Permanent residency could help bring in more investors
The Dubai property sector has emerged as a stable and mature market in the past couple of years despite a slowdown in major developed and emerging markets as investors believe in its promising future due to recent initiatives introduced by the government to attract more investment into the industry, say experts.
Analysts and industry players said the government's initiatives such as the 10-year visa for certain professionals, five-year visa for retirees and 100 per cent ownership for foreign businesses will be helpful in attracting investment into the sector.
Experts said the emirate is already a second home to around 55,000 millionaires and the latest morale-boosting measures will lift market sentiment.
"A sense of belonging and permanence is a surefire motivator for investments the world over and we feel that it will apply 10-fold to Dubai's appeal owing to its conducive business landscape and resident happiness index," Shaher Mousli, chairman and chief executive officer of Arthur Mackenzy Properties Group, told Khaleej Times.
He said the long-term visas, favourable market condition, ease to do business, attractive payment plans offered by developers and flexible bank offers will increase the appeal of Dubai's property sector as a sound investment option.
Catalyst to investment
Taimur Khan, research manager, Knight Frank, echoed similar views and said permanent residency will help bring more investment into Dubai's growing economy.
Elaborating, he said Expo 2020 will no doubt showcase the country and Dubai in particular, given its spectacular architecture, a top-10 global financial centre, one of the region's most diversified economies, over 200 private schools and world-class lifestyle and amenities and all within a tax-free environment - factors that are helping draw in expats from all over the world and if this message can be delivered to a wider audience, it can help drive greater investment volumes.
Simon Townsend, senior director and head of strategic advisory and consulting at CBRE, said one of the key catalysts for the success of Dubai has been not only the underlying infrastructure but also the ability to attract international business and consumers.
He said the positive changes in legislation to make doing business more transparent, coupled with the increased legal structures to protect the interest of real estate investors, will undoubtedly assist in giving more confidence to investors.
"With investors being return-focused, the importance of creating long-term income streams wherein returns on investment would be more commensurate with the risks and such income flows would not only appeal to individual or private investors, but also to institutions and global funds," Townsend told Khaleej Times.
Amine Housni, regional manager for Middle East at Blueground, said a major initiative such as permanent residency will drive more investment into the emirate by attracting more high-net-worth individuals.
"Yes - very supportive of encouraging investment from abroad - it will further elevate Dubai to a world-class business hub," he said.
Housni said the UAE is on the right track to be effectively widening the range of possibilities for expatriates to be more deeply involved in the long-term economic growth of the country.
"Changes on foreign business ownership, visa regulations and reduction in the cost of living will work towards this way," he said.
Lynnette Abad, director, research and data, Property Finder Group, said Dubai has an interesting mix of factors happening right now and we have to look at the local, regional and global markets in order to understand the main drivers of supply and demand.
As for the local economy, she said Dubai's leadership has issued a number of initiatives as far as a 10-year residency visa for certain professionals in scientific and data-related fields as well as a five-year residency visa for retirees who are able to meet certain criteria as well as the issuance of 100 per cent ownership for foreign businesses.
"While those initiatives were welcomed in order to boost market sentiment, we are still waiting to see what the concrete framework is so those can begin to be issued," she said. Similarly, she said Abu Dhabi's leadership has issued a stimulus package worth Dh50 billion. It is clear from the speed at which announcements are made that the country is looking to react quickly to stave off any further economic challenges. However, considering the wider regional issue of declining demand for oil from the Middle East, there is a need for not only the UAE, but also the GCC to diversify their economies further.
"Dubai was quicker to begin this process by investing heavily toward generating tourism and business and we look for that to expand," Abad said.
When looking at the macro picture, both China and the US economies are projected to slow down in 2019 and 2020. With that comes increased initiatives to tighten monetary policy both from the Bank of China and the US Federal Reserve, and that means that it will be harder for capital flight to take place.
"With a strong USD, pegged currencies like those in the GCC [except for Kuwait's dinar] mean that UK and European property is more advantageous and thus we are seeing a lot of investment from individuals as well as sovereign wealth funds investing in commercial and residential property and less in the region," she said.
"An extensive amount of supply to the tune of 47,000 residential units with a completion status of over 65 per cent are due in 2019 and a minimum of 20,000 are slated for 2020. We will need to see enough demand generated to snap up those units and to boost prices.
"The realistic scenario is that the prices we have been seeing since 2016 are about what they should be and they will inch down a bit further in the coming two years. While many are waiting for the bottom, or claim we are already at the bottom, all of these factors lead many economists and other market watchers to understand that cannot be true," Abad concluded.
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