Dubai is a home away from home for a large number of expat families, including many that have lived in the city for two or three generations. The introduction of freehold property has given many of these expats a bigger incentive to deepen their roots in the emirate.
Foreigners currently get a two-year investor’s visa when they invest around Dh1 million in Dubai property. However, experts say it would make sense to extend the duration of the visa to make Dubai even more attractive to foreign investors.
Amit Vardhan, 47, who owns an advertising firm in Dubai, is among those interested in a long-term visa scheme, noting that it will encourage more expats to invest in property. Having lived with his family in the UAE for almost two decades, Vardhan is planning to buy a four-bedroom villa by the end of the year. Previously, he had invested in a one-bedroom apartment in International City, which he has already sold.
“I am keen to buy a unit for self-use since we find Dubai an ideal destination with excellent living conditions,” says Vardhan. “Moreover, if a long-term investor’s visa regulation is enforced, investing here will become very attractive for the residents, [who would feel] more settled in the country.”
He says it is particularly more appealing to a large number of the working population, who are hesitant to buy property knowing they will have to go back home if they lose their jobs. A long-term visa will encourage expats to invest in long-term assets such as real estate.
Mario Volpi, Chief Sales Officer at Kensington Exclusive Properties, says residents are generally wary of job insecurity and are, therefore, less inclined to buy their own homes or invest in real estate.
“Changing the visa rules to longer-term validity will give more stability to the market and, in turn, will attract more interest from investors and end users,” says Volpi. “Moreover, with fewer restrictions to the visa by investment option, Dubai would most likely be seen as a great destination for retirees, especially if the lifespan of the visa itself is extended.
“The challenges in the current structure include the short renewal period and prohibitive costs. Moreover, mortgage and off-plan properties are not eligible [for visa application].”
According to the regulations and guidelines issued by the Dubai Land Department (DLD), those who invest at least Dh1 million in real estate can apply for an investment visa. “A homeowner can apply for an investment visa, subject to meeting all the requirements and obtaining the necessary initial approval from the DLD,” says Philip Sequeira, Head of Property Regulatory at Hadef and Partners. “He or she first has to apply for a residence visa licence by paying a fee of Dh8,420 to the DLD. This residence visa licence is renewable every four years. Once received, the investor must then apply to the Immigration Department for the investment visa, which has a validity period of two years and can be renewed for similar terms.”
The fee for the investment visa is roughly the same as for a residence visa, and even the requirements are similar, such as a medical test. However, there are additional costs, such as the residence visa license fee of Dh8,420, which is payable every four years.
“The facility of an investment visa is available to owners only for a completed apartment or villa and the property should be situated in a designated freehold area,” says Sequeira. “Leasehold properties for 99 years are currently not eligible for investment visas. Spouses can apply for an investment visa on the same property. Also, owners can combine one or more property to meet the eligibility criteria of Dh1 million.
“However, if the property in question is mortgaged, then the mortgage should be at least 50 per cent paid before you can apply for the investment visa subject to a no-objection certificate from the bank.”
The property investors’ long-term visas are intended to bring in foreign direct investment or skills into an economy. Hence, every market follows a different approach towards visa norms. Sallie Bowtell, Partner at Trowers and Hamlins, points out that in countries with more mature real estate markets such as the US, Australia and the UK, real estate investment does secure residency, although it can help in obtaining some form of residency (see box left).
“The difference between these jurisdictions and others is that they relate to more mature economies, which are arguably not as reliant upon foreign investment in real estate to support their growth or the sustainability of their economies,” says Bowtell. “Although Dubai has done well in [minimising] its reliance on oil revenues and natural resources through other sources of income, including tourism, corporate investments and real estate, its local population is rather small in comparison to the expat population. Therefore, it relies more heavily than other jurisdictions on foreign investment into property.
“Additionally, in more mature jurisdictions, it is possible to gain something more than residency — citizenship, but the UAE and the GCC countries are not relatively open to granting citizenship to foreigners.”
However, experts point out that Dubai is seeing an increasing number of people settling here on a more modest but longer-term basis. The emirate is even beginning to attract retirees from other countries. “Many individual foreign investors are purchasing apartments or villas with their savings to move here later on in their lives,” explains Bowtell. “Hence, it is certainly a market that Dubai could explore, but residency would need to be easier to secure.”
Sequeira also believes that Dubai at some stage will need to resolve how best to attract “grey dollar”, which refers to ageing affluent people, as this is a rapidly growing sector globally.
“By grey dollar, we mean those retirees who wish to reside somewhere such as Dubai for long term, but do not want [to go through constant] visa reapplication or to manage or operate their own business.
“For instance, in the US, a retiree can invest $500,000 [Dh1.83 million] into a government-approved business and live there with a conditional green card, which can be replaced with permanent residency after two years or subject to conditions for full citizenship after five years. Although Dubai probably does not need to go as far as offer citizenship, it could provide longer-term residency of up to 10 years for people of proven wealth and character, so they can remain in the UAE supported by their funds during their retirement years.”