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Dubai’s property market awaits multi-year visa boost

Dubai’s property market awaits multi-year visa boost

Gulf News, 29 January, 2019

Dubai: Dubai is awaiting the final go-ahead from the UAE Government allowing certain categories of property investors with multi-year visas and other “privileges”. This would strengthen Dubai’s hands in trying to bring in global institutional investors for “special projects”, according to a top official with the Dubai Land Department.

The proposed visa provisions include allowing investors who acquire property worth Dh5 million or more with five-year visas. (The visa eligibility extends to 10 years for Dh10 million committed to non-real estate exposures in the UAE. The funds need to be retained in-country for a period of a minimum three years. In addition, entrepreneurs and certain categories of professionals too can have 10-year visas.)

“Visa requirements are not for the Land Department to issue — but there will be privileges that Dubai will offer global institutional investors,” said Majida Ali Rashed, CEO of Real Estate Investment Promotion and Management Sector within the Land Department. “Those privileges are being determined.”

“Global institutional funds will need something more than ‘normal projects’ to get their interest. We already have such normal projects in Dubai. What we are doing is work with potential investors on special projects and with special privileges.”

It’s been a year since Dubai made a concerted push to target global investors and funds in key overseas territories. There was a realisation that raising awareness about investment into Dubai real estate needed much more concerted efforts than relying on developer campaigns and participation in overseas property shows.

The ongoing correction in Dubai’s property market has made it all the more necessary to pull in different types of investors, including pension funds and those managed by sovereign wealth funds.

If even a portion of these funds come here, that would more than compensate for subdued interest from individual investors. About 25,000-30,000 new homes are likely to be completed this year, based on the average forecasts put out by multiple consultancies.

“Challenges do exist in the UAE’s real estate industry. However, there are a number of key opportunities across a range of sectors in 2019,” said Simon Townsend, Head of Strategic Advisory at CBRE’s regional operations. “The introduction of new legislation has bolstered the strength of the industry by further supporting the UAE’s growth into a world-class business hub.”

“The business-friendly reputation serves to attract more international corporates to the country, whilst encouraging talented professionals to set up home and remain indefinitely in the UAE.”

Land Department sources said that contact with more than ‘900 funds’ were made during the period, and there have been some notable progress in courting some serious players. There are talks with an Indian investor on a potential ‘Dubai Smart Healthcare Project’, and with a possible $8 billion (Dh29.3 billion) in play over a five-year period.

Another alliance is with a Chinese construction company, and could involve $1.5 billion in fresh commitments into Dubai. Two Chinese entities — BTL Hospitality and Sax Xiang — could bring in another $1 billion by 2020 and beyond.

Going forward, China and Chinese buyers will figure prominently in Dubai’s real estate landscape. Special trustees have been assigned to spread the word about Dubai’s real estate in China, and Chinese estate agents licensed to sell local property to buyers there. The Chinese already figure in the top 5 spots of international investors with property interests here, after those from India, Pakistan and the UK.

What awaits Dubai’s residential market this year and 2020

There will be a spike in new homes entering the market ahead of Expo 2020, especially around the Metro expansion, according to the consultancy CBRE.

But there could also be a softening of year-on-year deal volumes for both apartments and villas this year.

“Developers will continue to offer highly attractive payment plans and incentives, potentially leading to a rise in the number of first-time buyers or owner-occupiers,” the report says.