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Foreign investors may turn backs on Dubai property

DUBAI - Dubai will lose its bargaining power in the real-estate market if master developers stop offering residence visas to property buyers. Most foreign investors feel safer as they come to and leave the emirate without restrictions.

The absence of residency visa would not only make Dubai lose a good number of investors in the property market but also in other sectors, since some holders of resident visas engage in other types of investments as well.

These are the reactions from officials of property developers to the reports that some master developers, such as Emaar Properties, have removed a clause from the investor’s contract guaranteeing a residence visa on a property sale.

“If the residence visa is taken away or not offered, investors will look for other safe havens, and Dubai will lose its winning edge,” said Noreen Khan, director of sales and marketing at Al Dua’a Holding, a real-estate developer and investment firm.

Emaar, the biggest real-estate developer in the Middle East, has sent notices to its sub-developers to hold off on processing residency visas for investors pending further announcement.

A company spokesperson said Emaar acted upon the instruction of the Dubai Naturalisation and Residency Department (DNRD) to stop accepting residence visa applications from sub-developers.

“Emaar has also informed the sub-developers that once further instructions are received from the DNRD, they will be notified to them,” the spokesperson said. “No removal of clauses or change in contracts has been made.”

Stressing that the DNRD is the one in charge of granting visas, Union Properties, the Dubai-based real estate developer that’s building F1-themed parks, said it does not guarantee residence visas to its investors.

The general manager of Dubai-based Pride International Real Estate, Muzaffar A Soofi, said there would be a temporary slump in the number of end-users buying properties because of no guarantee of residence visa, but added that investors should know that rules are subject to change.

He pointed out that Nakheel, for instance, which stopped issuing residence visas to investors six months ago, has again issued some to certain nationalities. “I personally feel that the government should have a long-term and uniform residence visa policy, rather than having the market seeing frequent changes in rules,” he said.

Dubai-based Marios Maratheftis, the regional head of research for the Middle East, North Africa and Pakistan at Standard Chartered Bank, said the issue would not make a big dent on the property market.

“My understanding is that home buyers (correct me if I am wrong) will still be eligible to get residency visas and the developers will help in the process but this is no longer guaranteed,” he said in an emailed statement. “I therefore expect this to have very little impact on the market.”

An official at Dubai Properties, a government-owned developer, said developers may assist investors in acquiring residence visas. “We can act to facilitate the process of obtaining visas if an investor were to invest in any of our developments,” the official added. “This is something beyond our mandate, and clearly the federal regulations determine whether you are eligible for a visa or not.”

Soofi said that residence visas are subject to government rules while Noreen Khan pointed out that only master developers could extend a residence-visa guarantee to investors.

A Nakheel spokesperson said: “Upon the purchase of a Nakheel property, we will provide customers the basis for sponsorship, although the grant of a residency visa is still subject to the rules, requirements and procedures of the Department of Naturalisation and Residency.”

The number of property investors in Dubai has surged since 2002, when foreigners were allowed to buy property in selected areas across the emirate. Short-term investors and a record growth in population have increased property prices by about 800 per cent since 2002.

jose@khaleejtimes.com

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