No date yet being given for new three year property visa in the UAE

by Ray Clancy on November 3, 2011

New visa seen as desperate measure to prop up struggling property market

There is not date for real estate owners in the United Arab Emirates to be granted a three year residency visa if their property is worth more than AED1 million, it has been confirmed.

‘We hope it will be soon,’ said a spokesman for the Dubai Land Department who declined to be more specific.

The lack of a date comes amid rumours that the plan could even be scrapped after it was reported that the idea had met with a lukewarm response and was judged to be a kind of desperate measure to prop up the UAE’s struggling property market.

The UAE government said in June it would replace visas that require renewal every six months for some home owners, but the decision appears to have made little progress in the months since.

Mohammed Al Hammadi, assistant director-general for visas and residency at Dubai’s Department of Naturalisation and Residency, said there had been no updates on the status of the extended visas.

‘We have no idea when the rules will start. I expect they will have some meetings and then tell us,’ he said.

Rents and prices in Dubai, the Gulf’s worst performing market in the last three years, have been in freefall since the collapse of the emirate’s real estate bubble in late 2008, some down up to 60%. Analysts have warned that prices could fall a further 10 to 30% as developers add to excess supply in Dubai and Abu Dhabi while buyers dwindle.

Home purchases in the UAE dropped by 44% to 1,459 in the third quarter from a year earlier, the CBRE Group said this month. That’s down from 4,059 transactions in the third quarter of 2008, just before the crash.

Dubai has unveiled a number of government backed financing schemes aimed at spurring sales in its property market. One was the three year visa for property owners which they hoped would tempt overseas buyers back. But analysts have said from the start that they doubted it would work.

Even buyers in the region who no longer have confidence in other Middle East countries because of political turmoil have not been buying in any great numbers. Hopes that the UAE would be seen as a safe haven for property investors from Egypt, Tunisia and Libya have not been fulfilled.

According to Catherine Gill, a lawyer with Clyde & Co in Dubai, details of the new visa proposals have not been forthcoming.

‘The issue seems to have been placed on hold. It is not yet known to us when, or if, the initiative is likely to come into effect and, if it does, whether an investment threshold of AED1 million would still apply,’ she added.

Matthew Green, head of research at CBRE Group, said any impact from extended property visas would be dependent on the structure of the new ruling.

‘There are points they still need to clarify, such as family such as who is included on the visa, renewal schedules and fees. They may also be considering whether it’s now more relevant to have a lower base value now prices have come down,’ he explained.

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