How “Golden Visas” Assisted in Dubai’s Economic Rebound

Beyond the commercial property boom, signs of Dubai’s resurgence are evident across various sectors.

Amid the height of the global pandemic, Dubai faced a dual threat: an exodus of expatriates and increasing competition from neighbouring business hubs. However, the government’s decision to open up has proven instrumental in steering the city away from the commercial real estate crisis gripping other parts of the world.

The United Arab Emirates, including Dubai, embarked on a departure from its traditional economic model prevalent in the oil-rich region, which tied residency to employment. Notable reforms included expanding eligibility for long-term ‘golden’ visas, eliminating the requirement for companies to have a majority local partner, transitioning to a Monday-Friday working week, and legalizing cohabitation for unmarried couples.

The objective behind these policy shifts was to transform Dubai’s transient reputation by attracting expatriates and fostering an environment conducive to business setup. The results speak volumes, with data released by authorities indicating a substantial turnaround. In 2023, the city witnessed a remarkable 30% surge in active business licenses compared to 2022, marking a staggering 75% increase from 2021 levels.

Moreover, Dubai International Financial Centre reported a 26% rise in registered entities in 2023 compared to the previous year, with the free zone experiencing a 15% uptick in employment, now totalling approximately 41,600 individuals.

The impact of these reforms is most palpable in Dubai’s commercial real estate sector. Unlike other global cities where demand has dwindled, occupancy rates in Dubai’s financial district, particularly in the Dubai International Financial Centre, remain at record highs, accompanied by rising rents.

Notably, one of the city’s iconic towers, located in the DIFC, is poised for sale with a potential valuation of up to $1.5 billion. This property stands out as among Brookfield’s top-performing assets globally, juxtaposed against the backdrop of falling occupancy rates in other prime locations like Los Angeles and London’s Canary Wharf.

Prathyusha Gurrapu, head of research and advisory at property firm Cushman & Wakefield Core, emphasized the divergence of Dubai’s real estate market from global trends. While many Western markets grapple with hybrid or remote work models, Dubai experiences a surge in demand, with a significant portion of the workforce returning to offices.

External factors have also contributed to Dubai’s resurgence. Relocation of bankers from Asia to evade lockdowns, affluent Russians seeking to safeguard assets amidst geopolitical tensions, an influx of crypto investors, wealthy Indians in search of secondary residences, and young job seekers from Europe and the wider Middle East have bolstered arrivals.

Ryan Bohl, a senior Middle East & North Africa analyst at Rane Network, underscored the significant impact of holistic reforms. He highlighted the pressure on neighbouring countries like Saudi Arabia and Qatar to liberalize their economies to compete with Dubai’s economic freedom.

Beyond the commercial property boom, signs of Dubai’s resurgence are evident across various sectors. Lengthy waiting lists for schools and clubs, congested key roads, and ambitious infrastructure projects like the $5 billion public transit initiative reflect the city’s trajectory towards growth.

Despite the positive momentum, challenges persist. The readiness of infrastructure, housing, lifestyle amenities, and administrative capacities to accommodate an influx of foreign white-collar workers and their families remains a pressing question. Additionally, the possibility of individuals abandoning Dubai for other destinations, such as Riyadh, underscores the need for continuous adaptation and improvement.

The allure of the Middle East’s substantial oil wealth, particularly in Abu Dhabi, has attracted multinational firms, driving Dubai’s appeal as a regional business hub. Despite the introduction of corporate tax, the city continues to attract significant investment, facilitating the setup of numerous companies.

However, hurdles such as the absence of retirement programs and comprehensive health insurance plans, coupled with the introduction of value-added taxes, pose challenges to Dubai’s ability to retain foreigners. The delicate balance between fostering a competitive advantage and rationalizing budgets through increased taxation remains a focal point for policymakers.