LEGAL
SPOTLIGHT ON THE UAE VISA LAWS Yields top priority list of investors rather than residence visas
news was immediate. Share prices in property companies listed on the Gulf state’s stock markets jumped, while real estate experts lauded the move as a shot in the arm for the UAE’s real estate sector. It would, said Mohammed Alabbar, chairman of the country’s largest
W
developer, Emaar Properties, “enhance investor confidence and drive the growth of the country›s property sector.” Tere was good reason for such optimism. Te UAE’s 2002 decision
to allow foreigners to own property transformed Dubai into the world’s fastest-growing real estate market until the onset of the financial crisis in 2008. Linking residency visas to real estate ownership played a key role in the Gulf state’s success, helping to lure wealthy foreign investors attracted by the promise of an easily-renewed five-year visa. Tis demand was muted when the government curbed the visa
programme in 2009, after the collapse of the UAE’s real estate bubble saw house prices fall more than 60 percent from their peak. Visa duration was shortened to six months and holders were required to exit the country and return for renewals at a cost of up to AED2,000 a time. For many property experts then, the decision to offer three-year visas
to buyers of homes worth more than AED1m was widely expected to give a vital cash injection to the market. “Te announcement was a boost for the market last year, but there hasn’t been a dramatic impact on sales,” said Craig Plumb, head of research at property consultancy Jones Lang LaSalle, MENA. “Tere are questions around what properties will be covered, what the small print is.” Te UAE has yet to specify whether the visa is an automatic entitlement
linked to property ownership or simply a class of residency to be applied for. Until the details are fleshed out, said Plumb, many investors are content to remain on the sidelines. Te timing of the news was also significant, coming in the wake of a wave of political unrest that swept the region in 2011, toppling leaders in Egypt, Tunisia and Libya. Just the promise of an extended visa was calculated
hen the UAE unveiled its plan in June to extend visas for foreign homebuyers to three years from six months, the impact of the
to ignite new interest from wealthy investors displaced by the unrest or seeking safe-haven residential properties in a politically stable market. “I don’t think there’s any doubt we saw an uptick during the Arab Spring, and would have even without the three-year visa,” said Plumb. “Tere has definitely been more money flowing into the UAE.” According to Dubai Land Department (DLD), 2,605 property sales were
completed in the fourth quarter of 2011, a rise of 64 percent on the 1,589 transactions seen in the third quarter. Real estate deals for the year reached 35,297, with a combined value of
AED143bn, DLD said. Even if carried out, the visa policy will not be a panacea for wider concerns about UAE real estate. “It’s not an immediate fix,” said Matthew Green, head of research and consultancy, UAE, at real estate consultancy CBRE. “Tere is uncertainty over prices, the significant amount of supply coming in, regional unrest– these are all barriers to people making that decision to buy.”
Te issue of residency has also slipped down the agenda of buyers, said
Tom Bunker, investment sales consultant at Dubai-based Better Homes. “Te key issue for people now is, how much can I make on a property,” he said. “Tey’re looking for investments where they can buy and rent them out at four or five percent yields and then not worry about them again for five years. “Before the crisis, the first question among a lot of buyers was, ‘do I get a visa?’ It was at their top of their minds. But no one has asked me about a visa for months now.” Despite this, the visa policy is a sign that the UAE government is
focused on bolstering property demand by smoothing the path for foreign buyers to return. Combined with signs house prices have reached the bottom in some sectors, this may be enough to re-energise the market, said Bunker. “Te UAE is perfectly positioned right now. We have tons of office space,
tons of residential, we have a very business-friendly environment - we just have to make it as easy as we can for people to relocate here ” l
48 I CITYSCAPE I APRIL 2012
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