By Claire Ferris-Lay
Property investors are ‘once bitten, twice shy’, warns Kanoo Group deputy chairman
The UAE’s decision to grant three-year residency visas for property worth more than AED1m is unlikely to give any boost to Dubai’s beleaguered real estate market, Mishal Kanoo has said.
The leading Arab businessman and deputy chairman of the Gulf conglomerate Kanoo Group said property prices in new Dubai were leveling out but could still fall further.
“It might affect a few people but I can’t see it having a major affect,” he said of the new visa regulations. “Just look at what the majority of those have experienced in purchasing property over here – do you think they are going to go back and say what a wonderful thing it was?
“Once bitten, twice shy. I think you are going to have a lot of people going ‘no, not too sure,’” he said.
Investors from the US, Europe and Russia are only likely to show interest in the emirate’s property market when economies in their home markets show signs of recovery, he said.
“If these major buyers are feeling an economic pinch in their countries, the chances of them coming here [and investing] are going to be slim-to-none.
“There are some good indicators that the market is leveling….but it doesn’t mean to say we are going to see growth.”
Prices in Dubai, the Gulf’s worst-performing market in the last three years, have fallen more than 60 percent from their peak since the collapse of the emirate’s real estate bubble in late 2008.
A Reuters poll in June showed analysts believe prices could plummet a further 10 percent as the market is squeezed by nearly a third too much supply.
Kanoo said he remained bullish on the UAE economy, which has been boosted by high oil prices and its reputation as a safe haven amid a wave of political unrest in the Arab world.
The Institute of International Finance on Monday revised its forecast for the UAE’s 2011 GDP growth from 3.8 percent to 4.4 percent.
“I have no choice but to be bullish,” Kanoo said. “We like to talk about [the fact that] we have diversified or tried to diversify outside of the oil and gas sector but let’s face it the whole region lives and dies by that.
“Subsequently I’m going by the value and the pricing of the oil and gas sector and both are shooting up. So while I’m not going to reap the rewards of it right now, a few months down the road is when I’ll be enjoying that. So how can I not be bullish?”
Can always count on Mishal Kanoo to speak his mind.... and the truth. Such a refreshing change from so many real estate CEO's who could not stop gushing about the 'huge impact' the visa would have....and that too without knowing the details!
The truth is the international investor is skeptical about the transparency, the laws that govern real estate in Dubai and WILL NOT INVEST ANYMORE till investor rights are clearly upheld.
Well said as always Mishal :) - when will the others just face reality and take the blinkers off. Fully agree with what Jag is saying in his comment about the international investor - Lets sort out the laws that govern real estate and then we all may even see some light at the end of the tunnel! (lets hope its not a train thundering down!!!)
Could anyone clarify for me if the new visa is a Residency Visa ( as the investor visa before) or a 3 Years Visit visa...Emaar still talks about a Visit Visa and AB defines it as Residency
Completely agreed with Jag , the laws needs to be cleared and the DNRD should have a clear guideline on issuance of visa's. Just recently i called them on their helpline number and they were not sure about the Visa regulations for property holders who own properties more than a Million Dirhams.
- They were not sure if a Certified Copy of the title deed is acceptable or not - Incase if your property is mortgaged by the Bank.
-They were asking a declaration from a Bank that the owners income is 10,000 Dirhams a month - That does not make any sense as if i have a salary coming in my bank account that means that I already have a job & a Valid visa - So why should i be asking for a Property Visa then ? Makes no sense & it was getting difficult for me to explain this to the rep on the phone.
-Over all information was very vague and once again Not reassured at all - This is again not healthy in terms of 1st step of ''atleast getting the right information''.
New 3 year investor visa is great but details are needed!
People are very happy about this new investor visa but they are also anxiously waiting for the final draft. Without the full details they're at a loss on what to do next. Can they apply for things like a driving license? If they can sponsor their families can they apply for school admissions? But September is so near and they are very worried. People are definitely getting frantic and need to know as soon as possible.
When will they ever understand that there is much more to life then their 3 year visa!..wake up and smell your coffee guys...hi time to stop the carrot and stick game and hammer out some genuine and honest formula for confidence boosting..until then nothing is going to work...
The real road to restoring confidence in the property market is a significant crop of court cases brought against developers demanding refunds for heavily delayed or non existent properties, which result in a ruling in favour of the claimant. Above all evidence that the money is available in Escrow accounts to cover the pay out of refunds.
However, until some form of refund redress is evident outside the boundaries of DIFC, Dubai will never ever be an acceptable off-plan market for foreigners again, or at least for another 5 to 10 years.
Presently the only way to sell is on price and for this global comparative value is the key. So what a villa on the Palm would cost in equivalent markets like Spain, Greek Islands, Florida, Australia, is the price. Dubai has many attributes but it is not Barcelona, Montecarlo, Nice, Boca Raton and Southern California as a destination or Singapore and Hong Kong as a business hub. So average luxury at aed 500 p sq ft, middle income aed 350 p sq ft?
There was a big hoo haa about this 3 year resdient visa, but this is still talk nothing has been practically announced as to how this going to be worked out or implemented. Let's see what the DNRD etc have to say.
Further the biggest worry lies if this rule is being implemented to address the property market slump then 5 to 7 years down the line when the going is good, it is possible that it might change again!!
It has happened before, Emaar had promised resident visas before then the rule change to 6months visit visa ...
The point here is the decision for a new 3 years visa, the point is when they are going to change it again?!
There is no steady rule. this won't help for sure! In addition prices of properties still sky rocket, there are plenty of places around the world that can be less in price and more stable!
Dubai has a great future if the prices of Real Estate are $100/sq.ft for residential property and $ 130/sq.ft for residential property. Unless the price is stabilized at this level, there is no hope. Economics is the same all over the world and the bubble attraction of Dubai is over. The dream has turned into a nightmare. People who lost money should forget that they'll ever recoup their loss. They should mentally take the loss and move on.