The recently introduced Foreign Direct Investment Law (Federal Law 19 of 2018) is an epoch making event in UAE’s economic history. As per the new law, foreign shareholders can now have upto 100% ownership of companies in specified sectors. The FDI law provides for a positive list and a negative list which is nothing but the sectors in which 100% FDI is allowed and sectors in which they are not. As per the law, the UAE cabinet is to form a FDI committee which will suggest the sectors to be included in the ‘positive list’. The final decision on the sectors in the ‘positive list’ will be left to the UAE cabinet. A broad outline or principles has been given for the Foreign Direct Investment committee to determine the sectors under positive list.
(i) To be in alignment with the overall plans of UAE;
(ii) Value addition to UAE economy;
(iii) Technology innovation and job opportunities and training for UAE Nationals;
(iv)The overall expertise, repute and competency of the FDI firm;
(v) Modern technology implementation and
(vi)Any other requirement and conditions as may be imposed by the UAE cabinet from time to time
The level of such ownership can be fixed at any level, either 100 percent or any lesser percentage. Conditions may also be imposed on the minimum capital requirement, the form of entity and Emirati (employment on board) requirement etc.
Not-permitted sectors (The negative list)
Article 7 of the FDI law specifies the negative list in which higher levels of FDI is not permitted. These are:
(i) Petroleum products exploration and production;
(iii) Security, Military, Arms and Weapons and uniformed services and equipments etc;
(iv) Post & Telecom;
(v) Banking and Financial services;
(vi) Transportation (Land & Air);
(vii) Hajj & Umrah services and services such as publishing, labour, recruitment, pharmaceutical, blood banks, quarantines, electricity and water supply etc.
The cabinet has the right to add or remove any sector from the above list.
Article 10 lists the procedure to apply for increased FDI ownership. The application should be processed within 5 working days by the competent authority. License shall be issued by the Economic Department of the Emirate concerned, while rejected applications have an appeal process defined. Detailed procedures for registration, renewals etc. are being issued separately.
For sectors that are neither on the positive list nor on the negative list, applications can still be submitted for higher FDI. A new FDI Unit will be created under the Ministry of Economy. The FDI unit shall recommend the FDI policies to the Government and establish a comprehensive database of FDI projects in UAE and monitor their performance too.
The new FDI law is a path breaking event in the annals of UAE’s economy. Though at present there is no clarity on the exact sectors under ‘positive list’, the UAE cabinet has been given the powers to issue directions on this. The cabinet may accordingly permit a ownership of less than 100%, place restrictions on the type of entity, specify minimum capital investment, allow greater FDI ownership in specific Emirates and so on. We, at Al Nassar, advocates in Dubai are constantly monitoring each and every development in the sector and undertake a careful review of every Act, Article and law made in this regard. Whether you are a MNC looking to improve your UAE presence, or a local business wanting to know how the new law will affect the future of UAE’s economy, you can contact Al Nassar Advocates for more clarity and information on the issue.
If you were to carefully review the new mortgage law in Dubai, one thing becomes crystal clear; it is aimed at strengthening the real estate field in UAE. The new law paves the way for more foreign investment in the city. The reforms don’t just end there as the new law supports “alternate funding methods.”
“By developing Dubai’s Mortgage Law, we will help real estate organizations to operate in perfect harmony and enhance their smart resources to provide the best possible services to the customers and create strong new investment tributaries.” Said Sultan Butti Bin Mejren, Director-General of Land Department
Hence, we can derive three major motives that Dubai is trying to achieve
With that said, the laws also serve the purpose of bringing more structure to Dubai’s Mortgage system. The key takeaways are:
Dubai has a curious case with its mortgage proceedings as the country faced an increased demand for land in recent years is what the professional real estate lawyers says. The real estate prices saw great gains, as much as 79% from 2007. Even though the high prices will bring in more overseas capital, the Dubai government realized the need for a most structured set of rules and regulations to maintain order and smooth progression of the economy. Therefore, without waiting for things to worsen, the Dubai government has made the necessary changes to keep the system running at full steam.
The new Mortgage laws will enable the flow of REITs (Real estate investment trusts) and alternate finances, which will greatly help the developers to build property without struggling to find capital. Since Dubai now stands as a prime location for investment opportunity to foreigners, the new laws certainly give them better visibility when it comes to investing in Dubai. These new reforms fall under the vision “Dubai plan 2021”.
The new set of laws is also aimed at helping the middle-class residents to buy their own property, freeing them from rentals. With the current real estate scenario, a user will have to pay at least 32% of the total value of the property upfront. With the new laws, this value is expected to decline, helping the mid-tier section to own property in Dubai.
The new Mortgage laws are indeed a welcome change in Dubai, and it will help many to realize their dream of owning property in Dubai.
Before venturing out to find the best real estate lawyer in Dubai, you must ask yourself if you know the qualities to look for in a real estate lawyer that puts them a cut over the rest. Since they handle very delicate matters that are usually of large financial significance, you need to carefully review their skills and reputation before going through with the appointment.
If you do want to find the best real estate lawyers in Dubai, select a lawyer who possesses the following set of skills:
Lawyers need to have the license of the respected jurisdiction license if they want to deal in a certain state. Lawyers often reject clients from states that they do not operate in. But if the details were to go unnoticed, you might be hiring a lawyer who is not authorized to practice in that specific area. This can lead to further legal complications. The remedy is pretty simple as you can ask for their license before hiring them and ask them about their jurisdiction rights.
When you are hiring a real estate lawyer, you have to be sure that he/she is giving you all the right info without any blinds on. When something goes wrong or if your business strategy needs immediate change, you must have to hear it no matter how negative it is. Leading the client on without giving out proper info will cause a breakdown if something bad were to happen.
When you are in the process of buying or selling real estate, you must inquire about the area where you are trading. There might be some complication tied to a piece of land that might hinder its value over time and knowing everything about it from the get-go will be a major help. A real estate lawyer with appreciable local knowledge will have all the key skills to facilitate a smooth trade.
If you are looking for a real estate lawyer for a specific purpose, make sure that the lawyer has enough grasp of the matter. This can be easily evaluated if you review their past cases. If they do not have enough expertise in the field that you need help in, choose another real estate lawyer who does have experience in that specific field.
You can spot the best real estate lawyers in Dubai by how much value they give to their client’s time. Like the saying that goes “Time is money,” every second matters when it comes to business. You will know that your real estate lawyer is serious about your matter when he/she shows up for meetings and other legalities punctually.
The real estate lawyer that you select must be skillful enough to get you the best deal always. They must be able to convey the ideas better and have the proficiency to conduct deals that make the client happy. Negotiations are a critical part of real estate trade because the deal must be in such a way that both parties can leave happy. You need a skillful lawyer to find that sweet spot.
There is no real benefit in having a real estate lawyer who has all the above qualities but does not respond in time to your queries. Promptness or availability are two different attributes that achieve the same end result – better client satisfaction. Just think of a scenario where you need immediate legal assistance, but your real estate lawyer in Dubai is nowhere to be contacted! So be sure that the people you hire are available to you.
We know how hard it can be to get a real estate lawyer in Dubai who can check all the right boxes at all times. We, Al Nassar & CO., found a solution to this by giving you access to a group of lawyers who have proven their mettle in their respective fields. This way, you will always have the best possible help by your side 24/7. Why wait, contact us now!