The views of the author are his own and don’t necessarily reflect those of IMI.
As Emirati authorities keep lowering the bar, the scheme will soon regress from a status symbol to a run-of-the-mill residence permit.
An Overhyped PR Gimmick
Much like any other sweeping reform rolled out by the United Arab Emirates, the 10-year golden visa was primarily intended to make headlines and create a worldwide buzz as opposed to being true to form. This initiative is far from a gesture of goodwill towards those with a demonstrably genuine and long-term commitment to the gulf nation. Many second and third-generation expatriates from middle-class backgrounds still have no real sense of belonging in their place of birth and remain at the mercy of a local sponsor in order to continue residing there. The scheme is aimed at encouraging newcomers with deep pockets to draw in foreign direct investment (FDI) hand over fist.
On the face of it, the eligibility criteria for real estate investors are fairly clear-cut and no-nonsense: purchase one or multiple properties worth at least AED 2 million ($544,515) to qualify. The General Directorate of Residency and Foreigners Affairs (GDRFA) went into overdrive during Expo 2020, issuing an unprecedented number of golden visas at a time when the world’s eyes were on Dubai. Regular people, like university professors and social workers, were also thrown into the mix for good measure and to reflect an altruistic component.
Many Western participants had threatened to boycott the Expo over the UAE’s treatment of migrant workers. As such, rewarding select foreigners who were instrumental in the sheikhdom’s modernization drive was a means of polishing the country’s image with respect to human rights. Nominees are customarily rung up by local immigration police and invited for a photo-op with the Major General or his deputy-in-command, after which cordial handshakes and smiles do the rounds on social media. Public officials have also been handing out golden visas galore to A-list film stars and high-profile sports figures with no conceivable ties or sentimental attachment to the country.
National newspapers are awash with testimonials from the latest beneficiaries heaping praise on the ruler of Dubai, whose brainchild the residency program happens to be. Indenturing affluent immigrants to the UAE for a decade instead of the standard two-year period raises the stakes for those who don’t toe the line and conduct themselves in accordance with unwritten government dictates.
From the standpoint of policymakers, this initiative is not so much an act of benevolence as a ploy to maintain the existing social order. Golden visa holders will now feel like they have a lot more to lose by deviating from officially accepted discourse in a country that does not entertain free speech or independent thinking.
An Unsafe and Unsound Investment
Granting expatriates an extended stay in the UAE was also meant to breathe life back into the country’s real estate industry. Admittedly, inflationary pressure generated by pre-Expo hysteria coupled with the government’s robust handling of the pandemic has led to a fleeting uptick in demand for residential as well as commercial units. Golden visas turbo charge the reinvigorated appetite for this asset class among domestic and overseas buyers alike.
But doubts over the scheme’s longevity linger and it’s not unreasonable to question whether it might be subject to unfavorable amendments in the near future. The ruling elite in Abu Dhabi has long been at odds with Dubai’s relentless economic overtures vis-à-vis the outside world. In light of the capital’s staunchly conservative crown prince being appointed head of state last month, it would come as no surprise to see the application procedure turn far more stringent and bureaucratic in short order.
On that note, investors ought to exercise serious precaution when plowing their hard-earned capital into the UAE, or any hereditary monarchy for that matter. Legislation pertaining to all sectors of the economy is passed arbitrarily at the whim of one man, for better or worse. The absence of any semblance of a public sphere in which to air personal grievances and misgivings over ill-thought-out decisions means essentially agreeing to a “play by the rules or get out” doctrine. Intellectuals and artists, who have a proclivity for outspokenness and expressing themselves freely, will struggle to ply their trade in such a circumscribed environment.
Amid the sheer jubilation over joining the golden visa club, all bets are off concerning the fate of its members once ten years have elapsed. Naturalization is almost certainly out of the question in a country whose roughly one million natives are already a burden on fast-depleting state coffers as the globe gradually weans itself off fossil fuels. The introduction of corporate taxes from 2023 onwards, as well as efforts to transition federal government employees into the private sector, are a harbinger of upcoming frugality in a post-oil era.
Despite having moved with the times more aptly than most other GCC states, tribal laws continue to reign supreme in the UAE while demagoguery remains rife by virtue of its lopsided ethnic makeup. Seeing as indigenous people are in the minority, it is incumbent upon the government to pamper their own countrymen at the expense of non-citizens. Most accredited developers for the golden visa program are affiliated with the state and, thereby, immune to legal proceedings in the event of deals going sour or contractual disputes arising.
Mediocre Quality of Life
Life in Dubai, and by extension the UAE, is actually quite mundane. For starters, the unbearable heat over the course of nine months a year makes it impractical to spend time outdoors. Precious few leisure-time activities, besides fine dining and meandering aimlessly around shopping malls, are available. The extreme weather also has ramifications on residents’ well-being since it acts as a major impediment to getting adequate exercise. The UAE has one of the world’s highest per capita rates of diabetes, obesity, and juvenile cardiac arrests. The region’s aridity also necessitates importing all basic foodstuffs, which is infused with artificial preservatives detrimental to one’s health.
Insofar as healthcare is concerned, the caliber of local practitioners leaves a lot to be desired. Most residents prefer to undergo medical treatment abroad for this very reason, which takes precedence over the cost factor. The Dubai Health Authority (DHA) has been notoriously lax in issuing licenses to doctors from overseas – many of whom were later found to have forged their diplomas and been involved in botched surgeries.
The UAE often prides itself on playing host to over 200 nationalities. While this is true on paper, the ground reality feels starkly different. Multiculturalism is, by no means, synonymous with being a melting pot of cultures. Overrepresented groups of unskilled workers from South Asia and the Philippines account for the lion’s share of the population. Reliance on foreign labor also undermines the UAE’s nationhood to the point that one derives no cultural enrichment from living there. Street festivities to mark national holidays do not take place, and museums to familiarize outsiders with Emirati heritage are few and far between. English and Hindi are much more widely spoken than Arabic.
Even promoting so-called “staycations” and weekend getaways has proven a hard sell since the country is not exactly blessed with diverse topography or an abundance of nature. The landscape is such that nothing but endless patches of sand make up the outskirts of urban centers, with very few attractions or historical sites worthy of setting out to explore. Unlike EU residents, who benefit from unfettered access and borderless travel to fellow member states, GCC residents are offered no such facility. Most UAE-based expats still need a separate visa to frequent neighboring countries and can only do so by plane or car. There is still no railway network offering a more scenic journey akin to those of Europe or Central Asia.
Keep Your Options Open
Those who have their hearts set on permanent relocation to the UAE should take a long-haul view of how the federation’s fortunes will fare in the next five to ten years rather than contenting themselves with the way things stand at present. If the war in Ukraine has taught us anything, it is that national security can never be taken for granted and runs the risk of coming undone at the stroke of an adversary’s pen. As tensions intensify between Iran and Israel, the UAE may well find itself in the crosshairs of an all-out confrontation or proxy battle. Emiratis with Persian roots are routinely looked down on as second-class citizens and ostracized for speaking Farsi – a pretext not dissimilar to Russia’s motive for launching their military operation in late February.
Internal affairs aside, Saudi Arabia has made no bones of wanting to turn its capital into the Middle East’s commercial hub. Multinational firms have been given an ultimatum to shift their main premises from Dubai to Riyadh by the end of 2023 or risk losing access to a 36-million-strong market. The Kingdom’s assertiveness is also permeating the tourism and aviation space, in which it seeks to become a major player. According to a recent Bloomberg article, the Saudis have offered foreign carriers financial incentives as a means of enhancing direct air connectivity to their target markets. Should they succeed on all three fronts in the buildup to Vision 2030, Dubai’s raison d’être will cease to be tenable.
Banking in the UAE is set to become more onerous for self-employed individuals and SMEs following the country’s reinstatement on the Financial Action Task Force (FATF) grey list. Those hoping to procure golden visas through the entrepreneurial path will undoubtedly encounter their fair share of hurdles while opening corporate accounts, applying for credit lines, and carrying out cross-border transactions. Being placed under intense scrutiny for alleged involvement in money laundering not only brings a certain level of disrepute to the nation but also has far-reaching implications on the ease of doing business there.
Simply put, Dubai is no longer a safe haven for questionable patrons and financiers to park their undeclared funds or set up shell companies. The UAE has long been governed in a corporation-like manner and today finds itself facing severe headwinds from allies and foes in equal measure.
The question savvy investors should be asking themselves is whether vying for a stake in “Dubai Inc.” will reap long-run dividends substantial enough to forgo other lucrative opportunities and fail to hedge their portfolios. Bottom line: Golden visas in the UAE are not a guarantor of indefinite leave to remain. Anyone who falls afoul of the gulf country’s draconian laws or out of favor with the regime is fair game for expulsion.