UAE citizenship initiative is a game changer, set to benefit property market and knowledge economy
The UAE’s initiative to grant citizenship to expatriates is a game-changer that sets the foundation for sustained growth, boosting the country’s knowledge based-economy and its property market.
The move will help local businesses attract and retain top talent and there are potential spillovers for the financial sector in the country, with more savings remaining in the UAE rather than being repatriated, according to analysts.
"It is a positive move that is a continuation of the recent reform agenda aimed at attracting and retaining foreign talent and investment," said Scott Livermore, chief economist and managing director at Oxford Economics. "It potentially accelerates contribution foreigners make to the UAE economy."
"The most immediate impact is likely to be felt in real estate as it increases the likelihood that individuals remain in the UAE for the long term and hence invest in property."
On Saturday, the UAE announced it made unprecedented legal amendments that allow selected expatriates to obtain citizenship with the aim of attracting talent. Sheikh Mohammed bin Rashid, Prime Minister and Ruler of Dubai, laid out the process for investors, specialised talents and professionals including scientists, doctors, engineers, artists, authors and their families to become citizens of the Arab world’s second-largest economy.
The UAE cabinet, local Emiri courts and executive councils will nominate those eligible for citizenship under criteria set for each category.
The new development "sets the base for more sustained economic growth of the country", said Jaap Meijer, managing director and head of research at Dubai-based investment bank Arqaam Capital. "It’s a historical move and could be further liberalised down the line."
Countries such as the UK and some European nations have benefitted in terms of long-term retention of talent and investment flows, he said, adding that the UAE has a very strong passport and that makes it very attractive for skilled professionals.
A UAE passport holder can travel to 173 countries without the need for pre-visa requirements and is ranked as the 16th strongest in the world by citizenship firm Henley and Partners, in its Passport Index of 2021.
"While it will help many people who have played a significant role in the development of the country through the years … it will also help to attract new talent," said Dr Azad Moopen, founder chairman and managing director of Aster DM Healthcare in the UAE. "This will further propel the UAE to be one among the most progressive countries in the world."
The citizenship initiative is part of the government’s progressive efforts to transform society and the economy, while strengthening its foundation to achieve its 50-year growth targets. In recent months, the country's leadership has made several changes to legislation related to immigration and commerce.
These include amendments to the commercial companies’ law that allows 100 per cent foreign ownership of businesses and commercial transactions legislation such as the decriminalisation of cheques. The government has also amended bankruptcy and consumer protection laws.
"The biggest impact will probably be on the knowledge- based [economic] sectors … and these are more of a focus of the UAE’s growth strategy," Mr Livermore said.
"To stimulate growth in these sectors, the UAE needs to attract – and as importantly retain – talent and that has been the focus of much of the recent reforms in the UAE."
Carla Slim, Standard Chartered's Middle East North Africa and Pakistan economist said the latest measures are part and parcel of the country's goal to "nurture new economic growth drivers, such as innovation and technology", over from the traditional ones.
"This will have the natural consequence of expanding the high-skilled labour force," she said.
The real estate sector which slowed on the back of a slump in oil prices in 2014 and faced further headwinds in recent quarters on oversupply concerns and the Covid-19 pandemic, is likely to see a rise in demand from long-term investors, according to Farhad Azizi, chief executive of Azizi Developments.
Taimoor Labib, founding partner and head of Mena at Affirma Capital, said the latest development "could help revive demand over the medium-term in the housing and stock markets particularly after the expected boost from this year’s World Expo in Dubai".