How Dubai’s retirement visa may shape the future of the UAE’s real estate market
Experts, developers agree that new retirement visa will create new opportunities for residential real estate markets in the UAE
For a sluggish real estate market attempting to recover from the blow of the coronavirus pandemic, the announcement of the retirement visa was perfectly timed for Dubai.
Experts and developers alike agree that the implications are big, with new sub-sectors being created in the property market focused on would-be buyers approaching retirement age.
One of the three conditions through which expats can be eligible for the retirement visa is for them to own property valued at over AED2 million (close to $550,000).
Real estate developers now have a previously inaccessible market, that of 55 years old and over expats, within their reach.
Retire in Dubai was launched earlier this month and so it is too soon to have solid data on its impact, but the prospects for real estate stakeholders is promising.
In its first phase, this visa program is only open to existing residents of the UAE.
Haider Tuaima, head of real estate research at consulting and advisory group ValuStrat, quoting a figure from the Dubai Statistics Centre, says there are 170,000 people in Dubai who are over 55 years old, with expats representing almost 92 percent of the population in the emirate.
Using these figures, Tuaima says: “I would say anywhere between 100,000 and 150,000 are expats so that’s quite a catchment market for this particular visa opportunity… If only 10 percent of them meet one of the criteria for the visa, we are talking about 10,000-15,000 properties.”
Beyond the number of existing retirees, 12 percent of Dubai’s population is between 45 and 54 years old and so is approaching retirement age, according to Gabriella De La Torre, director at real estate and investment organisation CBRE Middle East.
Another potential market segment of resident expats are those who have set up businesses in Dubai, following the launch of the long-term resident visa, or Gold visa, in mid-2019.
There has been a huge jump in the number of new business licences issued in Dubai from 20,129 licences in 2018 to 38,378 in 2019, says Taimur Khan, associate partner at Knight Frank, a real estate consultancy based in Dubai.
“So those are a lot of people who have a long term stake in Dubai. Having property attached to that as well will be very significant going forward; the market is becoming a lot less transient.”
Once the retirement visa opens up to non-resident expats, the catchment area will be that much wider. Elderly people from northern Europe or the US who would usually spent their golden years somewhere sunny in the Mediterranean or Florida now have Dubai as an option, suggests Declan King, managing director and group head of real estate at ValuStrat.
“The UAE could increasingly be considered as a retirement destination for people currently living and working outside the UAE,” De La Torre agrees, adding: “And in this case, it will be key to further develop and provide the quality of life, services and facilities that are typically required by this target segment.”
An opportunity for developers
All of this has brought a heightened sense of expectation and renewed vitality to property developers in Dubai. Those Arabian Business spoke to agree that they can now market their existing properties to retirees while also developing a whole new world of potential properties relating to the needs of retirees.
When it comes to existing residential properties, De La Torre believes the ones which will be most attractive to retirees are those that “benefit from prime locations, easy access to quality healthcare facilities and which offer community living”. She adds that this depends on several factors including personal taste, income level and family size.
Demand for rest homes and nursing homes is small in the UAE, given that expats’ stay is largely tied to their employment and regional cultural norms dictating that children must take care of their parents in their old age, for the wider retirees market, however, the availability of well-developed rest homes would be among the criteria they require in a retirement destination, thus creating an opportunity for developers.
“It will have implications to the specialized retirement sector that can now start to evolve in the UAE, similar to what we have in western countries,” says King, “In the West, this has become a very successful subsector of the real estate market and stakeholders really play to what we call the grey or silver dollar (the spending capacity of older generations).”
Healthcare facilities are another area of real estate development that can benefit once retirees start settling in the UAE. “We expect that developers targeting this specific segment of the market will focus more and more on incorporating quality healthcare facilities and services within their developments in the form of on-site care or potential tie-ins with key healthcare operators,” says De La Torre.
Khan also expects developers to incorporate specialist clinics, instead of large scale healthcare facilities, within their master plans of properties targeting retirees.
Who else can benefit?
While the retirement visa was recently launched by Dubai’s Department of Tourism and Commerce Marketing, the visa scheme is nationwide and therefore has implications beyond Dubai.
Developers that Arabian Business spoke to generally agree that Dubai will be the most attractive emirate for retirees, given its advanced leisure activities’ offerings and how well connected it is aviation-wise.
However, other emirates are generally considered more affordable than Dubai and hence can compete. “Dubai does have a premium in comparison to other emirates in terms of property ownership so here you can look at some of the northern emirates,” says Khan. “There’s a lot of development activity happening with these markets and the cost of ownership there is a lot cheaper.”
Richard Paul, head of professional services and consultancy at residential and commercial services company Savills Middle East, adds: “Dubai, Abu Dhabi and Ras Al Khaimah could emerge as the preferred destination for people planning to retire in the UAE. The quality of health care, the availability of good quality residential stock, an established social infrastructure and leisure options are among some of the factors that will drive demand across these locations.”
De La Torre believes retirees might opt for the more relaxed leisure and hospitality-driven locations of Ras Al Khaimah and Fujairah where they could relax in the sun in one of the many existing properties.
Whether senior citizens choose to spend their golden years in a community condo in Dubai or a resting home in Abu Dhabi remains to be seen. What is clear is that the UAE’s real estate developers now have fresh opportunities to chase.