The recent move is part of a series of ambitious plans to attract foreign investment to the UAE
In its latest efforts to attract foreign investment, the United Arab Emirate is preparing a draft law that would allow foreigners to own up to 100 percent of businesses in the maritime industry in accordance with specific criteria.
Infrastructure Development Minister and chairman of the UAE Federal Transport Authority Abdullah Al Nuaimi said last week that the legislation, which is expected to pass in the first half of 2020, will address areas ranging from vessel ownership to dispute resolution.
The UAE has long capped foreign ownership in local companies at 49 percent, with the exception of economic free zones, which were established countrywide in a bid to satisfy foreign investors.
But the recent move comes following a cabinet decision on July 2 which allows the country’s seven emirates to set foreign ownership limits across a number of sectors, with up to 122 economic activities across 13 sectors eligible for 100 percent foreign ownership, including in the renewable energy, space, agriculture and manufacturing industry. The decision also includes hospitality, information and communications, healthcare, art and entertainment, construction, scientific, technical and educational activities and more.
The government of Abu Dhabi also announced that all foreigners will now be entitled to own the freehold of land and properties which they purchase in investment zones.
Previously, this was only permitted for UAE and GCC nationals and the move has been described as a “game changer”. As part of the changes, residential units in the zones will be registered under Abu Dhabi’s freehold law, with property ownership deeds issued to investors.
Foreign investors in Abu Dhabi property were formerly generally limited to leasehold arrangements with 99-year leases.
The move was hailed by Aldar Properties with CEO Talal Al Dhiyebi stating: “This is a game-changing announcement for Abu Dhabi, and we applaud yet another insightful policy decision by the government that allows expatriates to be able to buy freehold properties in investment zones.
“This will not only further drive the maturity of Abu Dhabi’s real estate market, but will also increase transparency and provide clarity of title for property owners, increasing long-term investment, injecting more liquidity into the market and encouraging longer term residency.”
Earlier this year, Aldar launched its Alreeman project in Al Shamka, an investment zone located adjacent to Abu Dhabi Airport.
Al Dhiyebi added: “The latest changes not only boost the real estate market but also have far-reaching impacts on the broader economy, and further increase Abu Dhabi’s diversification to non-hydrocarbon industries.
“We are already reaping the rewards of the recent initiatives and seeing a positive shift in sentiment, evident by strong sales of over AED2bn ($544m) achieved for our two latest plot developments, Alreeman and Lea, which demonstrates strength and resilience in the market.”
Last year, the federal government made sweeping changes to visa laws, which included granting long-term residency to UAE property owners, as well as retirement visas and 100 percent ownership of businesses for foreign investors.
Abu Dhabi government has also launched the accelerators programme Ghadan 21 which aims to boost competitiveness of Abu Dhabi businesses and paves the way for a more positive investment environment in the longer term.
The kingdom is also relaxing ownership laws as it removed a cap on ownership of publicly traded companies for foreign strategic investors, allowing international investors to have controlling stakes in sectors ranging from banking to petrochemicals.
Riyadh-based Regulator Capital Market Authority (CMA) said foreign strategic investors no longer have maximum or minimum limits on the ownership of listed companies, for which the limit was previously 49 percent. The instructions don’t apply to qualified foreign investors, however.
Saudi Arabia began opening up its market four years ago when it allowed foreigners to trade stocks directly. It has been working towards diversifying its oil-dependent economy following the drop in energy prices.
“Saudi Arabia, increasingly, is open for business, not just for local investors but for international investors,” CMA chairman Mohammed El Kuwaiz told Bloomberg.
“It is ironic, I would say, that Saudi Arabia is rapidly opening up and embracing the world in a period when the rest of the world seems to be closing down.”
While the CMA has removed the cap, limits by other regulators or companies continue to apply, with authorities in sectors such as banking, insurance and telecommunications still having to approve deals that surpass a pre-established threshold.
The limits don’t prohibit investors from going beyond them, “but require approval for investors to build stakes larger than that threshold. And that applies for both Saudis and non-Saudis,’’ from now on, El Kuwaiz told Bloomberg.