UAE government extends the visa duration from six months to three years for foreign investors who own properties worth equal to or greater than AED1.0 million; it would be a multiple entry visit-visa, however they have to exit the country every six months.
The timing of the decision is very significant amid unrest in the regional countries; visa extension will allure the regional affluent, especially. From outside region, real estate investor mainly from Pakistan, India & United Kingdom will likely to take the advantage of the visa extension rule.
According to Dubai’s Real Estate Regulatory Authority (RERA), the top three real estate investors are Indian, Pakistani and UK nationals in total 4Q2010 property transactions. During earlier Dubai real estate boom which busted in 3Q2008, main investors in the real estate of Dubai were from Pakistan, India, Iran & United Kingdom.
Due to more developed, better infrastructure & having competitive advantages, Dubai's real estate will get more attraction while Abu Dhabi will also attract investors to tap its growth. Although, i don't foresee up-tick in Dubai's real estate prices because of large property overhang & incremental supply.
Affluent foreign longer term residents would increase the economic activity in the country, more positively, if they transfer their wealth in the deposit vaults of UAE banks, it could increase the bank’s deposits which already surged by 7.5% in Jan-April 2011, added 79 billion AED in deposits in 4M2011 compared with 67 billion AED in all of 2010.
These influx of deposits will increase the already high liquidity present in the UAE financial system, measured by broad money growth -M2, which is increased by 8.15% in just first four months of the year, Jan-April 2011, in result benchmark three month UAE interbank offered rates (EIBOR) at seven year low, today reached at 1.563%. High liquidity could pave the way for spur in advances growth from banking sector.
Muhammad Irfan Khaliq is an Investment Analyst, can be reached at hakaiun@gmail.com
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