The UAE offers many opportunities to foreigners who are willing to invest in real estate sector to secure a long-term visa following a reform process initiated by the government last year.
As per the new UAE regulations, property investors can get a five-year residence visa when they invest in a property worth at least Dh5 million. The ruling applies both to secondary and new properties above Dh5 million and Dh10 million.
The requirements for this new long-term visa currently state cash-only investments. Therefore, more clarity is required on how this is applicable to single units or entire buildings, land, etc, she said.
“Bulk residential units in higher yield areas like International City may prove to be a better investment option in the Dh5 million and above category, particularly for those with a higher risk appetite, than a single villa where yields tend to hover around 4-5 per cent,” said Dhama.
“Indians, Pakistanis and Britons will remain top 3 investors seeking long-term visa through property investment,” she said while referring to majority of investment in Dubai’s property sector coming from India, Pakistan, Britain and Saudi Arabia.
There are 30 communities across the emirate of Dubai where Dh5 million worth of investment can get a 5-year visas, according to data provided by Cavendish Maxwell. Al Barari, Al Furjan, Arabian Ranches, Arabian Ranches 2, Bluewaters Island, Business Bay, City Walk, Culture Village, Damac Hills, Downtown Burj Khalifa, Dubai Harbour, Dubai Marina and Dubai Science Park (DuBiotech), are included among those communities.
While the eight communities in Abu Dhabi for long-term visa are Saadiyat Island, Nurai Island, Al Reem Island, Marina Village, Al Raha Gold Gardens and other communities in Al Raha area including Al Zeina, Al Manara and Al Bandar.
Taimur Khan, head of research for Middle East at Knight Frank, said majority of the properties above Dh5 million price range are villa properties in locations such as Emirates Hills, The Palm Jumeirah, Emirates Living among others. In addition, there are also a number of luxury apartments which are available in Dubai’s established prime area such as Downtown Dubai and Palm Jumeirah. “We are also seeing new offerings come to the market in Dubai Marina, Bluewaters, Jumeirah and City Walk.”
“Whilst there are other locations where properties above this value are available, the aforementioned locations are where non-GCC national are able to buy property,” he said. He noted that investors’ focus will be on properties which are not only of great quality but are also part of a community.
Fadi Nwilati, CEO, Kaizen Asset Management Services, stated that the UAE’s long-term visa strategy has given confidence among expatriates and a greater feeling of permanence in the UAE.
“We have seen a direct impact on foreign investment increase outside of the GCC, especially from India and Pakistan. As an organisation, we have in particular discussed this topic with business owners, since business owners have started expressing interest to buy rather than rent properties. There is a lot of excitement in the market, but it is far too early to see tangible results. We are looking forward to seeing the tangible impact in the next three years,” Nwilati said.
Jake Wright, investment director, Smart Crowd, believes that the long-term visas will provide individuals greater comfort around their mid- to long-term future, allowing them to better plan their lives within the emirate.
“Working on a two- to three-year visa may deter people from making key life decisions i.e. shall I buy a property to live in, shall I invest some of my savings or even smaller purchases such as furniture etc. All of which a key factors in creating a thriving economy,” said Wright.
“Often, these investments start at Dh12 million, with typical transaction values between Dh50 million and Dh100 million,” Love said. He said other commercial assets like retail community malls may generate 8-12 per cent, with investments ranging from Dh15 million to Dh200 million. Labour accommodations often offer the best returns, more than 15 per cent, but also carry the most investor risk due to high tenant turnover and cyclical rents.