The regional real estate, construction and hospitality sectors have been turned upside down over the last two years, with Covid-19 bringing these sectors to a halt. The impact of the pandemic remains, however, the resurrection of these vital sectors across the region is a welcome relief because they support the development of modern cities, which in turn have attracted commerce and tourism to the Middle East and North Africa.
This latest edition of Law Update, provides vital insights, updates and commentary on the latest trends taking shape across the real estate, construction, hotels and leisure sectors. The articles within this edition cover a broad range of topics, from what’s next for real estate in Dubai, to commentary on Saudi real estate, a market that is set to become the main bedrock of the region for years ahead. You will find articles on reforming real estate laws in Qatar, foreign investment and ownership in Oman, and mitigating risks on hotel construction projects and the lessons learnt from Covid.Read the full report
On Monday, 1 July, 2019, His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, announced that “a resolution allowing 100 per cent foreign ownership in UAE’s 122 economic sectors [was adopted], giving foreigners 100 per cent ownership of their investment. The sectors include agriculture, manufacturing… transportation, arts, construction, entertainment among others.”
This welcomed update indicates the issuance of the much-awaited ‘positive list’ pursuant to the Federal Decree Law No. 19 of 2018 (“Decree”) permitting 100% foreign ownership by global investors in the UAE mainland.
While the said Decree provided a negative list for sectors in which an FDI application may not be made, it authorised the Cabinet to separately issue a positive list of sectors in which an FDI application would be welcomed.
The ‘positive list’ covers 122 activities in the agriculture, manufacturing, education, health and services sectors. The ‘positive list’ also prescribes a minimum share capital for certain activities and a requirement to register with the Tawteen Partners Club for select activities as well.
|Hospitals||Share Capital value: AED 100,000,000|
|Medical and dental clinics||Share Capital value in accordance with applicable laws|
|Pre-primary education, primary education, secondary education, higher education and other types of education.||Share Capital value in accordance with applicable laws|
|Retail sale in non-specialised stores (this can include hypermarkets).||Share Capital value: AED 100,000,000|
|Land and sea transport of goods.||Share Capital value in accordance with applicable laws|
|51 manufacturing activities including the production of food products (except of bakery products, dairy products and animal feeds).||Share Capital value ranges between AED 3,000,000 – AED 100,000,000|
|Civil engineering and construction of buildings||Share Capital value in accordance with applicable laws|
The issuance of the federal ‘positive list’ indicates that the other UAE Emirates may begin accepting applications for businesses that fall within the said list. This will mean a more uniform application of the Decree across the Emirates.
The Emirate of Dubai, as of the date of this article, was the only Emirate where the Department of Economic Development (DED) accepted applications made by businesses pursuant to the Decree. The DED in Dubai has registered new companies and converted existing companies to become 100% foreign owned. The applications to the DED in Dubai have been assessed on a case-by-case basis, based on each application’s individual merits. Common criteria included the size of the investment in the UAE and the number of employees to be hired by the business. The DED also requested companies applying for 100% foreign ownership to appoint a UAE national (or a company owned by UAE nationals) to act as a local service agent for immigration purposes.
The approach to activities which do not fall within the ‘negative list’ or the ‘positive list’, such as specialised retail, real estate activities, F&B and operating hotels, is not yet clear. It appears as though approvals in this grey area of activities may be granted on a case-by-case basis at the discretion of the relevant authorities.
Further updates will be issued in once the DED in the various Emirates determine the formal procedure for applications in the sectors listed under the said resolution.