Wednesday, June 25, 2008

Regulation banning automatic residency visa for property buyers may be a major knock for Dubai realty sector

The expatriates are less likely to buy properties in Dubai henceforth, following the new regulation by the emirate's real estate regulator, that homeowners are not automatically entitled for long-term residency rights, reveals media reports.

Marwin bin Ghalita of RERA (Real Estate Regulatory Authority) in Dubai, had mentioned that Dubai will introduce short-term visas for foreign investors in the realty sector, and that "there is no direct link" between owning a property in Dubai and obtaining long-term residency rights.

These comments were quite contrary to the earlier statements made by local developers such as Emaar Properties, the leading real estate firm of Arab world.

Dubai, being the commercial hub of Arab world, has been witnessing a property boom ever-since the government permitted foreigners to invest in properties during 2002. Thereafter, a real estate regulation issued during 2006 permitted foreign freehold ownership in certain localities.
Expatriates from neighboring countries such as Pakistan, Lebanon and Iran, who have been facing political instabilities in their respective countries, were being lured to Dubai, over the assumption that owning a property here would ensure long-term visas to them, as it would prove to be a huge asset for them if situation in their own countries turned sour. Dubai was the only market in the region, offering such a link.

The recent comments by bin Ghalita, has now left the foreigners doubtful about the promise of residency from developers, including the Dubai Properties and Nakheel, which are state-owned and has legal backing.

"Developers should not lure investors to property sector with the promise of a residence visa," bin Ghalita commented.

The existence of "safety homes" in Dubai was a main factor for the huge property demand, and any decision on the part of regulators to review the visa status of existing homeowners would bring about "legal hazzles" and may badly hit the image of the emirate, says the media.

Owners are likely to feel that they have been offered a worthless investment, particularly, with the developers being close linked to the state in Dubai.

Already the shares of Emaar Properties slipped 0.45 percent and that of Union Properties by 2.68 percent, following the announcement by RERA on Tuesday.

In the meanwhile, the regulator has submitted a proposal to the government to grant visit visas to foreign homeowners, which may also be made applicable to existing homeowners if approved, revealed bin Ghalita.

About 80 percent to of UAE population are foreigners, with majority from the Indian subcontinent, Iran, and other Arab countries.

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