Longer residency visas for those owning property worth over Dh1 million, announced by Government this week, are very welcome. The new policy will help property markets, and will also increase the sense of permanency for many expatriates.
Property visa rule is one step on a long road
The impact was as immediate as officials had hoped. Share prices in property companies showed a dramatic increase on the UAE's stock markets yesterday after the Government's decision to extend residency visas for homeowners.
On Tuesday, the UAE Cabinet announced the revamped law that will allow owners of homes worth more than Dh1 million ($272,253) to receive visas for three years instead of the current six months.
It is an overdue announcement that many financial and property experts agree should provide a boost to the UAE's struggling real estate market. "As long as there are no conditions and as long as the fees are reasonable, it will be fantastic for the market," said Tomas Ghassemi, the managing director of The Property Store.
Confidence in the property market, damaged as many investors lost significant savings on failed projects over the last few years, should in the long term improve thanks to this change. The expected rise in demand for properties in that price bracket should inject a substantial amount of cash into the coffers of property developers who have had a rough time since the 2008 global downturn.
This will also be welcome news for expatriates. The difficulty to secure long-term visas has been a key issue restricting home sales. But now, investors will have more of a stake in the property market, and just as importantly enjoy a degree of permanency when it comes to planning their future in the UAE.
Despite these positive points, the new policy will not be a panacea; it is the first step of a long-term plan to encourage major investments and entrepreneurship in other private sectors, especially the stock markets and small businesses.
As ever, a degree of caution is needed to ensure that the new laws achieve their targets, and are not open to abuse. Buyers need to be aware of real property values - just because the Dh1 million mark qualifies for a visa, does not mean every property is worth it. Authorities also need to regulate the issuance of visas so that new owners cannot flip properties after long-term visas have been received.
For now, this change will make the UAE a more attractive place to live. In the longer term, it could help re-energise the economy.