A view of the Dubai Marina. Investors with a completed home worth Dh5 million and more can apply for the 5-year residency visa. Applications need to be submitted at ‘Cube’ service centre. Image Credit: Getty Images

Dubai: Homeowners in Dubai are not known to miss a trick when they come across a potential benefit. With the 5-year residency visas now on offer, they definitely are on to a good thing.

Firas Al Msaddi

“I’ve heard that investors with Dh5 million homes are applying already for these visas,” said Firas Al Msaddi of fam Properties. “Whether this scheme lives up to expectations or not, the government will not stop the process of reforms. Of course, we have to factor that when times are challenging, it could impact even the most thought out schemes.

“But one thing is clear — when the global investment ecosystem gets better, this residency visa scheme will do a lot better. Dubai’s uniqueness will certainly prevail.”

As per the guidelines, those investors with a completed home worth Dh5 million and more can apply for the visa, which will entitle them to five years rather than the standard two-year duration. According to Al Tamimi & Company, the law firm, applications need to be submitted to the “Cube” service centre operated by the Dubai Land Department. For eligibility, investors should not have any payment outstandings on the property.

Interestingly, based on available information, the guidelines do not stipulate whether the investor should have held the property for a certain period of time before they can apply for the five-year permit.

In a soft market, this could be the ‘big bang’ reform

That the Dubai real estate market needs fresh stimulus is obvious. Both property values and rents remain under strain across most neighbourhoods, even though buying activity is fairly upbeat.

But there is one category of users who will not be complaining. “Conditions remain conducive for tenants who are well-positioned to demand rent-free periods, fee waivers and flexible payment terms from property owners,” said Aditi Hariharan, Senior Consultant at Cavendish Maxwell, the property services firm. “And potentially upscale to bigger units which may have previously been beyond their reach.”

Apartment rents keep falling

Rents in Dubai were down an average 12.5 per cent in the second quarter compared to a year, and villas/townhouses did not fare too well either, going down 12.6 per cent.

More property completions could extend the squeeze on rents ... and prices. “While we have noticed a slower rate of price declines in some areas over the last 12 months, this is still contingent on new supply and actual materialisation rates,” said Hariharan. (Materialisation rates — which is how many homes got completed against what were expected to be completed in a year — have averaged 40-50 per cent in recent years.

According to Asteco, in the first six months, more than 10,000 apartments were delivered, while villas crossed the 2,000 unit mark.

The northern emirate rental scene remains tenant-friendly

A prospective tenant looking at the rental scene in the northern emirates will have lots to cheer about.

According to Asteco, the most “notable” dips were for typical apartment units in Ajman and Ras Al Khaimah, of 9 per cent and 7 per cent during the second quarter. This was “due to the handover of new supply with better quality specifications/facilities at competitive rates within the emirates and in neighbouring municipalities. While Ajman residents relocated to Sharjah and Dubai, tenants in Ras Al Khaimah opted for the masterplanned communities of Mina Al Arab and Al Marjan Island.

For the immediate future, the status quo will continue in these emirates. Landlords will have to keep monitoring what is happening in Dubai — “Further downward pressure on rates is expected as the delivery of new supply and resulting drop in rental rates in Dubai impedes the recovery of rates in the northern emirates in the short-term,” the Asteco report adds.