The UAE’s move to grant three-year residency visas to owners of property worth more than AED1m may have been pushed to the back burner amid doubts it will succeed in spurring fresh activity in Dubai’s housing market.
The UAE government said in June it would replace visas that require renewal every six months for some homeowners, but the decision appears to have made little progress in the months since.
“We hope it will be soon,” a source at the Dubai Land Department told Arabian Business.
“We don’t know when because it isn’t coming from us. [All we know is that] there is a lot of interest and demand for properties between AED1-2m.
Mohammed Al Hammadi, assistant director-general for visas and residency at Dubai’s Department of Naturalisation and Residency, said there had been no updates on the status of the extended visas.
“We have no idea [when the rules will start],” he told Arabian Business. “I expect they will have some meetings [and then tell us].”
Rents and prices in Dubai, the Gulf’s worst-performing market in the last three years, have been in freefall since the collapse of the emirate’s real estate bubble in late 2008.
A poll of property analysts last week showed respondents believed prices could fall a further 10 to 30 percent as developers add to excess supply in Dubai and Abu Dhabi while buyers dwindle.
Home purchases in the UAE dropped by 44 percent to 1,459 in the third quarter from a year earlier, CBRE Group said this month. That’s down from 4,059 transactions in the third quarter of 2008, just before the crash.
Dubai has unveiled a slate of government-backed financing schemes aimed at spurring sales in its property market. The emirate’s Land Department last month signed a deal to identify suspended or offplan residential developments and offer them for sale or long-term lease.
In May, the agency unveiled a scheme to offer low-interest bank loans to developers with partially-constructed projects.
Government-controlled Investment Corporation of Dubai last week said it would start a $1bn fund to buy up assets in the city’s beleaguered real estate market, in partnership with Canada’s Brookfield Asset Management.
It was hoped the decision to extend property visas for some homeowners would help to spur fresh activity in Dubai by attracting foreign buyers fleeing the Arab Spring unrest.
The emirate has been seen as a safe haven during turmoil that has gripped the Arab world and toppled leaders in Tunisia, Egypt and Libya.
But others believe the regulation will do little to aid sales in the face of rising property supply.
“At this point we haven’t seen any evidence that the government is looking to [encourage the private sector to buy] with any urgency,” Liz Martins, senior economist, HSBC Middle East, said in an emailed response to questions.
“We think that there is some tentative demand returning to the Dubai property market, but this will be counteracted by ongoing supply increases. So we wonder how effective any plans to stimulate demand will be in the face of this rising supply.”
“Since the announcement, further details have been hard to come by,” said Catherine Gill, a lawyer with Clyde & Co, Dubai. “The issue seems to have been placed on hold. It is not yet known to us when, or if, the initiative is likely to come into effect and, if it does, whether an investment threshold of AED1m would still apply.”
Matthew Green, head of research at CBRE Group, said any impact from extended property visas would be dependent on the structure of the new ruling.
“There are a few points they still need to clarify, such as family – who is included on the visa, renewal schedules and fees. They may also be considering whether it’s now more relevant to have a lower [base] value… now prices have come down.”
Ratings agency Moody’s said last week that Dubai’s property market was unlikely to see a price recovery until 2016 as oversupply pinched real estate rates.