The UAE government said it had extended visas for foreign property buyers to three years from the existing six months, as the Gulf state looks to boost investment in its struggling property market.

“The UAE federal cabinet decision ... will significantly enhance investor confidence and drive the growth of the country’s property sector,” Mohammed Alabbar, chairman of Dubai’s Emaar Properties, said in a statement.

Property stocks rose as a result of Tuesday’s announcement with Emaar rising 1.7 percent by 0930 GMT and builder Arabtec’s shares gaining 1.6 percent.

In Abu Dhabi, Aldar Properties, the emirate’s largest developer by market value, increased 0.8 percent.

Currently, foreign owners of property worth more than AED1 million ($272,300) in the UAE have to renew their visa every six months.

In a research note, Citigroup said the decision could significantly boost demand in Dubai’s residential real estate sector, where the promise of a long-term residency visa was a major driver of second-home purchases during the boom prior to mid-2008.

“However, the overall impact on the property market will likely be somewhat muted by oversupply issues that are being exacerbated by the ongoing completion of new properties,” analyst Farouk Soussa said in the note.

Dubai’s property sector has been hit hard in recent years with billions of dollars worth of projects put on hold or canceled, while prices slumped as much as 60 percent largely due to lack of buyers in the market.

The emirate’s Real Estate Regulatory Authority (RERA) said earlier this year it canceled as many as 217 registered property projects over the past two years.

RERA has been taken a number of steps to improve regulation and transparency of Dubai’s property sector, such as laws for property maintenance, but more needs to be done to tempt overseas investors back to Dubai after the collapse.

More clarity on the mortgage law and visa regulations are among further steps that need to be introduced, analysts have said.