Wednesday, 25 June 2008
Visa u-turn in Dubai
An article from the Arabian Business website today:
Dubai risks scaring off investors with visa u-turn
From ArabianBusiness.com Tuesday, 24 June 2008
INVESTOR CONFIDENCE: ING said the announcement expat homeowners in Dubai are not automatically entitled to long-term residency could hit property sales. Foreigners could be less likely to buy properties in Dubai after the emirate's real estate regulator said expatriate homeowners are not automatically entitled to long-term residency rights, ING said on Tuesday.
"There is no direct link between owning a property in Dubai and obtaining a residency visa", Chief Executive of the emirate's Real Estate Regulatory Authority (RERA), Marwan bin Ghalita, was quoted by daily Gulf News as saying on Tuesday. (my emphasis)
The comments were contrary to prior statements from local developers such as Emaar Properties, the Arab world's largest real estate firm by market value, ING said, noting the remarks could trigger "negative sentiment" and impact Emaar's stock.
Dubai, the commercial hub of the Arab world, has witnessed a property boom since the government allowed foreigners to invest in properties in 2002. The emirate passed a real estate law in 2006 allowing foreign freehold ownership in some areas.
Expatriates from neighbouring countries facing political instability, such as Pakistan, Lebanon and Iran, have been lured to Dubai largely on the assumption that owning a property would entitle them to long-term visas, ING said.
"People from politically/economically unstable countries in the region bought residences in Dubai assuming they would automatically be granted residency, a huge asset to have if the situation in their home countries turned sour," ING said.
"Dubai was the only market in the region to offer such a link."
But bin Ghalita's comments on Tuesday raised questions about whether the promise of residency from developers, including state-owned Dubai Properties and Nakheel, has legal backing, ING said.
"Developers should not lure investors to the property sector with a promise of residence visa," bin Ghalita was quoted as saying.
The existence of "safety homes" in Dubai has been a key factor driving demand, and any decision by regulators to review the visa status of existing homeowners would create a "legal minefield" and could hit the emirate's image, ING said.
"Owners will feel they have been sold a worthless investment and what's more by developers that are all linked very closely to the state in Dubai," the bank said.
Shares of Emaar Properties slipped 0.45 percent on Tuesday while those of Union Properties fell 2.68 percent.
The regulator, meanwhile, has submitted a proposal to the government to grant foreigner homeowners visit visas, a rule that could also apply to existing homeowners if it is approved, bin Ghalita said.
Foreigners comprise more than 80 percent of the population in the United Arab Emirates, home to about 4.1 million people, the majority from the Indian subcontinent, Iran and other Arab countries. (Reuters)