Dubai: Dubai is studying the enforcement of a new residence visa system for property owners, sources from the government confirmed yesterday.
The government official, who spoke on condition of anonymity, said that authorities in Dubai are discussing ways of granting owners of properties in the emirate, residence visas based on transparent rules and legislation.
"The rules are expected to be issued soon," the source said.
Al Bayan Arabic daily reported yesterday that Dubai would issue a law granting specific categories of property owners to have residence in Dubai.
Realtors are optimistic about the implications of this proposal for their industry but are wary about the costs involved.
"Residence related to property was a main catalyst for buying and selling in the real estate sector especially since the boom. We think this [law] will restore some activity in the market but not like the previous levels in real estate," said Tariq Ramadan, Chairman of Tharaa Holding.
However, the costs associated with setting up a company to register the property under it could reach up to Dh40,000 a year and this may deter some buyers, Ramadan noted.
"It will be a disadvantage because the mainten-ance fees and ownership fees are high and then add company ownership fees at Dh20,000 to Dh40,000 annually, then this would be helpful only for those who want residence. But it is expensive," he said.
The law would be an incentive for foreigners coming to the UAE for visas and would additionally "spruce up" Dubai's real estate market, said Nima Khanpour, Commercial Director of Stratum Owners Association Management.
Ramadan hoped the law would be flexible and that its logistics, conditions and associated costs would not detract from its attractiveness. The official said that concerned authorities from private and public sectors are looking for mechanism for residence for property owners.
The official said that the new mechanism suggests that property owners to establish a company in the free zone and then the company will own the property which will let the property owner who owns the company to obtain a residence permit on the basis of ownership of the company, not the property.
"We are looking to encourage foreign investment here and aiming to boost the progress of the real estate market here," he said.
He said the concerned authorities will have rules and regulations which will include the level of income of the property owner, his or her job and the total cost of the property.
"The property owner must meet specific requirements in order to be able to establish the company," he said.
He said, the value of the company and the number of times the owner wishes to renew his residence will be taken into consideration too.
He said the residence visa will be valid as long as the ownership of the company is valid.
"If the property owner decided to sell his or her properties, which means the cancellation of the trade licence to the company and the cancellation of residence too," he said.
While the law would help the real estate market, it will not be enough, some analysts said.
"While it would not solve all of the real estate problems in Dubai, any law relaxing or improving residency given to real estate owners in Dubai would help support residential demand. It must be emphasised that long term residency visas would not solve all of the issues with residential oversupply in Dubai, which would take time to bring back into balance," said Jesse Downs Head of Management Consulting at Jones Lang Lasalle for MENA.
"It might attract investment demand or second home demand through improving residency with property but it can only go so far. What Supply/demand dynamics will take a while to return to balance."
The structure of the law, the proeprty owner applying for residency by registering a company, is meant to fit with an existing corporate structure and to fast track the process, said Essam Al Tamimi, Senior Partner of Al Tamimi and Company. "The local ferezone entities could take responsibility of sponsorship based on corporate structure."