New visa rules lift property stocks

Dubai and Abu Dhabi bourses witnessed a rally on Wednesday, led by property companies as the positive impact of Tuesday’s momentous Cabinet decision on investor visa started to instill fresh optimism about the realty sector.

Emaar Properties, one of the region’s property giants, rose two per cent, Deyaar added 1.4 per cent and builder Arabtec climbed 2.4 per cent.

In Abu Dhabi, Aldar Properties gained 1.6 per cent and Sorouh Real Estate advanced 1.7 per cent.

The DFM General Index — which declined a few days ago to a three-month low on investor dismay in the wake of a delay by MSCI in enhancing the UAE to emerging market from frontier status — gained 0.6 per cent, the most since June 15, to 1,516.93 at the 2pm close in Dubai, trimming the loss for the month to 2.8 per cent. The DFM Real Estate Index rallied 1.5 per cent and Abu Dhabi’s increased 1.8 per cent.

Although specific details and conditions set by the new visa rule are yet to be announced, burgeoning bullish sentiment become instantly reflected on property prices on Wednesday with sellers hiking villa prices in some gated communities by two to three per cent overnight, a real estate brokerage company told Khaleej Times.

Mohamed Alabbar, chairman of Emaar Properties, said the UAE Federal Cabinet decision to extend residence visa for real estate investors to three years would significantly enhance investor confidence and drive the growth of the country’s property sector.

“The property sector is a key contributor to the non-oil GDP of the country, and is one of the largest employment providers apart from supporting several associated industries. The sector also plays in driving foreign direct investment to the country, and the Cabinet decision will enhance the appeal of the UAE as a preferred destination for safe investments in property,” Alabbar said in a statement.

Citigroup said the visa decision could significantly boost demand in Dubai’s residential real estate sector, where the promise of a long-term residency visa was a major driver of second-home purchases during the boom prior to mid-2008. In a research note, Citigroup said the UAE’s plan to extend visas for foreign home-buyers could lift demand in Dubai’s slumping property market.

Elaine Jones, chief executive of Asteco Property Management, told this paper that while the revised law is positive news, other market dynamics currently prevailing continue to impede investor sentiment and thus demand is likely to remain subdued in the short to medium term. However, there should definitely be an increase in the level of enquiries and transactions in all emirates. “The unrest in parts of the region may well encourage those residents to look for alternative safe and secure location where they will be able to base their families.”

The global and regional downturn had taken a heavy toll on Dubai’s once booming real estate sector with prices dropping to as much as 60 per cent, and consequently forcing authorities to cancel as many as 217 registered property projects over the past two years.

issacjohn@khaleejtimes.com