- Article in Emirates Business 24/7
The UAE real estate sector must have more co-ordination between regulatory bodies in different emirates and the proposed federal real estate regulatory body to tackle various issues concerning the sector, analysts said.
“What the government needs to do is have real estate regulatory bodies of each emirate to liaise with one central regulatory body and the federal immigration department to oversee real estate issues such as visa regulations,” said Chet Riley, Vice-President, Equities Real Estate Analyst, Nomura International.
“Three years ago, people were trying to encourage buyers through visa offers. When the market got overheated, visa rules were tightened. Today there is a lot of confusion over the rules and regulations in the real estate sector regarding visas.”
He said: “A central regulatory body for the oversight of issues such as immigration is probably required to ensure the consistent application of immigration law and prevent forms of regulatory arbitrage related to real estate.
“There are aspects of regulations that we think should remain at the emirate level, which could include dispute resolutions and arbitration, planning consents and associated municipality issues such as infrastructural requirements.”
Emirates Business reported yesterday that the Ajman Real Estate Regulatory Agency (Arra) had submitted a proposal to federal authorities to overhaul current property visa regulations. Arra wants to remove property values, fixed incomes or compulsory exits as criteria for granting or renewing six-month residency visas.
Ajman’s regulatory body put in a five-point submission and said it should be possible to renew visas every six months for up to three years without the need to leave the country.
Parvees Gafur, Executive Vice-President – Sales, Gowealthy real estate, said: “Co-ordinated efforts are needed between real estate regulatory bodies in various emirates of the country and a central regulatory body that will work in close connection with the immigration department of the country to tackle visa issues of real estate investors.”
“We would even recommend that the immigration department allocate representative resources to each of the real estate regulatory bodies to provide an integrated service package and assist investors with their visa queries promptly,” said Gafur.
He said: “At an operational level, a decentralised approach with individual real estate bodies within each emirate will be far more efficient and effective to govern real estate regulations as each emirate has different challenges, visions and focus.
“However, a central authority established to monitor the progress of individual bodies will help in guiding various factions towards overall positioning of the emirate to occupy a strategic place within the global economic platform.
“Such an entity can facilitate best practices and federal-local interactions that can have a positive influence on shaping the overall identity of the emirate.”
Farina Ahmed, CEO, BSEL Infrastructure, an Ajman developer, said: “Any co-ordinated effort taken to bridge gaps in the real estate sector is a welcome move. I believe there should be co-ordinated efforts among different emirates’ regulatory bodies and one central body.”
Real estate analysts in the UAE have welcomed Arra’s initiative to submit a proposal to the federal government.
Mohanad Alwadiya, Managing Director, Harbor Real Estate, said: “The Arra initiative is a positive move towards attracting foreign investment and boosting the level of confidence among all the relevant stakeholders in the property industry.”
Iseeb Rehman, Managing Director, Sherwoods Independent Property Consultants, said: “The proposal is a positive move. Any effort taken to resolve real estate issues by real estate regulatory bodies is a step in the right direction.”
“In Ajman the real estate sector has been seeing some swift and timely action. The feedback from clients and developers is that Arra is resolving issues quickly and trying to provide clarity.
“Conditions for residing in the UAE is a federal issue, but they need to consider current market climate versus current income situation. Regulators need to be realistic and at the same time appealing to people looking to come to the UAE. If conditions become too stringent it will be harder for people to comply.”
Riley said: “Arra and Rera [Dubai Real Estate Regulatory Authority] are being relatively proactive in the area of co-ordination, which is a positive step and it is very important to continue dialogues among the six emirates. Under the present circumstances, Arra’s initiative, though in the initial stages, is a step in the right direction. We welcome the initiative to establish visa regulations and think this should be set at a federal level in conjunction with immigration authorities to remove any confusion. Currently, the major challenge faced by the region is one of customer confidence, be it investors, end users or even corporate entities.”
“It would, however, be difficult to have a minimum price level set across the emirates given the disparity of pricing in each area. The key issue that we see is the ability of the applicant to support themselves and their dependants, rather than the value of the property, if they were looking to reside in the country,” said Riley.
“Ajman is a different market from Dubai. Imposing limits across the board will be difficult in all the emirates,” he said.
Gafur said: “The proposal is a first step towards addressing visa issues. If implemented, steps such as these will give further impetus to a larger segment of investors and business entities that have long-term business plans in the region.”
“The minimum criteria for property investment should be looked into very closely and the medium- to long-term impacts of such steps have to be assessed using situational planning and forecasting studies. Investment strata-led visa restrictions, if planned efficiently, could have a positive influence in the market by ensuring the right kind of investments and investors are at play over substantial and optimum time periods.”
The BSEL CEO said: “The six-month visa regulation is not enough for an investor in Ajman. Residency permit should be for three years. With six months’ visa tenure, investors lose faith in the real estate market in Ajman.”
Alwadiya said the property market recovery in the UAE needs to be supported by solid economic drivers and regulations. “The visa issue is one that has placed a lot of pressure on recently retrenched expatriates when trying to find alternative employment or heading home. The Department of Naturalisation and Residency has implemented a law which will grant six-month renewable visa to those who invest in freehold property in the UAE.”
“While this is a positive move to assure potential investors, the six-month period is considered to be too limited a duration to be meaningful to many investors. It is thought the federal law should match the general residency law whereby investors will be eligible for a three-year residency visa provided they visited the emirate at least once every six months. This approach will appear to be far more appealing and enticing for investors,” said Alwadiya.
Gafur said: “Confidence-building measures at the federal and regulatory level is paramount in bringing back faith to the market and spur medium- to long-term investments into the country.”
“Fundamentally, the long-term success of an economy is influenced primarily by the potential of the economy to s
ustain itself on the basis of its inherent resources and the faith of internal and external stakeholders.
“And this faith is determined by the strength of relevant regulatory systems that shape, manage and control various segments of industry that spur the economy, such as legal systems, banking and financial entities and industry bodies.”
Gafur said with substantially reduced market prices for properties and prevailing investor sentiment as the background, a planned and phased overhaul of visa regulations is critical to the long-term success of the emirate.
“Visa regulation changes can have immediate and substantial effects on the long-term business and operational sentiment of the investing public and should be approached with extreme care. Ajman has come a long way in stamping its brand of investment potential, especially within the mid-segment of investors from South Asia and the United Kingdom. Unfortunately, this growth has been fraught with teething issues, compounded by the present economic downturn.
“The immediate elements that need to be looked into would be infrastructure – power requirements, for example – and further clarity in regulatory and legal frameworks, especially within the real estate sector,” he said.