The UAE has been at the forefront of economic development and is known to have one of the highest GDP per capita’s in the MENA region – driven by its diversified economy and increasing population base.
While 2020 started on a positive note with the anticipated Expo in October and the promise to draw over 25 million visitors, the onset of the global pandemic posed severe challenges to not just the nation’s economic fundamentals but also to the wider global economy.
Impact of Covid-19
Within a few weeks, movement restrictions and lockdown measures limited tourist inflows and impacted employment and key economic sectors.
Household income levels tightened as many organisations introduced salary reductions, which led to lower disposable income levels and impacted demand for a variety of goods and services.
Subdued global conditions also affected economic growth within the UAE as key sectors contributing to the GDP such as tourism, hospitality and retail were impacted by the movement restrictions that were put in place.
These challenges posed by the pandemic demanded a strong government response to help bolster the economy and the real estate sector, while minimizing volatility wherever possible.
Historically, Government investment and strategy has played a key role in the successful development of the UAE, and this past year has been no different, with the government providing a quick response to the events spurred on by the global pandemic and introducing many critical reforms and strategies in response to the changing economic and political landscape.
Government investment and strategy has played a key role in the successful development of the UAE
Government initiatives
The newly established diplomatic relations with Israel have been viewed with positive eyes across the diplomatic and business communities and are expected to boost trade, attract a new subset of tourists and bolster investment into the UAE.
In this way, this historic agreement is anticipated to improve the economic and geopolitical landscape of the UAE. Israel is also expected to take part in the Expo 2020 occurring in October of this year in Dubai.
In the long run, these diplomatic relations are expected to create new opportunities within key sectors of the economy, such as tourism and ultimately benefitting key real estate sectors including hospitality, retail residential real estate.
The introduction of the retirement visa in 2020 is another positive step towards strengthening the economy and creating long-term opportunities for new investment in the UAE.
The introduction of the retirement visa in 2020 is another positive step towards strengthening the UAE economy
This retirement visa is expected to position the UAE as an attractive retirement destination and tap into the demand potential of the global retiree population.
Retirement visas will enable investors and residents to develop a more long-term view in terms of their investment strategies and positively influence their spending patterns. The visa is expected to benefit the country’s key sectors such as residential, healthcare, retail and hospitality in the long term and create new opportunities in the holiday home and senior living segments.
It will also facilitate a sense of security for older expats and investors who are nearing retirement age, as the visa offers them the opportunity to plan long term and prepare for retirement in the country.
In a similar vein, the UAE also recently announced that it will begin to allow foreign students to sponsor their families if they have the financial means.
This initiative has been launched in line with the country’s aim to position itself as a regional education destination by attracting top talent and students with outstanding academic records and providing them a 5-year visa.
Attracting and retaining talent has been a longstanding objective of the UAE, backed by the landmark policy shift, which was just announced in the past few days, to grant citizenship to a select pool of investors and specialized professionals in the art and science fields.
This new citizenship initiative aims to attract more, talented expatriates into the UAE and offer them an incentive to invest in the country over a longer term.
The UAE also recently announced that it will begin to allow foreign students to sponsor their families if they have the financial means
While the new directive is still in its early stages, understanding the key conditions and the rights granted to the new citizens will be key in determining the long-term impact of this initiative.
Abu Dhabi has also introduced a freelancer license which is applicable to over 48 business activities and provides freelancers with a platform to obtain a valid residency visa and sponsor family members.
The license is available at a relatively low cost, making it more accessible to a broad range of income levels. This new visa is expected to stimulate growth in the creative sectors of Abu Dhabi and attract freelancers and specialists from varied business sectors to the capital.
From a real estate perspective, this new initiative is expected to have a knock-on effect on demand for residential, office and retail space as new residents and freelancers live and work in Abu Dhabi.
Beyond these initiatives, foreign direct investment and business activity are also expected to receive a positive boost from the recent Government announcement around foreign business ownership. As part of this new initiative, foreign investors will be able to benefit from 100% ownership in a local company without requiring an Emirati sponsor.
This new directive allows foreign nationals and expats to fully own their local business and is expected to further increase the ease of doing business within the UAE, enhancing the country’s competitiveness and attractiveness on a global scale.
Regulating real estate supply
While these key measures are expected to support demand and opportunities for the real estate sector, the Government and key real estate players have also taken several initiatives to regulate the supply side of real estate.
Private developers are now expected to put up to 50% of the total project value as bank guarantees, creating an additional requirement to launch new projects.
This new regulation is expected to potentially reduce the number of new off-plan projects that will be launched in the coming years, which, in turn, will help normalize supply and property values across the market.
Private developers are now expected to put up to 50% of the total project value as bank guarantees, creating an additional requirement to launch new projects
Developers themselves are also undertaking a more cautious approach, as highlighted by an announcement from Emaar, the UAE’s leading developer, to temporary halt the launch of new projects amid these oversupply concerns.
Despite the challenges that the UAE and the world has faced throughout the course of 2020, these new reforms and initiatives are expected to drive economic and business growth in the UAE as we move forward, while creating new opportunities for the real estate sector.
Regulatory changes introduced in 2020 will serve to further enhance the UAE’s competitiveness, attract investment, stimulate the UAE’s economy and strengthen its position as the leading economic hub in the region.
Ria Lobo is a Consulting Analyst at CBRE in Dubai
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How the UAE is taking the pandemic challenges head on
Government initiatives including new visa laws and regulating real estate supply will help boost the emirate’s economy, says Ria Lobo
Ria Lobo is a Consulting Analyst at CBRE in Dubai
The UAE has been at the forefront of economic development and is known to have one of the highest GDP per capita’s in the MENA region – driven by its diversified economy and increasing population base.
While 2020 started on a positive note with the anticipated Expo in October and the promise to draw over 25 million visitors, the onset of the global pandemic posed severe challenges to not just the nation’s economic fundamentals but also to the wider global economy.
Impact of Covid-19
Within a few weeks, movement restrictions and lockdown measures limited tourist inflows and impacted employment and key economic sectors.
Household income levels tightened as many organisations introduced salary reductions, which led to lower disposable income levels and impacted demand for a variety of goods and services.
Subdued global conditions also affected economic growth within the UAE as key sectors contributing to the GDP such as tourism, hospitality and retail were impacted by the movement restrictions that were put in place.
These challenges posed by the pandemic demanded a strong government response to help bolster the economy and the real estate sector, while minimizing volatility wherever possible.
Historically, Government investment and strategy has played a key role in the successful development of the UAE, and this past year has been no different, with the government providing a quick response to the events spurred on by the global pandemic and introducing many critical reforms and strategies in response to the changing economic and political landscape.
Government initiatives
The newly established diplomatic relations with Israel have been viewed with positive eyes across the diplomatic and business communities and are expected to boost trade, attract a new subset of tourists and bolster investment into the UAE.
In this way, this historic agreement is anticipated to improve the economic and geopolitical landscape of the UAE. Israel is also expected to take part in the Expo 2020 occurring in October of this year in Dubai.
In the long run, these diplomatic relations are expected to create new opportunities within key sectors of the economy, such as tourism and ultimately benefitting key real estate sectors including hospitality, retail residential real estate.
The introduction of the retirement visa in 2020 is another positive step towards strengthening the economy and creating long-term opportunities for new investment in the UAE.
This retirement visa is expected to position the UAE as an attractive retirement destination and tap into the demand potential of the global retiree population.
Retirement visas will enable investors and residents to develop a more long-term view in terms of their investment strategies and positively influence their spending patterns. The visa is expected to benefit the country’s key sectors such as residential, healthcare, retail and hospitality in the long term and create new opportunities in the holiday home and senior living segments.
It will also facilitate a sense of security for older expats and investors who are nearing retirement age, as the visa offers them the opportunity to plan long term and prepare for retirement in the country.
In a similar vein, the UAE also recently announced that it will begin to allow foreign students to sponsor their families if they have the financial means.
This initiative has been launched in line with the country’s aim to position itself as a regional education destination by attracting top talent and students with outstanding academic records and providing them a 5-year visa.
Attracting and retaining talent has been a longstanding objective of the UAE, backed by the landmark policy shift, which was just announced in the past few days, to grant citizenship to a select pool of investors and specialized professionals in the art and science fields.
This new citizenship initiative aims to attract more, talented expatriates into the UAE and offer them an incentive to invest in the country over a longer term.
While the new directive is still in its early stages, understanding the key conditions and the rights granted to the new citizens will be key in determining the long-term impact of this initiative.
Abu Dhabi has also introduced a freelancer license which is applicable to over 48 business activities and provides freelancers with a platform to obtain a valid residency visa and sponsor family members.
The license is available at a relatively low cost, making it more accessible to a broad range of income levels. This new visa is expected to stimulate growth in the creative sectors of Abu Dhabi and attract freelancers and specialists from varied business sectors to the capital.
From a real estate perspective, this new initiative is expected to have a knock-on effect on demand for residential, office and retail space as new residents and freelancers live and work in Abu Dhabi.
Beyond these initiatives, foreign direct investment and business activity are also expected to receive a positive boost from the recent Government announcement around foreign business ownership. As part of this new initiative, foreign investors will be able to benefit from 100% ownership in a local company without requiring an Emirati sponsor.
This new directive allows foreign nationals and expats to fully own their local business and is expected to further increase the ease of doing business within the UAE, enhancing the country’s competitiveness and attractiveness on a global scale.
Regulating real estate supply
While these key measures are expected to support demand and opportunities for the real estate sector, the Government and key real estate players have also taken several initiatives to regulate the supply side of real estate.
Private developers are now expected to put up to 50% of the total project value as bank guarantees, creating an additional requirement to launch new projects.
This new regulation is expected to potentially reduce the number of new off-plan projects that will be launched in the coming years, which, in turn, will help normalize supply and property values across the market.
Developers themselves are also undertaking a more cautious approach, as highlighted by an announcement from Emaar, the UAE’s leading developer, to temporary halt the launch of new projects amid these oversupply concerns.
Despite the challenges that the UAE and the world has faced throughout the course of 2020, these new reforms and initiatives are expected to drive economic and business growth in the UAE as we move forward, while creating new opportunities for the real estate sector.
Regulatory changes introduced in 2020 will serve to further enhance the UAE’s competitiveness, attract investment, stimulate the UAE’s economy and strengthen its position as the leading economic hub in the region.
Ria Lobo is a Consulting Analyst at CBRE in Dubai
Follow us on
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