Thursday, 1 April 2010

Longer visas needed to boost Dubai homes market

Source: ArabianBusiness, 1 April 2010
Photo: I took it during a seaplane flight from Jebel Ali.

 Longer visas are needed to boost Dubai's real estate market, say experts. The length of visas offered to foreign buyers of Dubai property is too short and is hampering the recovery of the county’s beaten-down real estate market, experts have said.
The six-month visas currently issued to expatriate homeowners are deterring foreign investors, who will favour housing markets with more relaxed residency rules.
“Shortness of residency is definitely keeping the buyers away,” said Nicholas Maclean, managing director of CB Richard Ellis Middle East.
“We do need to elongate the window that people have so they don’t need to go back and forth. The period we have at the moment is a barrier to entry.”
Property prices in Dubai have plunged 50 percent since their peak in 2008 in the wake of a global downturn, wiping an estimated $100bn off the value of the emirate’s developed property assets.
According to Colliers International, one in four homes now stand empty. The emirate will be oversupplied by 32,000 new homes by the end of the year, predicts Deutsche Bank.
At the height of the property boom, buyers were promised visas by developers - including state-backed Nakheel and Dubai Properties – a move that was later overruled by the UAE federal government.
Last June, the Department of Naturalisation and Residency said foreign buyers could avail of a six-month visa, dependent on factors such as the price of the property and the applicant’s monthly salary.
Critics of the plan say the residency period is too short to entice new buyers to the UAE market, and excludes a significant number of lower-income expats.
“The one thing that would give a real boost to the property market would be if the federal government would allow three-year visas. It would transform the market,” said Charles Neil, CEO of Landmark Properties, at a recent roundtable. “This is the one thing that is keeping investors away at the moment.”
“Dubai is trying to fill up a growing city. How can they fill up the city if they can’t give residency?” said Tomas Ghassemi, managing partner of The Property Store.
Aside from providing a shot in the arm to the housing market, an overhaul of the visa laws would allow Dubai to filter its long-term residents more selectively, said Maclean.
“By tweaking the visa regulations the government can control who buys here. And that might be a good thing, so they can keep people here who could be a long-term benefit to – rather than beneficiary of – the economy here. We should be encouraging people who want to come, bring their families, educate their children, spend into the retail markets and have a house,” he said.

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