An increase in the number of foreign firms operating in the UAE speaks to the restored business confidence following the government’s handling of the coronavirus pandemic, company bosses have told Arabian Business.
The total number of foreign companies who have picked the UAE for expansion grew by 3.5 percent in December compared to the previous month, according to the country’s National Economic Register (NER).
Real estate developers and companies that deal with high net worth investors said the figure reflects what they are already experiencing in terms of a surge in demand. They attributed it to several factors related to the UAE’s handling of the coronavirus pandemic and its impact on the economy.
“It comes as no surprise to us to see consumer confidence levels, as well as the opening of foreign business, rising significantly in the UAE. This a surge that we are witnessing first hand, reflected in the influx of sales inquiries and property purchases,” said Farhad Azizi, CEO of property developers Azizi Developments.
In November, the UAE government announced an overhaul of foreign ownership rules applicable to commercial companies and Azizi said this “momentous movement” enhanced the openness of the business climate in the UAE.
He said the decision will “lead to more than a three-fold jump in the number of companies in the UAE in the long run, enabling the creation of new job opportunities, the development of market movement, the localisation of technology, the development of skills and human capabilities as well as the introducing of new streams of non-oil economic growth”.
Last month, Abdullah bin Touq Al Marri, the UAE’s Minister of Economy, said that by abolishing the need for foreign companies to have Emirati shareholders would help increase the number of firms in the UAE to one million within the next 10 years from about 300,000 today.
According to the NER’s figures, the number of GCC-founded companies operating in the UAE amounted to 763 of the total 3,209 of foreign businesses. Most of these companies are based in Dubai.
“These statistics accord with what, in particular, our agency team has observed in the last four months – that the pace of enquiring and activity in the prime commercial real estate market accelerated significantly,” said Nick Maclean, managing director CBRE MENAT (pictured below).
“We put this down to a number of factors, both local and international – a logical and practical handling of the pandemic by the UAE government, continuing stimuli both here and elsewhere, attractive rental levels and, whether it is true or not, a view that perhaps a return to relative normality is on the horizon,” he explained.
Mohammed Asaria (pictured below), founder and managing director at Range Developments, a hospitality developer in the eastern Caribbean engaged in the Citizenship by Investment sphere, told Arabian Business that the efforts of the UAE government to mitigate the economic impact of the pandemic is paying off with an increased appetite for foreign investments in the country.
“On a daily basis, we meet high net worth individuals who recently have or are in the process of relocating to the UAE. These individuals have lost confidence in the ability of the governments of their home states (whether these are in Europe, the Sub Continent or further afield) to manage and balance, their respective economies and health care systems.
“These individuals are attracted to the UAE, given the UAE Government’s forward-looking, business-friendly and caring approach towards both citizens and residents alike,” he said, adding that this significant influx of high net worth individuals will drive the wheels of the UAE economy forward in 2021 and beyond.
“This in turn will drive job creation and investment into the local economy,” he continued.
Azizi also said: “This [increase in foreign companies] may also be a result of pent-up demand, with many having wanted to invest in the UAE months ago but having been precautious due to unknowingness of where the unprecedented global situation may lead. With progress and an end now in sight, many now feel comfortable investing.”
Earlier this month, Dubai Crown Prince Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum announced that Dubai has agreed on a fifth economic stimulus package to support businesses hit by the ongoing coronavirus pandemic.
He said an extra AED317 million ($86.3 million) was being allocated to bring the total stimulus package to AED7.1 billion.
Dubai has recently launched a series of measures aimed at liberalising business activity in the UAE, where foreigners comprise more than 80 percent of the population.
In October, Dubai launched a virtual visa scheme, which allows remote working professionals from all over the world to relocate to Dubai with their families with access to all services in the emirate, including schooling, telecom and services.
In September, the emirate launched a retirement programme for resident expatriates and foreigners over the age of 55.
Retire in Dubai, the first of its kind in the region, is being spearheaded by Dubai Tourism in collaboration with the General Directorate of Residency and Foreigners Affairs.
Dubai has also recently launched the Virtual Company Licence, which allows global businesses to access a regulated e-commerce platform populated by Dubai-based companies, while also exploring new markets and investment opportunities digitally.
The initiative, which allows investors worldwide to do business in Dubai digitally without having to live in the emirate, is expected to attract more than 100,000 companies.
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