The UAE’s planned introduction of long-term residency visas to investors and specialists will be a boon to the real estate market, stimulating the nation’s fledgling owner-occupier market.
“Over the past few years, we have seen the UAE move towards a less transient workforce and long-term visas would boost this trend, resulting in greater opportunities for local businesses and encouraging longer-term investment,” said Alexis Waller, Dubai-based partner and head of real estate at law firm Clyde & Co. The changes are likely to “stimulate the owner-occupier market, with more residents seeking longer term housing by purchasing their homes, or renting on longer terms,” she added.
On Sunday, the UAE Cabinet unveiled plans for a new visa system offering residency of up to 10 years to specialists in the medical, scientific, research and technical fields, compared to the current maximum of three years. The government will also enable greater inward investment by allowing foreign investors to fully own a company in the UAE – a significant departure from the 49 per cent stake permitted in entities outside free zones.
Shares in some of the country’s biggest listed property developers rose on Monday with Dubai-based Emaar rising 4 per cent while Abu Dhabi’s Aldar Properties gained as high as 1.4 per cent in early trade as investor sentiment grew.
The UAE property market slowed in the wake of the 2014 collapse in oil prices, with tenants and buyers seeking more affordable options, residential sales and rental prices declined and are forecast to continue falling, but at a slower pace, for the remainder of 2018.
Though the new measures are welcome and will spur market expansion, an immediate rise in property prices is unlikely, said Nick Maclean, managing partner of consultancy CBRE Middle East. “While we expect this to be a beneficial move that stimulates demand, that demand will take some time to translate in terms of transactions and pricing.”
Experts said real estate and construction – one of the biggest contributors to the UAE's economy – could be among the biggest beneficiaries of the changes. “Retail, health and education could be the key sectors that benefit, along with hospitality and real estate given that longer-term residency would be an incentive for expats to own homes and businesses,” said economist Nasser Saidi, a former economy minister of Lebanon.
There are “multiple benefits” to a long-term residency programme, he added. The UAE would attract and retain qualified human capital, increase the inflow of foreign direct investment and encourage domestic investment by existing foreign residents.
The measures will also provide greater certainty of medium-to-long term residency for a larger proportion of the expat population and lead to population growth overall – stimulating demand for UAE real estate, added Tariq Imam, head of Middle East real estate at law firm Clifford Chance.
Property developers were equally optimistic. “[The visa changes] will boost the real estate market in a big way,” said Atif Rahman, director of Dubai developer Danube Properties. “This will also help developers and mortgage providers offer better choices and incentives for longer tenure.
Ali Rashid Lootah, chairman of Nakheel Properties, said the changes would “undoubtedly” have a positive effect on the UAE economy – “in particular the real estate sector.”
However, CBRE’s Mr Maclean said the government needs to clarify if a 10-year residency visa would be issued separately to a UAE work permit. If so, this would remove uncertainty over an individual’s right to remain in the country without employment and offer investors greater confidence.
"It would effectively provide people with the ability to put down longer roots in the country, which in turn will benefit schools, retail and other components of the economy," Mr Maclean told The National.
“It’s also very important for the commercial property sector because the cost of visas is becoming an important consideration for larger employers when they choose their office location.”