Analysts raise doubts on impact of UAE visa plan

Analysts said on Sunday that the UAE's plan to grant expat homeowners multiple-entry visit visas enabling them to stay six months at a time if they own properties worth at least 1 million dirhams ($272,300) was unlikely to stimulate the market to any degree.

Property buyers had been waiting for legislation for years to clarify their residency rights in the second-largest Arab economy after many of the country's seven emirates allowed foreign investment in property in recent years.

But analysts said the government decree, issued on Saturday, needed more details on which properties would be eligible amid a real estate downturn that dragged Dubai property prices down 41 percent in the first quarter.

Saud Masud, analyst at UBS, told Arabian Business: "This visa extension has marginal implications because it is a temporary extension of stay and does not allow expats to work.

"Essentially a qualified expat property owner is granted an extra 5 months to stay in Dubai should he or she lose their job. How many expats own properties worth AED1 million or more and have a monthly income of AED10,000? A minority of the total employed workforce in my opinion.

"At end of the day, sustainable population stickiness or growth depends on job creation for majority of the employed pool."

And EFG-Hermes added in a research note: "Greater clarity regarding visa and ownership rights of property owners would help to increase transparency and hence confidence in the market, perhaps providing a positive trigger for demand."

According to a decree issued by UAE Minister of Interior Sheikh Saif bin Zayed al-Nahayan, owners of built-up properties can stay for six months from the date of entry into the country.

After six months, owners would have to leave the country and would be granted re-entry only if they meet certain conditions, including that their property be wholly owned, built, worth least 1 million dirhams and fit for accommodation by a family.

The owner should also have a fixed income of no less than 10,000 dirhams a month, or the equivalent in a foreign currency. The visit visa does not give the owner the right to work in the UAE, the decree said.

"More clarity is needed," said Sana Kapadia, vice president, equity research at EFG-Hermes in Dubai. "It depends whether it means 1 million dirhams at the time of purchase or if is the current selling price."

Real estate prices in Dubai, for instance, have tumbled 41 percent in the first three months of 2009, according to property consultants Colliers.

Home prices rallied during a six-year boom spurred by Dubai's decision in 2002 to allow foreigners to invest in some properties on a freehold basis.