The forthcoming reforms to the UAE visa system are designed to make it easier for expats to live, work and build a future in the country. With this, we’re likely to see an evolution in the spending and investment habits of expats in the UAE, as they start to plan their finances around longer-term residency.
Alongside the extended investor and entrepreneur visas, the new regulations are likely to encourage expats to commit more financial resources within the UAE, whether it be buying property, building an investment portfolio locally, or spending more disposable income in-country.
Long-term stability
The new long-term residency schemes will promote a high sense of stability among qualifying UAE expats. It will also provide an important buffer to foreign residents living in the UAE who were previously reliant on short-term renewable visas linked to their employment.
The confidence that comes with secure residency will encourage more special visa-holders and their families to put down roots. With an extended visibility on the future, expats can now build and oversee investment and savings plans over the longer-term, as well as exploring new opportunities within the UAE.
Greater investment potential
The visa system overhaul will lead to a reduction in the cost of renewing residency permits, which should in turn lead to more savings and investments taking place as a result. Attracting more knowledge workers to the country will help to build and retain a highly-skilled workforce, with more investment potential and greater spending power.
The lifestyle opportunities the UAE offers, combined with the prospect of working towards a clear savings goal, mean that the investor visa option is likely to attract not only high-net-worth individuals but also the mass affluent expats.
New investment mindset
The opportunity to reside in the UAE long-term is likely to change the investment mindset, particularly when it comes to property. Where expats might previously have invested in a residence in their home country, the option to build a future in the UAE means long-term visa holders will be more likely to explore residential property in the Emirates.
Furthermore, the current supply and demand equation has made investment property an attractive proposition. With the implementation of longer-term residency options, more expats will come to the UAE, and push rental prices up in the process.
Impact for individuals
For any expat that secures a long-term visa, a range of opportunities will open up on the investment landscape, but how to approach them will depend on a number of factors. Individual investors will have different requirements and expectations based on planning periods, risk appetite, and market conditions.
Younger investors might choose to focus on gross planning investment vehicles, while older investors closer to retirement need to explore income-producing investments that will pay out enough to meet their financial commitments.
Impact for business
The new regulations will naturally have a positive impact on the local banking industry as more investment is retained in the UAE. We can also expect an evolution in the broader business landscape as companies start to plan differently for their future.
Security of residence for employees will help to build more certainty around business continuity. Growing investment in commercial property is likely as existing businesses look to commit to the long-term and more new ventures set themselves up in the UAE.
Planning for an uncertain future
Overall, the UAE’s forthcoming long-term visa plans will raise residents’ savings and investment goals and encourage increased spending locally. Combined with the introduction of the retirement visa last year, many long-term residents may also decide that the UAE is the best place to accumulate their wealth.
Yet with the volatility in markets and the uncertainty that lies ahead, good financial advice remains critical for any expat aiming to secure their financial future, whether that be in the UAE, or in their home country.
Sophia Bhatti, is an award-winning leader in finance and investment and a Chartered Wealth Manager.
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