Why UAE’s visa overhaul will promote a savings mindset among residents

RELATED: UAE Cabinet approves major overhaul of visa system by September The UAE’s newly announced long-term residency Golden Visas and Green Visas , which are aimed at attracting and retaining global talent and skilled workers, will boost residents’ savings goals and encourage increased spending locally, personal finance experts have said. “The new long-term residency schemes will foster a high sense of stability among UAE residents and families,” says Vijay Valecha, chief investment officer of Century Financial. “It provides a cushion to foreigners living in the UAE who previously had renewable visas valid for only a few years tied to employment.” On Monday, the UAE Cabinet approved one of the biggest overhauls of the visa residency system in years. Amendments were introduced to the Golden Residence Scheme to simplify the eligibility criteria and expand the categories of beneficiaries. This 10-year residence is granted to investors, entrepreneurs, skilled professionals who earn a monthly salary of more than Dh30,000 ($8,167), exceptional talents, scientists and professionals, outstanding students and graduates, property investors, humanitarian pioneers and frontline heroes. A Golden Residence holder can sponsor their family members including spouse and children regardless of their age, and sponsor domestic workers without limiting their number. There is no restriction related to the maximum duration of stay outside the UAE to keep the Golden Residence valid. Meanwhile, a Green Visa provides a five-year residency for skilled employees, without sponsor or employer. The minimum educational level must be a bachelor’s degree or equivalent and the salary should not be less than Dh15,000. The Green Visa for investors provides five-year residency for those establishing or participating in commercial activities. It replaces the previous residence that was valid for two years. When all stages of granting golden residency to different groups are completed, economic growth rate in Dubai is likely to increase by between 0.25 per cent and 1 per cent, driven largely by domestic demand and investment, Dubai’s Department of Economic Development said in 2020. “The initiative will lead to a reduction in the cost of renewing residency permits for families and enterprises, thus boosting their savings,” says Mr Valecha. “Furthermore, since all foreign residents would like to unlock the Golden Visa criteria, they will choose to save more to receive residency permits for longer-term periods.” Golden Visa recipients will have the stability to put down roots in the UAE and this will enable them to make long-term plans and goals, says Rupert Connor, partner at Abacus Financial Consultants. “People may now plan to save to buy property in the UAE as opposed to buying property in their home countries,” he says. “They will also think about the UAE as a place to retire and save more.” Residents across different age groups are initiating discussions with their respective wealth managers to start looking at portfolios and retirement income to suit their current living standards in the UAE, says Sharad Nair, vice chairman of Abalone Capital and group board adviser. “The government has strategically retained a large chunk of capital that could have left the shores of the UAE in the future. This was done when residents were completing their 25 to 30 years’ lifecycle in the UAE,” Mr Nair says. People who want to live in the UAE for the long term will be able to receive a Golden Residence visa for 10 years with a property worth Dh2 million. The new regulations allow the property to be mortgaged , so with a loan-to-value of 75 per cent, a Golden Visa could be yours if you can save Dh500,000 for a property deposit, says Steve Cronin, founder of DeadSimpleSaving.com. “With a clear savings goal to work towards, people are less likely to spend their money on unnecessary items that will further delay their dream of long-term residency." This would enable the mass affluent to obtain a Golden Visa and not only high-net-worth individuals (HNWIs), says Ramzi Khleif, general manager of digital wealth manager StashAway Mena. While HNWIs will continue to benefit from the newly introduced reforms, now even exceptional talents, working professionals, outstanding students , freelancers, self-employed and skilled personnel can be eligible under the umbrella of the Golden and Green Visa initiatives once they apply, Mr Valecha says. “The new visa rules, including ones announced earlier for retirees, create a greater sense of reliability for residents to increase their savings corpus in the UAE where they believe they will spend most of the time going forward, including for their retirement,” says Vikas Arora, chief executive of UAE-based strategic and financial consulting firm CXO Factor. Meanwhile, the new rules will the change the entire dynamics of business and trade in the UAE, says Ali Rao, chief executive of investment conglomerate Elixir Group. “The liberal visa terms and threshold criteria have been introduced to encourage investment in the country,” he says. “With more time to spend in the country, lesser investment amounts, more banking access and availability of off-plan properties, the changes touch multiple sectors such as banking, tourism and real estate. It is the perfect boost in confidence an investor needs from authorities while establishing a business or participating in commercial activities in the UAE.”

Why UAE’s visa overhaul will promote a savings mindset among residents

Foreign residents will choose to save more to receive residency permits for longer-term periods, experts predict