Last year, 164 billion dirhams of remittances were sent abroad, according to the UAE Central Bank. “The goal of keeping more of this capital in the UAE and spent in the local economy is a good one,” says Lynnette Abad, Director of Research & Data of Propertyfinder Group, who predicts more white collar workers will be attracted to working in the UAE, and more money will be spent domestically instead of abroad.
The percentage contribution of the white-collar workforce in Dubai’s total population declined from 44 per cent in 2014 to 40 per cent in 2016, according to Dubai Statistics Center. These numbers will most likely rebound after the visa legislation is initiated, Abad says.
By now, most in the UAE are familiar with the new proposed legislation introducing longer term limits on residency visas and the legalisation of 100% foreign ownership of companies in the UAE, expected to be implemented by the end of this year.
“With a slow-moving market and high amount of housing supply being released over the next few years, these legislative actions could not have come at a better time,” says Lynnette Abad, Director, Research & Data at PropertyfinderGroup.
Abad forecasts that the changes in the visa and ownership rules will have a rebound effect on white collar workers, and draw capital into the UAE, rather than out of it. The new legislation will have an indirect effect on the real estate industry as it will naturally bring more white-collar workers into the UAE who can afford to purchase property. It is clear that the approach to this legislation is to entice talent, and spur entrepreneurship, startups, and foreign investment.
“The reforms will give expat residents confidence to invest in property due to the assurance they may remain in the country for a longer period of time,” Abad says. “Someone who would normally buy a property in their home country might think twice and decide to buy their home in the UAE, as they will now feel more stable and part of a community with a long-term visa.”
Currently, 70 percent of expats rent in Dubai, partially due to the uncertainty of not knowing how long they plan on staying here.
GCC neighbours like Bahrain, Kuwait, and Saudi Arabia have passed legislation in recent years supporting 100% foreign ownership of companies, so the UAE is part of a growing trend in the region. If the 100% foreign ownership of companies comes with no strings attached and no exclusion of industries, then this will have a massive impact on direct foreign investment in the UAE and stimulate the economy as a whole, including the real estate sector. However, if there are constraints and exclusions attached, it will water down the effect on the market.