On 20 May 2018, His Highness Sheikh Mohammed bin Rashid Al Maktoum, announced a state-of-the-art cabinet decision that will boost real estate in Dubai. By the end of 2018, international investors, including property owners, could enjoy 100 % foreign ownership of their Dubai mainland company and receive a 10-year residency visa.
100 % foreign ownership to attract investors
The aim of the cabinet decision is to promote Dubai as a permanent destination for international investors and increase foreign direct investments. Another goal is to attract exceptional talents and retain qualified human capital. His Highness Sheikh Mohammed said, "An open environment, tolerant values, infrastructure and flexible legislation are the best plan to attract global investment and exceptional talents to the UAE."
Unlike businesses based in free zones, Dubai mainland companies (onshore LLCs) generally need to have a 51 % local partner. The recent cabinet decision will allow global investors to own 100 % of their limited liability companies in Dubai. Further details are expected to be published in Q3 2018.
10-year residency visa for property owners
At present, international investors and entrepreneurs can apply for a 3-year UAE residency visa. Employees in Dubai currently receive a 2-year visa and students need to renew their visas every year. Real estate owners often apply for a 2-year property visa, issued for a freehold property with a purchase value of 1 million AED or more. All these visas can be renewed, but only allow a temporary residency in Dubai for a brief time.
The new cabinet decision will grant global investors, entrepreneurs and property owners a 10-year residency visa. Employees in medical, scientific, research and technical fields could obtain a 10-year visa. Students in Dubai will be able to apply for a 5-year visa and exceptional students (A-students) will be eligible for a 10-year visa. These long-term residency visas will provide multiple benefits, especially for Dubai’s real estate sector.
Benefits for Dubai property investors
The recent cabinet decision will attract skilled professionals and inspire innovative individuals in Dubai to establish their own businesses. The new regulations will also increase foreign direct investments, particularly in Dubai real estate. According to Dubai Land Department, foreign investors committed 56 billion AED to Dubai property in 2017. Besides UAE nationals and investors from the Gulf, the main drivers have been Indian nationals investing 15.6 billion AED. They are followed by British nationals devoting 6 billion AED, and Pakistan nationals committing 5 billion AED in Dubai property. With the new 10-year residency visa, direct foreign investments in Dubai real estate are expected to rise.
Furthermore, the long-term visa program will encourage investments by existing expatriates. Currently, expats are only receiving a temporary residency visa for 2 or 3 years. In lack of a permanent residency, several expats must leave Dubai after some years and go back to their home countries. Therefore, many expats do not invest in Dubai real estate, but spent their savings in their home countries. Receiving a 10-year residency visa, various expats would feel a greater sense of belonging, call Dubai their home, and invest their savings in Dubai property.
Effects for Dubai real estate
The effects of a long-term residence visa will be a stable growth of population, a high confidence in the real estate market and a rise of expats investing in their Dubai freehold homes. This could also be beneficial for Dubai developers and mortgage providers, offering more efficient opportunities for extended visa periods.
Hamad Buamim, President of Dubai Chamber of Commerce and Industry, said, “The move sends a clear message that the UAE is a competitive market which is open to international investors and conducive to business growth. At the same time, I expect that the new measures will help raise the UAE’s global profile as a preferred investment destination, positively impact the local business environment and ultimately enhance the country’s economic competitiveness.”
Dubai has always been well-known for its high-class property investments. The latest cabinet decision will cement Dubai’s image as the most investor-friendly city in the region and boost real estate in Dubai.