_The UAE Cabinet Finalises 100% Foreign Ownership Laws
The UAE Cabinet has announced the list of eligible sectors and activities; which are permitted for 100% foreign ownership within the UAE. This is following the initial legislation announcement in late May 2018 and the publication in the Official Gazette in late 2018 of the list of sectors not eligible for 100% foreign ownership.
A total of 13 sectors, comprising of 122 economic activities, were approved for 100% foreign ownership. However, it is important to note that local governments will have the ability to determine the cap on the percentage of foreign ownership for these activities.
NON-EXHAUSTIVE LIST OF LEGIBLE AND INELIGIBLE SECTORS
These developments will be welcomed by incumbent firms in the UAE and also potential new entrants to the market who are looking to leverage the UAE’s status as a global and regional hub to access not only GCC countries but also the wider MEASA region. These changes will encourage the movement of high-value human capital, including, but not limited to medical, scientific and research professionals, innovators and investors and help the country establish itself as the preferred destination for multinational firms.
The changes are likely to have a more direct and immediate impact on the commercial sector and eventually the residential sector. The manufacturing and logistics sectors are likely to witness the highest level of demand as a result of these legislative changes.
In the commercial sector, occupiers operating in the sectors announced which are eligible for 100% foreign and have chosen to set up in a Free Zone may have to re-examine this decision and alongside this, their real estate requirements. Whilst this may mean fewer differentiators between Free Zone and Non-Free Zone commercial space, it is important to note that Free Zones have more benefits than just 100% ownership such as their tax advantages and exemptions from customs and excise duties, therefore any decisions must be carefully considered. Furthermore, if this announcement leads new corporate entrants to the UAE we will in turn see greater demand for commercial office space in both Non-Free Zone and Free Zone locations.
Finally, with regards to the residential sector, if this announcement leads to the creation of additional employment we are likely to see greater demand trickle into the residential sector. This announcement combined with recent easing of long term visa regulations allowing for visas of up to 10 years for property investments creates a very valuable proposition for investors and employees alike.
This announcement is only one of a recent raft, where new laws ratified by the federal or local governments, with the aim to increase the competitiveness of the UAE’s economy.