(June 12): Dubai has set its sights on wealthy foreign investors, including the Chinese, by offering sweeteners such as long-term residence visas and retirement options, amid a slump in property prices.
Dubai, the second largest city in the United Arab Emirates, recently approved visas valid for between five and 10 years. Visas for expat workers and professionals are usually valid for up to three years. Likewise, the UAE announced last year that it was planning to issue five-year retirement visas to non-Emiratis aged 55 and older.
The new measures allow those who invest 5 million dirhams (US$1.36 million) in property; have a monthly income of 20,000 dirhams; or have more than 1 million dirhams in capital to secure long-term visas.
The Dubai Land Department, which promotes property investment in the city, has been stepping up efforts to lure more Chinese investors into buying property, targeting at least 1 billion dirhams in investments this year. The Dubai government arm opened two offices in Beijing and Shanghai in the past two years, and plans to open another in Shenzhen and other mainland cities, according to a report by the Abu Dhabi-based The National newspaper.
“Chinese investors represent a growing sector of the market … with many of the major developers currently targeting this sector through sales events in China and relationships with Chinese brokers,” said Craig Plumb, head of research, Middle East and North Africa at JLL.
The measures coupled with the UAE’s zero-tax regime are being touted to attract wealthy investors into buying property in Dubai.
Maria Morris, partner and head of residential at Knight Frank Middle East and North Africa, said that after nearly three years of a softening property market because of an influx of inventory, there are early signs of a recovery.
“This trend of higher demand could continue to strengthen given the recent approval of a range of legislation to ease visa and foreign business ownership by the UAE cabinet,” Morris said, adding that this was likely to drive additional demand for Dubai property, given that many of the changes in visa regulations were linked to property ownership.
Dubai, according to the latest data from Knight Frank, is the world’s least expensive ultra-prime market, with an average price of US$625 per square foot, 15 per cent of the average price of US$4,251 per sq ft in Hong Kong.
JLL’s Plumb noted that Dubai property prices and rents have declined by about 25 per cent since 2014, when the market peaked.
Research from property agents Cavendish Maxwell showed that average property prices in the city fell by 13.2 per cent in the 12 months to April.
In the first quarter of the year, average flat prices were down 3 per cent and villa prices were lower by 1 per cent from the fourth quarter of 2018, according to a report by Dubai-based real estate agency Chestertons International posted on its website. Rents also fell 2 per cent quarter on quarter.
As for volumes, the completed unit market saw transactions sliding by 1 per cent in the period. Transactions for off-plan property rose 10 per cent, continuing the 33 per cent increase in volumes in the previous quarter.
David Faulkner, managing director, valuation and advisory services, Asia at Colliers International, said that while property buying in Dubai has slowed down, the rental market remains resilient.
“The rental market is quite strong as Dubai is a base for foreign companies operating in the region and there is a large and growing expatriate community,” Faulkner said.
In Dubai, 92 per cent of its 3.2 million residents are expats who prefer to rent rather than buy.