It appears that the Dubai government is on the verge of a substantial U-turn regarding residential visas for the area for those connected with the property market. There is a very interesting thread on the property community forum which covers a number of issues, brings up some interesting arguments and offers some interesting angles on what is turning into a very difficult situation to understand. So what exactly is happening? Who will it affect? And why is it even being considered?
The situation at the moment
The situation regarding residential visas has been very difficult to follow over the last few years in Dubai as the property developers appeared to find a loophole whereby they were able to sponsor property investors and assist them in obtaining a residential visa for Dubai. There is some debate on the forum as to whether this has been successful or was in fact some kind of marketing ploy used by the major developers to attract attention.
While some people are a little sceptical as to whether these visas were ever issued there would appear to be some evidence that a substantial number of people did benefit from this “loophole” in obtaining visas for the country. Even though it is possible to stay in Dubai for a defined period of time under employment visas and tourist visas, the residential visa is the Holy Grail for many looking to move to the area for a new life. It gives them substantial rights, protections and more importantly it gives them a voice in the community.
There is also some discussion as to whether the government was happy about the supposed loophole being used to attract new property investors with the promise of residential visas. However, there would appear to be a change of heart within central Dubai government and they may well start to use residential visas to attract overseas investors to the region.
What do the government have in store?
As we touched on above, it would appear that the government is ready to officially sanction residential visas for those who invest in property in the area. At this moment in time there is nothing definitive and no known timescale but informed sources appear to suggest a significant change of heart on the issue. However, with his change of heart comes further concern about the speed at which regulations and laws can change in the region, often causing serious confusion which is something which any investor would prefer to avoid like the plague.
Will new residential visas actually make a difference?
There is no doubt that even though visitors to Dubai can stay on employment or tourist visas for a set time span, residential visas offer much more protection with suggestions that they could last in the region of 25 years. If this is the case then there is every chance of catching the eye of international property investors who are looking to move to the region full time. While rumours suggest the possible change in visa laws would only relate to European investors initially, there is speculation as to whether certain areas of Asia i.e. India and Pakistan would at some stage be included in this new scheme.
Some posters are speculating that the government is looking to bring in European investors initially and then they may call upon Asian investors at a later date to pump money into the region in exchange for residential visas. It is well known that many Indian and Pakistani nationals and business people would like to move to Dubai to live and invest. The expansion of the transportation system which serves Dubai has brought in a significantly larger catchment area over the last 12 months offering the potential to attract substantial numbers of property investors.
Surely this is a win-win situation?
While initially on the surface this must look like a win-win situation, the government attracting significant interest in finance to the property market and investors receiving residential visas along with their investments, there is concern at the speed at which laws and regulations in the region can change. Investors are concerned that the government appears to be changing the framework under which Dubai operates at a whim in order to try and refloat the local economy.
While there is nothing wrong with making changes where changes are required, the Dubai government have made a number of adjustments over the last few years which have not been well received by investors. The move to ban certain mortgage instruments only a few months ago left many investors and developers short of funding and was most certainly not in their favour. The concern is that now the authorities appear to be trying to curry favour with international investors, can these laws be relied upon on a long-term basis or will they change again once the property market and economy recover.
The framework of the Dubai property market
However, aside from the fact that the government seems intent on changing residential visa laws yet again it is sometimes difficult to understand that Dubai is still very much an immature property market with much work still to be done. The legal framework for investors, the government and developers is starting to take shape after an initial “wobbly” phase but the framework is still not finished. Many investors seem to have forgotten that Dubai is a relatively young property market and mistakes have been made by the authorities.
While the rumours of changes to the residential visa regulations have not yet been confirmed, the information appears to have come from reliable sources within the government who are paving the way for the changes. On the surface the news is very good for both investors and the Dubai property market as a whole but there is a nagging concern at the speed and regularity with which regulations and laws in the region can and do change.
Ask any investor about their worst case scenario and it would involve some form of confusion, speculation and counter speculation and the speed at which the government have changed regulations in the not too distant past does not help. The perception that the government will change laws on a whim in order to curry favour with certain areas of the property and business markets is not a helpful notion at this juncture.
While the changes to the residential visa regulations will be well received as and when they are announced, investors are literally crying out for a more stable regulatory framework from which they can look forward to long-term investment. Until the government shows that they themselves have a long-term timescale in mind there will always be a nagging doubt about what could happen tomorrow.