Is the residency visa incentive enough?

It's common knowledge that the real estate boom in the UAE market was the result of regulations that permitted foreigners to buy property in designated areas. An added incentive was the property residence visa, which attracted long-term expats wanting to retire in the country, second-home and safe haven seekers from troubled countries, and vacation home hunters from Europe in search of warmer climes.

However, the goal posts were moved in May 2009 when the three-year residence visa was replaced with a renewable six-month visit visa, which would enable the property investor to simply live in the country with no resident benefits such as sponsoring relatives, opening bank accounts or obtaining driving licences. This decision was met with resistance from investors who shied away from an already struggling market.

A few months back, the government reversed this limitation and extended the visa period for property owners to three years. Also, the visa would come with residency benefits such as sponsorship of dependents, though investors may be required to exit the country once every six months.

Monthly income

While this visa will come with conditions such as monthly income requirements (Dh10,000), fitness and medical insurance provisions as well as investment thresholds (Dh1 million), it is indisputably excellent news for the industry.

It is still too early to determine how much of an impact this new rule has had on demand and prices; nevertheless, the announcement has been welcomed. However, the UAE now competes not only regionally, but also internationally, and thus it is worth finding out what other nations are offering to foreign property investors.

Malaysia's ‘My Second Home' scheme allows foreigners to purchase property and live in Malaysia on a ten-year multiple-entry renewable visa. The investment threshold for the visa is 500,000 ringgit (Dh584,746).

Hong Kong, a popular expat location, offers residence to investors under its "Capital Investment Entrant Scheme", for an initial two-year period, which can be further extended, with the option to apply for permanent residence after seven years. The investment threshold is HK$10 million (Dh4.7 million) in permissible asset classes.

Renewable

While countries such as the US and UK do not have such schemes, owning real estate does add points when applying for visas and permanent residence.

Closer home, Qatar has been offering residency visas to property buyers since 2006, but the first visas were actually handed out only in May this year. Buyers receive a five-year renewable visa for themselves and dependents when they provide property ownership documents.

Bahrain offers a similar five-year renewable residence visa to the buyer and his dependents, provided the purchased property is worth not less than 50,000 Bahraini dinars (Dh487,000), the applicant has a bank deposit of more than 15,000 dinars in Bahrain, regular monthly income of more than 500 dinars. Oman offers a two-year renewable residence visa, but only after the completion of the purchase of the properties.

The above summarisation does indicate that while the UAE's three-year residence visa is a good incentive, the enticement needs to be made more attractive. Possibly a further five- to seven-year extension could be allowed after the initial three-year period subject to certain conditions such as continuing medical fitness, proving good conduct, passing a test on the Emirati, Arabic and Islamic cultures and so on.

The writer is head of valuations and research at Chesterton International