Visa reforms to help UAE retain appeal as an investment hub
The decision to grant a five-year visa for owners of property worth at least Dh5 million is also likely to incentivise greater investment, particularly in prime communities that were previously out of reach for many UAE residents. The existing property visa is a two-year renewable visa for a freehold property valued at Dh1 million or more on the title deed.
“The waterfront locations of Jumeirah, Palm Jumeirah, Dubai Marina, Dubai Creek Harbour and high-value properties in MBR City and Emirates Hills are expected to see renewed interest. This is expected to boost both the supply and demand side of the market as this will go a long way in attracting and retaining long-term investors. We foresee a strategic focus of new project launches/deliveries to be aimed at offering properties priced over Dh5 million to attract international investors,” says David Abood, partner at Core.
Residential properties priced more than Dh5 million represent approximately 3.5 per cent of overall Dubai home sales, according to consultancy ValuStrat. The majority of transactions, 75 per cent, were for homes priced less than Dh2 million. “Therefore, the new visa could increase the share of high-end home sales,” reckons Haider Tuaima, head of real estate research at ValuStrat.
There is also a possibility that many existing owners who have properties valued within this price range may decide to increase their real estate investment portfolio owing to security of residency.
“Over the past year, we’ve been witnessing a trend towards investors preferring affordable property as the tax-free income is still very good. With the new visa reforms, it is possible that existing residents will look to establish themselves in the Emirates on a medium- or longer-term basis and as such, look to enhance their residential property. We will see a boost in the luxury real estate space as those who are looking for an alternative location in which to reside now have another option,” observes Elaine Jones, executive chairman of Asteco.
However, further clarity is awaited on whether this regulation can be applied retrospectively.
The soft sales market has made the cost of property ownership more attractive versus the cost of rent, especially for those considering staying in the UAE for longer than five years.
“Residential properties in prime neighbourhoods are now more affordable and driving greater interest among potential buyers,” comments Matthew Gregory, head of sales, dubizzle Property.
The reforms will also have a far-reaching impact on the economy.
“The retention of HNWIs who had not previously enjoyed any security of residency and will now be able to secure a 10-year visa subject to Dh10 million worth of investment in business, is likely to be significant. There is likely to be an increase in foreign investments as the ability to establish ties for the medium term will attract a next generation looking for a stable location in which to base themselves, their family and establish business. The UAE will re-establish its position as one of the most attractive destinations to investors,” adds Asteco’s Jones.
She suggested that permanent residency for long-term investors must be the next step.
“We are seeing overall planning for longevity in the UAE. The UAE Cabinet’s decision to enforce the long-term visa law now allows expats to look at Dubai as a home rather than a temporary plan,” says Lewis Allsopp, chief executive officer of Allsopp & Allsopp.