UAE developers see market boost from new rules
Dubai, June 29, 2011
A decision to extend visa tenures for real estate investors will 'significantly' boost investor confidence in the UAE's struggling property sector, the head of the country's largest developer said.
The UAE government said on Tuesday that it has extended visas for foreign property buyers to three years from the existing six months, as the Gulf state looks to boost investment in its struggling property market.
'The UAE federal cabinet decision will significantly enhance investor confidence and drive the growth of the country's property sector,' Mohammed Alabbar, chairman of Dubai's Emaar Properties, said in a statement on Wednesday.
Property stocks rose as a result of Tuesday's announcement with Emaar rising 1.7 per cent by 0930 GMT and builder Arabtec's shares gaining 1.6 per cent.
In neighbouring Abu Dhabi, Aldar Properties, the emirate's largest developer by market value increased 0.8 per cent.
Currently, foreign owners of property worth more than Dh1 million ($272,300) in the UAE have to renew their visa every six months.
In a research note, Citigroup said the decision could significantly boost demand in Dubai's residential real estate sector, where the promise of a long-term residency visa was a major driver of second-home purchases during the boom prior to mid-2008.
'However, the overall impact on the property market will likely be somewhat muted by oversupply issues that are being exacerbated by the ongoing completion of new properties,' analyst Farouk Soussa said in the note.
Dubai's property sector has been hit hard in recent years with billions of dollars worth of projects put on hold or cancelled, while prices slumped as much as 60 per cent largely due to lack of buyers in the market.
The emirate's Real Estate Regulatory Authority (RERA) said earlier this year it cancelled as many as 217 registered property projects over the past two years.
Rera has been taken a number of steps to improve regulation and transparency of Dubai's property sector, such as laws for property maintenance, but more needs to be done to tempt overseas investors back to Dubai after the collapse.
More clarity on the mortgage law and visa regulations are among further steps that need to be introduced, analysts have said.-Reuters