Business | Property
Residency issue may dampen Dubai market
Foreigners could be less likely to buy properties in Dubai after the emirate's real estate regulator said expatriate homeowners are not automatically entitled to long-term residency rights, ING said.
- Reuters
- Published: 00:07 June 27, 2008
Dubai: Foreigners could be less likely to buy properties in Dubai after the emirate's real estate regulator said expatriate homeowners are not automatically entitled to long-term residency rights, ING said.
"There is no direct link" between owning a property in Dubai and obtaining a residency visa, chief executive of the emirate's Real Estate Regulatory Authority, Marwan Bin Galita, was quoted by Gulf News as saying on Tuesday.
The comments were contrary to prior statements from local developers such as Emaar Properties, the Arab world's largest real estate firm by market value, ING said, noting the remarks could trigger "negative sentiment" and impact Emaar's stock.
Dubai has witnessed a boom since the government allowed foreigners to invest in property in 2002. The emirate passed a real estate law in 2006 allowing foreign freehold ownership in some areas.
Expatriates from neighbouring countries facing political instability, such as Pakistan, Lebanon and Iran, have been lured to Dubai largely on the assumption that owning a property would entitle them to long-term visas, ING said.
"People from politically or economically unstable countries in the region bought residences in Dubai assuming they would automatically be granted residency, a huge asset to have if the situation in their home countries turned sour," ING said.
"Dubai was the only market in the region to offer such a link."
Questions
But Bin Galita's comments raised questions about whether the promise of residency from developers, including state-owned Dubai Properties and Nakheel, has legal backing, ING said.
"Developers should not lure investors to the property sector with a promise of residence visa," bin Galita was quoted as saying.
The existence of "safety homes" in Dubai has been a key factor driving demand, and any decision by regulators to review the visa status of existing homeowners would create a "legal minefield" and could hit the emirate's image, ING said.
"Owners will feel they have been sold a worthless investment and what's more by developers that are all linked very closely to the state in Dubai," the bank said.
Shares of Emaar Properties slipped 0.45 per cent on Tuesday while those of Union Properties fell 2.68 per cent.
Solution: Rera proposal
The Real Estate Regulatory Authority (Rera), meanwhile, has submitted a proposal to the government to grant foreigner homeowners visit visas, a rule that could also apply to existing homeowners if it is approved, Rera chief executive Marwan Bin Galita said.
Foreigners comprise more than 80 per cent of the population in the UAE, home to about 4.1 million people, the majority from the Indian subcontinent, Iran and other Arab countries.
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