Vol1 May 09

Ending months of uncertainty and speculation about the status quo of foreign property owners in the country, the UAE government has announced that it will grant multiple-entry visas to non-GCC nationals in areas hitherto designated as freehold. The ruling is significant in that property developers in the UAE had stopped issuing residence visas to foreign nationals about a year ago, adversely impacting the booming real estate sector. As both primary and secondary sales of properties decline across the UAE, the new decree is expected to bolster investor confidence and usher in Foreign Direct Investments into the country that are critical to its economic growth.

The new visa law comes into effect from June 1, 2009.

New criteria for issuing UAE property visas to foreign nationals

• The residence visas granted to foreign property owners will be multiple-entry entities valid for 6 months. These cover the owners’ immediate family, but do not permit them to work within the country.
  
  
• Health insurance is mandatory for all residents. Cost of insurance is the same as that for other types of visit visas.
  
  
• To apply for multiple-entry visas, the property owner has to submit the property title deed from the registration authority in the respective emirate. Besides, the purchaser has to be the sole owner of the property.
  
  
• The government decree states that the purchased apartment or villa should easily accommodate the family (spouse & children) of the owner. Further clarifications are awaited from the government.
  
  
• The UAE Ministry of Interior has issued a decree which defines multiple entry visas for expatriate property owners whose investment is no less than Dh1 million. The decree applies across all the emirates in the UAE.
  
  
• Property visas will be granted only for completed and partially completed properties and not for empty space.
  
  
• The visas are renewable or could be re-issued any number of times, as they are devoid of any limits. They effectively nullify possibilities of obtaining residence visas for leasehold properties valid for 99 years as was being advertised earlier by some realtors.
  
  
• The multi-entry permit can be renewed only after the owner exits the UAE, according to a resolution issued by the Minister of Interior, Lt-General Sheikh Saif bin Zayed al-Nahyan. "Owners of built-up properties can stay for six months from the date of entry into the country," the resolution reads. "On the expiry of this period, the owner pledges to depart for his homeland or any of the GCC countries," it adds. "He will only be allowed to enter the country again after meeting the required conditions."

The implications of the law and other recent regulations by the Dubai government like Rental Index would be perceptible in the market only in Q4 of 2009 when the effects of global economic recession wear off. Currently billions of dollars’ worth projects in UAE, particularly in Dubai, have been either put on hold or canceled due to liquidity shortage. But major infrastructure projects like Dubai Metro and Dubai World Central are progressing according to schedule, now that cash inflow has resumed due to governmental intervention in the form of the US$ 10 billion Dubai bond.

Once the ongoing infrastructure projects are complete, Dubai’s and Abu Dhabi’s rankings as the world’s top urban centers would certainly sky-rocket, boosting property prices and rents. In spite of the current financial crisis, Dubai and Abu Dhabi are still the two top cities in the Middle East, according to a latest global survey report by Mercer. Dubai, in fact has moved up six places in the annual survey from 83 to 77 owing to improved transport facilities, better road infrastructure and expansion of international airport and telecommunication amenities as well as other consumer services. Abu Dhabi, meanwhile holds the 84th position this year, up from 87th in 2008.

The price reductions for UAE properties are set to continue as long as uncertainty prevails over the future of local freehold property segment. The free fall would end when the effects of governmental laws and regulations take hold and stability is restored to the sector. Since the UAE has signaled its resolve to woo foreign investors this won’t be long in coming. According to analyses by the Gowealthy Research Team the results will be evident in the last quarter of 2009. In the meantime, it would be wise for the serious investor to manipulate a softening market and invest in property because an opportunity like the current scenario does not happen often.