction with respect
already collected amount to to immovable property based
considerable sums and creates on the intention of the taxpayer,
intolerable stress on the irrespective of reasons and/
national purse—indicates that or circumstances beyond its
the tax authority will tend to control (such as being unable
deny requests made for review to find tenants). A taxpayer
of tax adjustments, forcing must prove to its national tax
taxpayers to resort to litigation. authority its intention to carry
Nevertheless, the guidance on a taxable activity (eg a lease)
provided in the Imofloresmira in the property. This can be
case is that it is possible to shown by communications and
recover the tax adjustments engagements with real estate
made as long as the taxpayer agencies, financial forecasts

“
The decision of the CJEU is a welcome
”
development.
and marketing materials (such

as the creation of a brochure,
a mailing list and a website)
demonstrating the intention of
VAT taxable activities.
The ruling also states that
member states may not refuse
the taxpayer its right of review.
Thus, in addition to VAT
deductions applicable now and
in the future, property owners
should now consider whether
the correct VAT revision
adjustments have been applied
in the past.
In the Netherlands, for
example,VAT deduction with
respect to vacant properties
is already allowed in certain
circumstances. Dutch guidance
indeed goes beyond the position
confirmed by the CJEU and
provides for VAT deduction
on costs incurred related to
immovable property in cases
where the property has yet to
be put into use.
If you have any questions on how
this case affects your business,
please do not hesitate to contact
one of the authors or your
regular DLA point of contact.
ISSUE 31 • 2018 | 69
GENERAL REAL ESTATE | TANZANIA
LAND OCCUPATION IN
TANZANIA
CAROLINE KIVUYO, DAR ES SALAAM

“
A non-citizen cannot be allocated or
”
granted land in Tanzania.
U
nder the laws of up to but not exceeding
of Tanzania, all 99 years. For village land,
land is vested in ownership is mainly customary.
the President on Sometimes, land which falls
behalf of all citizens. There are within the LA can be occupied
three categories of land: general by means of a residential
land, village land and reserved permit for a period of up to
land. There are two main pieces two years, renewable on expiry,
of legislation governing land particularly on unsurveyed or
ownership in Tanzania. These unregistered land.
are the Land Act [CAP 113] Non-citizens, including individuals
R.E 2002 (LA), which covers and companies whose majority
ownership of general and shareholders are non-citizens, may
reserved land, and the Village be allocated land as follows:
Land Act, [CAP 114] R.E 2002 a) a right of occupancy for
(VLA), which governs the village purposes of investment
land (comprising of all other approved under the
land that is not general or Investment Act; for
reserved land). b) a derivative right for
Ways of owning land vary purposes of investment
depending on citizenship, the approved under the
location of the land in question, Investment Act; or
and which of the two Laws c) an interest in land under
noted above regulate the a partial transfer of interest
land. For the purposes of this by a citizen for purposes
article, the citizenship aspect of investment approved
will be addressed particularly by the Investment Act or
in relation to owning land for issued under the Export
investment purposes, for both Processing Zones Act (EPZA)
citizens and non-citizens. in a joint venture to facilitate
Citizens of Tanzania can compliance with development
occupy land by way of a grant of conditions.
a usufructuary right in form of a Therefore, a non-citizen cannot
right of occupancy for a period be allocated or granted land in
ISSUE 31 • 2018 | 71
Tanzania.They can however, obtain

a derivative right for investment
purposes or an interest in land
under a partial transfer in a joint
venture with a citizen to ensure
compliance with development
conditions either under the
Investment Act or the EPZA.
The Investment Act establishes
the Tanzania Investment Centre
(TIC) which is responsible for
allocating derivative rights to
investors who meet the relevant
requirements. An investor may
obtain a derivative from existing
derivatives at the TIC or the
right may be created from land
owned by a citizen, subject to
surrender of title to the TIC
which then creates a derivative
right grantable to non-citizens.
The EPZA, on the other
hand, has established an Export
Processing Zone Authority
which replaces the National
Development Corporation
(NDC) which previously handled
the applications for derivatives
rights from investors interested investments.The EPZA, therefore, are sometimes hesitant to accept
in investing on export processing is the law regulating acquisition the derivative right over the land
zones declared areas. Unlike the of land, and the designating, as security for lending.This is
TIC, which is only responsible promotion and provision of because the TIC reserves the right
for the allocation of derivatives business incentives and social to cancel a derivative right at any
over land, the Authority’s primary services offered on designated time and to pay compensation to
function is to establish the export processing zones. the investor for improvements
infrastructure required for the undertaken on the land, thus
export processing zones, although Challenges leaving the debt unsecured.
the law allows it to subcontract Although ownership of an interest Investors who trade through
this role to an investor.The in land form of derivative either the EPZA are less prone to
Investment Act does not apply to from TIC or EPZA is recognized this challenge. This is because
export processing zones-related by the law, financial institutions the primary objective of

the Authority is to create a the real estate business, such as portion of the loan to develop
beneficial infrastructure for its trading the EPZAs, working as the mortgaged property.
investors who mainly trade as licensees or subcontractors on Once passed, it is hoped that
licensees or subcontractors on EPZA construction projects, or these amendments will ensure
undertaking EPZA duties. financing EPZA projects. continued sustainability and
In conclusion, investment It is worth noting that there development in real estate.
under the EPZA may be an are legislative changes afoot,
IMMMA Advocates is a member
advantageous and cost-effective in the shape of amendments
way for non-citizens to invest to the LA provisions on of the DLA Piper Group, an
in real estate. Tanzania still has mortgages. These changes alliance of leading independent
a wide range of opportunities include the requirement that an law firms working together in
available in this sector for investor who mortgages land, association with DLA Piper, both
those who are interested in or interest on land, must use a internationally and across Africa.
Image credits: Shutterstock

ISSUE 31 • 2018 | 73
ISSUE 31 | www.dlapiperrealworld.com
REAL ESTATE
GAZETTE
KENYA
THE DIGITALIZATION
OF LAND REGISTRIES IN
KENYA
THE NETHERLANDS
WITH THE FLOW IN
AMSTERDAM
SWEDEN
THE VIVA PROJECT—THE
STORY OF A CUTTING
EDGE SUSTAINABLE
HOUSING PROJECT
UK
BLOCKCHAIN: OVER-
HYPED FAD OR
TRANSFORMATIONAL SEISMIC SHIFTS: HOW INNOVATION,
JUGGERNAUT?
DIGITALIZATION AND THE NEXT
USA GENERATION ARE CHANGING THE
INNOVATION REAL ESTATE INDUSTRY
EVERYWHERE ...
CONTRIBUTORS
Rafael Jordão Bussière – Rio de Janeiro +55 21 3262 3048 rbussiere@cmalaw.com

Philipp Moser – Munich +49 89 23 23 72 145 philipp.moser@dlapiper.com
Lars Reubekeul – Munich +49 89 23 23 72 140 lars.reubekeul@dlapiper.com
Alessia Bilotti – Milan +39 02 80 618 825 alessia.bilotti@dlapiper.com
Paolo Foppiani – Milan +39 02 80 618 1 paolo.foppiani@dlapiper.com
Amrit Soar – Nairobi +254 713 501335 asoar@ikm.co.ke
Wambui Muigai – Nairobi +254 713 501335 wmuigai@ikm.co.ke
Rutger Oranje – Amsterdam +31 (0)20 5419 810 rutger.oranje@dlapiper.com
Gro Hauge – Oslo +47 2413 1545 gro.hauge@dlapiper.com
Luís Filipe Carvalho – Lisbon +351 21 358 36 20 luis.carvalho@dlapiper.com
João Neves de Sousa – Lisbon +351 21 358 36 42 joao.sousa@dlapiper.com
Ines Chamarro – Madrid + 34 91 319 12 12 ines.chamarro@dlapiper.com
Johan Forsling – Stockholm +46 8 769 79 39 johan.forsling@dlapiper.com
Gustaf Ström – Stockholm +46 8 701 78 59 gustaf.strom@dlapiper.com
Paul Jayson – London +44 (0)20 7796 6501 paul.jayson@dlapiper.com
Andy Gray – Liverpool +44 151 237 4914 Andrew.L.Gray@dlapiper.com
Rob Shaw – Sheffield +44 114 283 3312 rob.shaw@dlapiper.com
Nichola Donovan – London +44 20 7796 6649 nichola.donovan@dlapiper.com
William Rudnick – Chicago +1 312 368 7078 william.rudnick@dlapiper.com
Kurt Helles Bardeleben – Copenhagen +45 33 34 00 90 kurt.bardeleben@dlapiper.com
Nuno Miguel Victorino – Maputo +258 21 241 400 nvictorino@salcaldeira.com
Daan Arends – Amsterdam +31 (0)20 5419 315 daan.arends@dlapiper.com
Caroline Kivuyo – Dar es Salaam +255 22 211 1622 kivuyo@immma.co.tz
Wouter Kolkman – Amsterdam +31 (0) 20 5419 337 wouter.kolkman@dlapiper.com
Ana Teresa Tiago – Lisbon +351 213 583 645 ana.tiago@dlapiper.com
Joana Pires de Mello – Lisbon +351 213 583 684 joana.mello@dlapiper.com
Image credits: Shutterstock

ISSUE 31
KEY CONTACTS
AMERICAS AUSTRALIA
Jay Epstien Tim Mathers
Co-Chair, Global Real Estate Practice Brisbane
Washington, DC T + 61 7 3246 4203
T +1 202 799 4100 tim.mathers@dlapiper.com
jay.epstien@dlapiper.com
MIDDLE EAST
EMEA
Olaf Schmidt Tom O’Grady
Co-Chair of the Global Cross-Practice Real Estate Sector Practice Group Head - Real Estate, Middle East
Milan, Italy Dubai
T +39 02 80 618 504 T +971 4 438 6322
olaf.schmidt@dlapiper.com tom.ogrady@dlapiper.com
Antoine Mercier UK
Global Co-chair, Real Estate Practice William Naunton
Head of International Real Estate Group Head of UK Real Estate
Paris, France London
T +33 1 40 15 24 09 T +44 (0) 20 7153 7065
antoine.mercier@dlapiper.com william.naunton@dlapiper.com
ASIA
USA
Susheela Rivers
John Sullivan
Head of Asia-Pacific Real Estate
Office Managing Partner Chair, US Real Estate Practice
Hong Kong Boston
T +852 2103 0760 T +1 617 406 6029
susheela.rivers@dlapiper.com john.sullivan@dlapiper.com
Although this publication aims to state the law at 28 March 2018, this publication is intended as a general overview and discussion of the
subjects dealt with, and does not create a lawyer-client relationship. It is not intended to be, and should not be used as, a substitute for taking
legal advice in any specific situation. DLA Piper will accept no responsibility for any actions taken or not taken on the basis of this publication.
This may qualify as “Lawyer Advertising” requiring notice in some jurisdictions. Prior results do not guarantee a similar outcome. If you would
like further advice, please speak to Olaf Schmidt, Co-Chair of the Global Cross-Practice Real Estate Sector, on +39 02 80 618 504 or your
usual DLA Piper contact on +44 (0) 8700 111 111.
DLA Piper is an international legal practice, the members of which are separate and distinct legal entities. For further information please refer
to www.dlapiper.com.
Copyright © 2017 DLA Piper. All rights reserved.
ISSUE 31 • 2018 | 75
www.dlapiperrealworld.com

DLA Piper Real Estate Gazette Issue 31

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ISSUE 31 | www.dlapiperrealworld.

06 CO-WORKING: THE COLLABORATIVE ECONOMY AND

10 THE EVOLUTION TO DIGITAL AGREEMENTS AND

14 BLOCKCHAIN—PRACTICAL APPLICATIONS IN THE

18 THE DIGITALIZATION OF LAND REGISTRIES IN KENYA

22 SEISMIC SHIFTS: GOING WITH THE FLOW IN

26 NEW CONCEPTS AND OUTDATED LEGISLATION

30 THE TRANSFORMATION OF PORTUGAL—AND HOW

34 TOURISM AND THE RESIDENTIAL MARKET:

38 THE VIVA PROJECT—THE STORY OF A CUTTING EDGE

42 DISRUPTION IN THE REAL ESTATE INDUSTRY—DON’T

46 BLOCKCHAIN: OVER-HYPED FAD OR

52 THE INTERNET OF THINGS AND THE REAL ESTATE

56 INNOVATION EVERYWHERE ...

GENERAL REAL ESTATE

58 STRATEGIC PARTNERSHIPS FOR PUBLIC-SECTOR

62 TEMPORARY ACCESS TO URBAN AND RURAL

66 CJEU:VAT REFUND FOR VACANCY

70 LAND OCCUPATION IN TANZANIA 70

6 | REAL ESTATE GAZETTE

with aggregated ancillary consequence being observed

that service providers businesses, established that co- municipal authority.

8 | REAL ESTATE GAZETTE

co-working as a service—also relationship between the users.

THE EVOLUTION TO DIGITAL

10 | REAL ESTATE GAZETTE

present the signature procedure noted that there are limits to

12 | REAL ESTATE GAZETTE

the blockchain technology,

14 | REAL ESTATE GAZETTE

trace. Further information estate sector company in the world to

16 | REAL ESTATE GAZETTE

18 | REAL ESTATE GAZETTE

20 | REAL ESTATE GAZETTE

SEISMIC SHIFTS: GOING

22 | REAL ESTATE GAZETTE

slight fragrance will be managed,

Workers being off work due to to meet, and there is a great

24 | REAL ESTATE GAZETTE

26 | REAL ESTATE GAZETTE

Co-working spaces kitchens, restrooms, etc, but also promote innovation.

28 | REAL ESTATE GAZETTE

30 | REAL ESTATE GAZETTE

Portugal is now also being there is plenty of potential to

32 | REAL ESTATE GAZETTE

general rental market as there

TOURISM AND THE

34 | REAL ESTATE GAZETTE

into a rented apartment so

36 | REAL ESTATE GAZETTE

THE VIVA PROJECT

38 | REAL ESTATE GAZETTE

sustainability, financial sustainability, people, and this is why Riksbyggen

from local energy supplier, together with Volvo, Göteborg

40 | REAL ESTATE GAZETTE

DISRUPTION IN THE REAL

42 | REAL ESTATE GAZETTE

44 | REAL ESTATE GAZETTE

caution needs to be exercised in than in objects. Perhaps of inter-company loans.

46 | REAL ESTATE GAZETTE

way we publish and blockchain technology may be Through supplementing, or

48 | REAL ESTATE GAZETTE

trust is removed, opening the in a number of jurisdictions, by a required before transactions

50 | REAL ESTATE GAZETTE