UAE property stocks emerged as the largest gainers on the country's bourses yesterday after a government decision to extend visas for homebuyers
Extension of visas for investors prompts a rally in property shares
Property stocks rallied yesterday after the UAE Government extended the length of visas for foreign homebuyers.
Shares in the sector accounted for almost half of the trades on the Dubai bourse as investors anticipated that the move would provide a much-needed lift to the housing market, which has struggled to rebound from a crash at the end of 2008.
Mohamed Alabbar, the chairman of Emaar Properties, said the move would "significantly enhance" confidence and drive the growth of the UAE's property sector."
He said the sector played a solid role in driving foreign direct investment."The Cabinet decision will enhance the appeal of the UAE as a preferred destination for safe investments in property," he said.
The extension of the residence period for foreign property investors from six months to three years was among measures introduced by the Government in a three-year plan.
Investors looked to Dubai's market, which ended the trading session 0.6 per cent higher, as the main beneficiary of the decision.
The country's property market was hit hard by the global economic crisis, but Dubai in particular was left struggling as property prices plummeted more than 50 per cent in some places after the crash set in.
The government plan revives promises of a long-term residency visa that contributed towards a major drive of second-home purchases in the years before the crash, analysts said. The move "could significantly boost demand in the UAE's residential real estate sector, particularly in Dubai", wrote Farouk Soussa, the chief economist of Citi's Middle East unit.
In the capital, major property stocks rose for the first time in more than a week. Aldar Properties, the most heavily traded developer in the country, clocked its first gain in more than a week, rising 1.6 per cent to Dh1.24. It has lost 10 per cent over the past week.
Emaar Properties, the developer of the world's tallest tower, the Burj Khalifa in Dubai, climbed 2.7 per cent at the opening. Other heavily traded stocks in the sector also clocked gains: Arabtec ticked up 2.4 per cent and Deyaar rose 1.4 per cent to 29 fils.
Analysts said the most dramatic reaction would be confined to the capital markets, with any direct impact on the property market not coming into effect for some time.
"It's a small step in the right direction," said Chet Riley, a property analyst at Nomura who has "buy" ratings on both Emaar Properties and Sorouh Real Estate.
"Before we take the leap of faith, there are no details beyond the headlines … There is a lot of work to do to shore-up confidence across the direct real estate market," Mr Riley said.