Dubai risks scaring off investors with visa u-turn

INVESTOR CONFIDENCE: ING said the announcement expat homeowners in Dubai are not automatically entitled to long-term residency could hit property sales. (Getty Images)

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.

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)

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READERS' COMMENTS

Is this really a problem?
Posted by sid, Sharjah on Wednesday 27 August 2008 at 11:11 UAE time


Hmm.. I think this would be a problem for those who were planning to stay here for the rest of their lives. But I personally don't know any one who does. Face it, we're all here for a period of time, to make money, save it and get out. There are those who get lucky, or are smart enough to do that. The rest just run after the dream. Well, that dream just moved a little further out of reach.
I think because of the huge boom in the housing and working market, the government of Dubai doesn't feel it needs to stick to something that it has implied all along, namely residence visas.
But I have a feeling that the tables will turn in a few years and they will need to revert on their decisions and make good on their promises.
Just a question of Supply and Demand.

changes in visit rules
Posted by zaheer, dubai, uae on Monday 28 July 2008 at 17:38 UAE time

Changes in visit visa fees will badly effect small investors and persons who comes to buy goods from wholesale market. Changing visa conditions will effect the persons who come to find job.

Dubai...dont make me laugh??
Posted by sam, dubai, uae on Wednesday 9 July 2008 at 12:58 UAE time

It has always been the case in Dubai or the UAE as a whole...no government planning and going with the flow (as they say). My family moved to Abu Dhabi in the 70s and all we have seen is laws being put in place without any thought about the consequences.

Not enough electricity supply, sewage flooding the roads, high rents, daily expenses forever increasing is only a few indicators that allow me to conclude, dubai is a disaster waiting to happen.

After all the foreign investment that has been injected into the city and then the government is going back on their word regarding residencies...what next? Income tax, property tax soon they will be charging you to breathe!!

How can anybody trust a country and its government with all the mess that is seen in dubai today. GOOD LUCK!!

A Mirage
Posted by Sajjad, stoke on trnet, UK on Tuesday 8 July 2008 at 17:52 UAE time


Yes other countries dont automatically issues visas on property purchase but other countries didnt promise to issue Visa's/residency on property ownership.
Its another case of the government not sticking to its word. Its a real shame becuase all they have acheived is to damage Dubai's reputation.

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