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Three-year investor visa to boost property sector

Issac John / 29 June 2011

DUBAI - Developers and analysts welcomed the Federal Cabinet decision on Tuesday to extend the visa period of property investors from six months to three years as a crucial move to restore investor confidence in the country’s real estate sector.

They said the long-awaited move will go a long way in reviving the moribund sector by luring more foreign and regional investors.

JR Gangaramani, Chairman of Al Fara’a Properties, a leading developer, said a long-term property visa was a long-standing demand of many property investors in the UAE. “We welcome this news. This initiative  is going to reinstate confidence and agility into the real estate market,” he said.

“It has timely arrived during the instability in the Middle East where many individuals in the Arab world seek long term stability and growth and as a consequence will now look forward to owning their permanent residence in the UAE. This move will act as a further stimulus for the economy of the UAE by increasing trade, tourism and consumer spending,” said Gangaramani.

He said the UAE is well known globally for its standards of living, safety, economic stability, ease of business and now it shall gain another feather in its cap. “This is Great news for the property developers who will experience a rise in demand and this will further act as a growth catalyst for the construction industry. We commend the great Rulers of this country on their vision  and generosity.”

Oliver Hogg, Senior Analyst at Landmark Advisory, a leading property consultancy, said the move to issue a three-year renewable visa for property owners would clear up a lot of confusion and distrust that had accrued due to the decision to renege on the original promises for a residency visa for property owners.

“It will take a while for the ramifications of this decision to be made clear and we will not be seeing any immediate change in the market on the back of this decision. However, what it does do though is provide the market with a reassurance that there is now a satisfactory system in place, for those who satisfy the criteria, this should be taken as an encouraging sign that the market in Dubai is gradually going up,” said Hogg. “While, in the short term, this will not address the still significant oversupply that is here in the market, in the long term this decision will help create some of the much needed demand to absorb the oversupply in the residential market,” he said.

Jesse Downs, Director of Management Consulting at Jones Lang LaSalle, said  the introduction of a three-year residency visa is definitely positive, but represents just one step in a longer process of rebuilding market confidence.

“In terms of demand, this could help to unlock second home demand, but this is anticipated to be limited and will not lead to full absorption of the supply overhang,” she said.

Downs said the market in Dubai is approaching the bottom. “We are seeing selective stability for some properties, but across the city average prices will continue to soften. In Abu Dhabi, the growing supply pipeline will continue to push rents and prices down.

“The most significant impact will be on confidence, but this is only one step and we need to receive more details and experience practical implementation. Until then, it is unlikely that this news will translate into demand growth. Consistent implementation of this federal regulation can encourage investment and help manage market risk.”

Ali Haider Zaidi, Chief Executive officer of Centurion Dubai, welcomed the Cabinet decision as a very positive step.  “A very encouraging step to restore confidence in the Dubai Real Estate market. But just as importantly a very affirmative signal of clarity and coordination at the federal UAE level. With the unrest seen across the region this year,  UAE’s attraction for long term residents wishing to raise families is now as strong as ever.”

issacjohn@khaleejtimes.com

(with inputs from Abdul Basit)

 
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