Business Law is evolving

In the UAE, business activity is regulated by individual emirates as well as by the federal government. In practice, the detail of business registration is the responsibility of each emirate, while the laws that govern that activity come from the federal authorities.

Since 1993, there have been a number of legal reforms aimed at creating a framework able to accommodate the country's commercial aspirations. Most notable is the commercial code which came into effect at the end of 1993 and covers a wide range of banking and commercial activities. Also significant are new laws on copyright, patents and trademarks which came into force in 1993. They are:

Commercial transactions law. The commercial transactions law (federal law number 18 of 1993) covers banking and commercial transactions on a scale unprecedented in prior legislation. It contains provisions on who may lawfully conduct business in the UAE; subject to certain exemptions for GCC nationals or companies operating in free zones. No one other than UAE nationals may do so unless in conjunction with UAE partners in line with the requirements of the commercial companies law which stipulates a minimum 51 per cent local ownership.

The commercial code also introduces a new legal basis for mortgages over a wide range of assets, both tangible and intangible and contains detailed provisions concerning bankruptcy and receivership.

Banking transactions are fairly comprehensively covered including current accounts, bank loans and guarantees, the discounting of commercial paper, trust receipts, deposits of securities and detailed rules on cheques, bills of exchange and promissory notes. In addition, the commercial code permits lenders to receive interest on commercial loans subject to certain limitations, a clarification welcomed by banks.

Companies Law, Federal law number 8 of 1984, came into effect in its amended form in January 1989 and has been applicable to all companies formed since that date. In particular, the companies law requires all companies to be at least 51 per cent owned by UAE nationals and to take one of the seven forms specified by the law.

Companies formed prior to 1989 did have the benefit of a number of grace periods to give them time to comply with the provisions of the law. The last grace period expired at the beginning of 1994 and has not been renewed. The companies law is now unequivocally applied to all local companies irrespective of when they were formed. A number of substantial amendments to the companies law were under consideration as the practical guide was being published, although it is not clear when they will be introduced, if at all. Foreign investors who are unsure of how the companies law now affects their interests should seek advice from their local legal advisors.

The professional companies law. This was due to come into effect at the end of 1994. Professional companies - companies where the knowledge of the partners is the main asset (for example, lawyers, engineers, accountants, hairdressers) - are not covered by the commercial companies law. The new law provides that UAE nationals must own at least 25 per cent of professional companies. The law will be applicable immediately to all new professional companies formed after it has come into effect. Professional companies already in existence will have a grace period of five years to adjust.

National Ownership is Required

Under the companies law, at least 51 percent ownership by UAE nationals is required for all UAE establishments, except where the law requires 100 per cent local ownership as in the case of, for example, commercial agencies. The companies law is not applicable to Free Zone Entities or branches established in the free zones generally. As mentioned, it is not applicable to professional companies, which, in due course, will need to be 25 per cent owned by UAE nationals.

The Categories of Company

The law sets out the requirements for shareholders, directors, minimum capital levels and incorporation procedures. Mergers, conversions of licenses and the dissolution of companies are also covered. The seven categories of business organisation permitted are:

• General partnership. General partnership companies are limited to UAE nationals.
• Simple partnership
• Joint venture
• Public joint stock company. Companies engaging in banking, insurance and financial activities should be run as joint stock companies. But foreign banks, insurance and finance companies can set up branches or representative offices. For joint stock companies, the minimum capital requirement is $2.725 million. The chairman and the majority of board directors must be UAE nationals and there is less flexibility regarding profit distribution than with a limited liability company.
• Private joint stock company. The minimum capital is $545,000 for a private company.
• Limited liability company. In limited liability companies, the profit and loss distribution is negotiable. A limited liability company is for between two and fifty people and the liability of shareholders is limited to their shares in the company's capital. In Dubai the minimum capital requirement is $82,000. In Abu Dhabi and all other emirates the minimum capital requirement is $41,000.
• Share commandite company.

The Dubai government does not presently encourage the establishment of simple partnership and share commandite companies. Otherwise, all entities formed under the companies law must be at least 51 per cent owned by UAE nationals.

Jebel Ali Free Zone

Jebel Ali Free Zone has special legal status allowing companies established there to be offshore, or outside the UAE for legal purposes. Incentives include 100 percent foreign ownership, no corporate taxes for 15 years renewable for an additional 15 years, 100 percent repatriation of capital and profits, no personal income tax, no currency restrictions, no recruitment or administration problems, abundant energy, excellent facilities at Dubai Ports Authority's two modern terminals, no import or export duties payable within the zone, first class communications and an attractive working environment.

Four different types of licence are available

• Special Licence. Special licenses are issued to companies established outside the UAE. Ownership may be 100 percent foreign and a license from the Dubai Economic Department is not required. A company with a special licence may undertake any activity permitted in the zone, but may only operate in the zone or outside the UAE. However, business can be conducted in the UAE through agents and distributors.
• General Licence. General Licences are issued to companies already holding a valid licence from the Dubai Economic Department permitting them to do business within the UAE. In the Free Zone, holders of a general license must comply with federal and municipal requirements relating to their operations in the rest of the UAE.
• National Industrial Licence. A National Industrial Licence is for manufacturing companies registered inside or outside the UAE. The company must be at least 51 per cent UAE or GCC-owned. At least 25 per cent UAE ownership is required for a certificate of origin issued by the Ministry of Economy & Commerce, as well as the requirement for the UAE value-added input to be at least 40 per cent of the total value of the relevant products. The holder of a National Industrial Licence who manufactures goods which are eligible for a UAE certificate of origin therefore qualifies for customs duty exemption if its products are exported to other parts of the UAE or to other GCC countries.
• Free Zone Entity Licence. Free Zone Entities (FZEs) have been allowed since 1992. A FZE is 100 per cent foreign-owned and is similar to a limited liability company. The main difference is that a FZE can have only one shareholder which is of interest to foreign companies wishing to have a wholly-owned subsidiary in the Free Zone, rather than simply a branch. The minimum capital requirement is $ 272,500 and liability is limited to the amount of paid up capital.

All licences are issued by the Jebel Ali Free Zone Authority (JAFZA) and are valid for the period the company holds a lease from JAFZA, but are renewable annually.

Intellectual Property

Other recent legal developments of note relate to intellectual property. The key pieces of legislation are:

• Patents. Regulations governing the registration of patents, industrial designs and models are covered by Federal Law number 44 of 1992 and came into effect in 1993.
• Trademarks. These are covered by federal law 37 of 1992 which came into effect in February 1993.
• Copyright and censorship. These are covered by federal copyright law 40 of 1992 and deal with the procedures for obtaining permission for the printing, publication, display, sale and registration of works in the UAE. These regulations have been enforced since September 1994 and pirated computer software and video cassettes are no longer easily available in the UAE.
• This article was prepared with the assistance of Clifford Chance, Dubai which specialises in corporate, commercial and banking matters, shipping litigation, oil and gas transactions, UAE offset programme work and arbitration.

Customs

Imports can only be undertaken by importers with the appropriate trade licence. In 1994, the federal government introduced a uniform 4 per cent customs duty across the seven emirates covering a wide range of imported goods. Previously, customs charges were one percent or nothing, depending on the emirate.

A list of 70 foodstuffs are exempt from tariffs, as are medicines, agricultural machinery, pesticides, fertilisers, periodicals, wood, unstrung pearls, unworked silver and gold, iron and steel for use in construction, and raw or partially worked materials for use by local manufacturers. Goods produced within the GCC are also exempt. There is no duty payable on goods destined for Jebel Ali Free Zone.

For a product to qualify as a national product and receive GCC customs exemption, at least 40 percent of the product's final value added must be made locally. The factory must be licensed by the Ministry of Finance & Industry and there must be 100 per cent or minimum 51 per cent UAE national or GCC ownership of the producing plant.

An appeals desk has been established at the federal customs directorate to hear claims from importers for goods to be classified as duty free, chairman of the UAE customs council and director-general of Dubai customs Obaid Busit said in December 1994. Busit said that the UAE had successfully resisted pressure from other GCC states for a 5 percent minimum duty. The increase in tax on tobacco to 50 per cent is to be implemented later in 1995, he added. A federal law raising tobacco tax was passed on 2 November but only comes into effect when it is published in the official gazette (MEED 25:11:94). Computerisation of customs services to cut the time to process papers from 45 minutes at present is due to take place in January.

Taxation in the UAE

There is no corporate tax in the UAE. The only exceptions are oil producing companies and branches of foreign banks.

It is highly unlikely that direct taxation will be introduced in the UAE in the near future. However, it is possible that one day Dubai emirate may introduce some form of direct taxation as its oil reserves dwindle.

Exchange Controls

There are no exchange controls and the UAE dirham is freely convertible. The dirham is linked to the US dollar and the rate is $1=Dh 3.67.

Agency Law

Foreign companies may sell goods to companies in the UAE by concluding transactions directly with importers and traders who are already established in the market. However, in the case of high volumes of business, a more permanent form of representation may be desired.

Companies wishing to sell to the UAE without establishing an office may prefer to appoint a commercial agent. This is covered by Federal Commercial Law 18 of 1981 as amended by Law 14 of 1988. The law states that the agent must be a UAE national or a company 100 per cent owned by UAE nationals. He must be registered in the Commercial Agency Registry kept by the Ministry of Economy & Commerce.

The procedure is as follows:

1. A commercial agency agreement is drawn up specifying the products and territories covered by the contract.
2. The agreement should be signed by both parties (principal and agent) and, if signed in Dubai, be legalised before a court notary. The agreement is then translated into Arabic by a sworn translator licensed to operate in the UAE.
   

   If the agency agreement is signed outside the UAE:

   • It must be authenticated by a local notary public.
   • The local Ministry of Foreign Affairs must then certify and authenticate the signature and seal of the notary public;
   • The agency agreement must be certified by the UAE embassy or consulate.
   • When the documents arrive in the UAE, they should be taken to the Foreign Ministry so that the stamp of the UAE embassy or consulate may be authenticated, and translated into Arabic by a sworn translator.
3. The agency should be registered at the Federal Ministry of Economy & Commerce.

A sole UAE agent may be appointed in each emirate or defined area of the country. A commercial agent is entitled to territorial exclusivity enforceable by infringement commissions.

Although the term of the agreement may be limited to a specific period, it is not permissible for the principal to terminate the agreement without the agent's approval, except for reasons considered valid by the commercial agencies committee of the Ministry of Economy & Commerce.

Failure to renew an agreement without justifiable reason may require compensation for the former agent.

Setting up a Business

There are various procedures for setting up corporate entities: Limited liability companies (Dubai). To do this, the following procedure should be followed:

1. Get the company's commercial name approved by the Licensing Department of the Economic Department.
2. Draw up the company's memorandum of association and have it notarised by a Notary Public in the Dubai courts.
3. Seek approval from the Economic Department and apply for entry in the Commercial Register.
4. Once approved, the company will be entered in the Commercial Register and have its memorandum of association published in the Bulletin of the Ministry of Economy & Commerce.
5. The company should then be registered with Dubai Chamber of Commerce & Industry.

Branches and representative offices of foreign companies (Dubai). To establish a branch or representative office in Dubai, a foreign company should:

1. Apply for a license from the Ministry of Economy & Commerce, submitting an agency agreement with a UAE national or 100 per cent UAE national owned company. Before issuing the license, the Ministry will:
   • forward the application to the Economic Department to obtain the approval of the Dubai government,
   • forward the application specifying the activity that the office or branch will be authorised to undertake in the UAE to the Federal Foreign Companies Committee for approval.
2. Once this has been done, the Ministry of Economy & Commerce will issue the required Ministerial license specifying the activity to be practised by the foreign company.
3. The branch or office should be entered in the Economic Department's commercial register and the required license will be issued.
4. The branch or office should also be entered in the foreign companies register of the Ministry of Economy & Commerce.
5. The branch or office should be registered with the Dubai Chamber of Commerce & Industry.

Branches and representative offices of foreign companies (Abu Dhabi). Individual expatriates and foreign companies wishing to do business in Abu Dhabi have to enter into agreement with a UAE national according to one of the following options:

1. An agreement with a non-participant sponsor (individual establishments and foreign firms).
2. An agreement with a national partner participating with 51 per cent or more of the capital (obligatory for all trading companies).

The procedure is as follows:

1. Sign agreement with UAE sponsor before the notary public.
2. Submit the mother company's articles of association and a copy of the resolution by which the competent authority decided to open a branch in Abu Dhabi.
3. Provide certification from the country of origin that the company is not insolvent or bankrupt.
4. Obtain an official power of attorney in favour of the proposed representative in Abu Dhabi issued by the mother company in the country of origin.
5. Obtain a letter from the Abu Dhabi Israeli Boycott office certifying that the company in question is not blacklisted.
6. Ensure all documents required for 2-5 are duly attested in the company's mother country.
7. All foreign documents must be translated into Arabic by a sworn translator.

A non-participant UAE sponsor does not have a share in the capital and is not liable for any loss or obligation towards others. He or she shall be entitled to 25 per cent of the annual net profit if the activity undertaken is trade. Commission on income from contracting companies is fixed according to the size of contracts.

Trade license (Abu Dhabi). The procedure is as follows:

1. Sign a sponsorship agreement with a UAE national. There is no minimum capital requirement in Abu Dhabi.
2. Secure approval for the selected business location from the municipality in order to obtain a provisional trade license. Licenses are issued in five categories, namely commercial, commercial (Local without import), vocational, professional and industrial.
3. Submit a copy of the partnership agreement authenticated by the notary public, a copy of the provisional trade license, the lease contract for the business premises, and a photograph of each partner to the Abu Dhabi Chamber of Commerce & Industry. There is an initial Dh 2,000 fee and a Dh 2,000 annual fee for each economic activity. Once approved, the Chamber will issue a certificate of approved membership.
4. The certificate of approved membership is taken to the municipality. The license fee depends on the amount of capital invested in the business. The final license broadly specifies the type of product to be imported. The trade license must be amended if the company wants to expand into other lines.

Special, general or national license from the Jebel Ali Free Zone Authority (JAFZA). All procedures can be completed within 30 days where no environmental issues are concerned. The process is as follows:

1. Applicant submits completed questionnaire (available from JAFZA).
2. JAFZA reviews questionnaire, then sends application form, electricity supply & planning documents, and E form (on environmental issues) if applicable.
3. JAFZA reviews documents and determines whether Environment Impact Statement (EIS) is required. If yes, a full report is requested by JAFZA.
4. The EIS is reviewed and, if applicable, the application is progressed. If not, the applicant is informed.
5. JAFZA accepts application and sends provisional approval letter. The presentation of company documents is requested. This includes notarised certificate of registration, articles of association, a list of board directors, a copy of board resolution setting up branch and appointing manager, a statement by company as to amount of capital set aside for company's operation in the free zone, the branch manager's photograph and a specimen signature.
6. If company documents are in order, JAFZA accepts application and a lease profile is signed.
7. JAFZA sends a conditional approval letter and requests the applicant to sign the lease and the pay rent and license fee.
8. The lease and license is issued to the applicant. The license for land is issued only after a building completion certificate has been issued.

For a general license, the following documents are also required: a valid trade license from Dubai Economic Department, and a Dubai Chamber of Commerce & Industry membership certificate (if applicable).

Free zone entity (FZE). The procedure is as follows:

1. Applicant submits preliminary questionnaire.
2. JAFZA reviews the project. If approved, it forwards FZE Application and other documents.
3. JAFZA forwards official approval of the applicant's incorporation as a FZE and requests documents to be completed. Issues letter to blank enabling applicant to open local bank account and to postal authority for registered addresses to be given.
4. Applicant signs lease profile, forwards it to JAFZA and pays capital sum required.
5. JAFZA issues certificate of formation, applicant signs lease.
6. JAFZA issues lease and license.

Costs

• Special Licence: $954.
• General License: $545.
• National Industrial License: $1,360.
• Registration of FZE: $2,717.
• Processing of FZE license: $1,358.

The Chambers of Commerce in the UAE

The establishment of any business or industrial activity must pass through the Chamber of Commerce & Industry of the relevant emirate. The chambers represent the private sector and protect its interests.

Their role is to organise commercial and industrial affairs, collect relevant information and statistics, produce publications, and organise conferences and exhibitions within each emirate.

The chambers' affairs and performance are supervised by a board of directors composed of 21 members appointed by the relevant government. Five board members are on the executive board and the other members form various sub-committees.

Abu Dhabi Chamber of Commerce and Industry

The Abu Dhabi Chamber of Commerce & Industry is situated in the Chamber Tower on the Corniche Road. The chamber was established in 1969 and has had a branch office in Al Ain since 1978.

Under Law 6 of 1976, all nationals and foreign persons, be they individuals, companies, or establishments practising commercial, industrial, financial or contractual activities within the emirate, whether they are branches or agencies, temporary or permanent, shall have to join the chamber.

Dubai Chamber of Commerce and Industry

The opening of a purpose-built building in the spring of 1995 is the highlight of the decade for the Dubai Chamber of Commerce & Industry. The magnificent new head office is opened to mark the 30th anniversary of the chamber's foundation. The Dubai Chamber's work falls under the following headings: foreign relations, registration and documentation, industrial affairs, administration and finance and legal affairs.

Sharjah Chamber of Commerce and Industry

This is situated in Al-Boorj Avenue. By late 1994, it had 9,902 professional members, 9,340 commercial members and 495 industrial members.

Doing Business in the UAE

The UAE business environment can be very lucrative and even predictable if care is taken to understand the influences working on an individual market at any one time. Keeping an ear to the ground and maintaining a steady physical presence is invaluable.

Visiting business people are advised to consult the many sources of commercial intelligence, including embassy lists, the chambers of commerce, official gazettes and tender lists. UAE national businessmen are the best source of information, and the ideal man in a business development role will usually be the one with excellent contacts in the local business community. Given the right high-level contacts it is possible to hear of projects ahead of the rest and long before tender documents can be officially purchased. The UAE is one of the most open and freely competitive markets in the world and although the authorities want to do business on the basis of quality and value for money, much still depends on this inside knowledge.

Personalities play a significant role in contract award. The knowledge, accessibility and reputation of one's local associate is often a vital factor in determining the outcome of fierce bidding between large numbers of international companies.

Business is Distinctive

Business in the UAE is complicated by the distinct character of each emirate. The commercial aspirations of Dubai Emirate mean that in most quarters there is a definite will to conduct business at a Western-style pace. This does not mean that traditional courtesies are waived. Business visitors will find that in Abu Dhabi, where there are fewer commercial pressures, the pace is more measured and the atmosphere more traditional. In the smaller emirates, except Sharjah, the pace of business is altogether more traditional. Sharjah, with its rapidly growing industrial sector, to a great extent follows the Dubai mode. So lessons learned in one emirate are not necessarily applicable in another.

The application of uniform federal standards and regulations, which started in the 1980s, has increased in speed in the first half of the 1990s. But discrepancies and procedural differences still persist.

Dubai's Economic Department is a New Departure

The Dubai government set up an Economic Department in 1992 with the express purpose of facilitating and encouraging the development of trade and industry in the emirate. It functions as a one-stop shop for business registration. If it receives correctly completed documents and approvals from the respective authorities in time, then a business licence is issued within a few days.

Nakheel delays sale of Al Furjan units

Nakheel delays sale of Al Furjan units

The sale of homes at Al Furjan, the community development in Dubai, will be delayed, until a rebound in demand for properties is seen, announced Nakheel, the master-developer of the community.

However, the 2000 homes that have already been sold during the sale of the first phase, are all progressing with construction works as scheduled, and will be complete towards end of next year.

The General Manager of the project, Mohammed Rashed, said that, the company is on track about the schedule for the first 2000 villas. However, for the other villas, the market condition needs to be evaluated first, and when the opportunity arises, more projects would be launched.
Rashed added that this move by Nakheel, was initiated as a part of its short-term plans to deliver efficiently what has already been committed to the customers.

Spreading across a 5.4million square meter space, behind the Discovery Gardens, in proximity to Jebel Ali Village, the Al Furjan community was planned to include 4000 villas and townhouses, schools, medical and retail amenities.

Nakheel is working with Gulf Lender Network, a mortgage company, to secure finance for customers who have already signed up for the Al Furjan units, Rashed revealed.

Nakheel has already back-tracked construction and reclamation work on its man-made island projects, and has delayed the construction of Nakheel Harbour and Tower, the one-kilometer tall structure, destined to be one of the tallest towers in the world.

However, the company is now focusing on its housing projects including the Jumeirah Islands, Jumeirah Park, and Jumeirah Village. Nearly 2200 units at Jumeirah Village and 900 units at Jumeirah Park will be delivered to residents by the end of the year.

In the meanwhile, Nakheel which has downsized its staff strength is also restructuring its senior management teams.

UAE likely to bail out real estate firms: EFG-Hermes

UAE likely to bail out real estate firms: EFG-Hermes

Leading investment bank in the Middle East, EFG-Hermes, yesterday said that UAE plans to bail out real estate companies in the country, and may restrict the flow of new supplies, amidst the slowdown in property sector.

The government is yet to reveal plans for the real estate sector, although it is known that a federal plan is in the agenda, said the Bank.

The real estate index of the Bank, reveal that advertised prices in Dubai have fallen 8percent during the past few months. The transactional prices have fallen by as much as 35 to 50 percent in Downtown Burj Dubai, Dubai Marina and Palm Jumeirah.

The government aims to restrict the number of housing units coming on stream. According to the Bank, the number of housing units to be released this year will be less than half of the original forecast of 70,000 units.

Last week, Morgan Stanley, the global financial services firm, said that property prices have fallen by an average of 25 percent, since its peak in September last year, and that about $263bn worth of projects have been either delayed or cancelled in UAE.

More than 50 percent of construction projects in the UAE, constituting a total of $582bn worth projects, are currently suspended, revealed ProLeads, the Dubai-based research firm, last week.
The once-booming property sector in Dubai, have been hit hard during recent months, by the fall in property prices, job redundancies, or projects being scaled back by the developers.

Al Mazaya maintains timely delivery of Icon Towers at Lake Jumeirah

Al Mazaya maintains timely delivery of Icon Towers at Lake Jumeirah

One of the leading property companies in the region, Al Mazaya Holding, has maintained its schedule of delivering 800 residential units at the Icon 1 and Icon 2 projects at Lake Jumeirah.

Al Mazaya has put in lot of effort, to ensure timely delivery of these properties to the owners in early 2009. It has assured that the other projects by the company will also be delivered within two years, thereby contributing its bit to the target of Dubai market to receive 70,000 residential units during 2009-10.

The Icon 1 and Icon 2 are the first projects to be completely sold out at Lake Jumeirah, although 120 other residential towers are also underway. Both Icon 1 and Icon2 residential towers comprise a total of 400 units that overlook the Jumeirah Lake on one side, and Jumeirah Islands on the other.

Fathi Dhamiri, SVP Projects at Mazaya Dubai, mentioned that despite the challenges faced during the development of the tower, all obstacles have been overcome, and the project has been scheduled in time.

Dhamiri mentioned that the timely delivery of these residential units implies the company's commitment towards its clients, and added that, Al Mazaya is currently developing three commercial towers, called Business Avenue for the business class in the area. Currently Business Avenue is 50 percent complete, and the units will be handed over towards end of 2010.
Dhamiri also did mention that the project is strongly supported by the Dubai Government, and that it is the first to be developed on Lake Jumeirah.

Nakheel's Marina Residences to be delivered in two months

Nakheel's Marina Residences to be delivered in two months

Thursday, February 12, 2009

Nakheel, the master developer in Dubai, said that the exclusive Marina Residences development on the Palm Jumeirah is more than 90 percent complete, and that the 900 homes of the development would be delivered in April 2009.

The Marina Residences are stunning residential complexes, located at the tip of the trunk on the Palm Jumeirah, the largest man-made island in the world.

The high-rise development includes six residential towers, resting on landscaped podiums, overlooking the marinas. The towers include 940 apartments and penthouses, and another 40 units are located on a marina fronted promenade, which form the townhouses.

One of the largest marinas in Dubai, Anchor Marina, is located just beside the Marina Residence tower, which berths more than 500 vessles.

The work on the development has made swift progress ever-since the groundwork began on the six towers.

The Managing Director of Palm Jumeirah, Johann Schumacher, said that Nakheel would handover the villas within next 24 months, while the 900 homes would be handed over this year, with the new residents hoped to enter Palm Jumeirah in April.

The strategic location of the iconic development, would enable the residents to enjoy the abundant tourism and leisure amenities that are on the offer, while also benefiting from being in proximity to one of the largest marinas in Dubai, Schumacher pointed out.

Nakheel has already begun delivering homes at its Jumeirah Villas, with more than 2000 villa sand townhouses to be delivered by the end of the year.

About 24 ultra-luxury villas at the Jumeirah Island Mansions are due for delivery this spring, which would be a welcome addition to this already vibrant community, which is one of the most sought residential locations in Dubai.

The Jumeirah Park is also ready for hand-over, later this year. About 90 percent infrastructure works are completed across the development, and villa constructions are 30 percent finalized.

Ajman property market considered more lucrative than Dubai

Ajman property market considered more lucrative than Dubai

Saturday, February 14, 2009

The emirate of Ajman is turning out to be a lucrative destination for buying opportunities, as rates have fallen as low as Dh.299 per square foot, from the Dh.600 per square foot rate that prevailed six months ago.

Although majority of the bargains are in Dubai, Ajman is not far behind, with equally or even better opportunities, as it is oriented towards the mid-income sector.

It is possible to purchase apartments in Ajman for as little a price as Dh.299 per square foot, and one need not wait for years for completion of the project, as the waiting period for such apartments would be only three to six months.

Property prices in Ajman began at a much lower level than in Dubai, when the first project in Ajman was launched in 2004 for Dh.176 per square foot. The units at Al Khor Towers in Ajman are now selling at a rate of Dh.299 per square foot, which means that a double bedroom apartment in Ajman is currently Dh.542,000. Similarly, the units at Horizon Towers are priced at a starting price of Dh.345 per square foot, with a double bedroom apartment being sold at Dh.631,760.

This, when compared to Dubai, indicates that even few of the cheapest studios are worth Dh.447,430, implying a rate of Dh.883 per square foot for a 506 square foot studio at present.

Although property prices and rents have been dipping this year, Dubai still remains expensive. Potential buyers are still awaiting mortgages and home financing options to enter the market for them to make purchases, while investors in off-plan units are trying to cancel contracts, fearing their financial security. On the other hand, properties in Ajman are almost complete, offering more comfort to buyers.

According to Christina Cabading, the President of BSEL Infrastructure Realty, the developer of five towers in Emirates City of Ajman, people are now seeking affordable places to live. Hence, even for people living in Dubai, the focus is being shifted towards Ajman.

Ajman Real Estate Regulatory Agency (ARERA) offers additional comfort and security, having informed all developers in Ajman that they must own an office in Ajman, and it is not sufficient if they just own an office in Dubai. The Agency however, has cautioned buyers to be diligent when considering low-priced properties.

The COO of Cirrus Developments, Rehan Khan, has urged investors focusing on extremely low-priced properties to check out if the developer has assured a trust account (Escrow) to protect their funds, and bring in quality in the project, as that would determine the rent or re-sale value in future.

Hydra Village Abu Dhabi units to be delivered by Q2 2009

Hydra Village Abu Dhabi units to be delivered by Q2 2009

Sunday, February 15, 2009

The leading UAE-based property developer, Hydra Properties, has achieved another milestone by announcing plans about hand-over of units of Hydra Village Abu Dhabi, one of its major community developments. The units will be delivered during mid-2009, as it completes Phase I of the mega project.

The leading property developer has also announced that excavation work for Phase II is nearly 20% complete, and the construction is progressing as scheduled. This achievement underlines the commitment by Hydra to complete the prestigious project on schedule by December 2010.

Speaking about the progress of the project, the CEO of Hydra Properties, Dr. Sulaiman Al Fahim, said that the timely delivery of Hydra Village Abu Dhabi units is one of the ways of expressing the company's dedication towards providing their clientele with complete satisfaction of services and offerings.

The construction of the project is currently monitored by few well-established contractors in the construction industry, such as Blue Sea, PAL Technology, Ersa, Abu Dhabi Land, Samer Group, Bayunah, and NEB Consultants.

Hydra Village Abu Dhabi is more of an eco-living retreat, designed by laying emphasis on conservation. It offers all amenities, and smart technologies, associated with modern living, while also offering eco-living at its best.

Strategically located, near Al Reef Palace in Abu Dhabi, Hydra Village Abu Dhabi is a residential community surrounding a total area of 950,000 square metres, with 2500 well-furnished villas, and 17 residential apartment blocks.

The units are featured with excellent amenities, including schools, mosques, clinic, and retail units that make the community a self-sufficient family destination.

Manhattan Luxury Apartments at Jumeirah Village on track

Manhattan Luxury Apartments at Jumeirah Village on track

Al Fara'a Properties yesterday confirmed that the company is making steady progress towards timely completion of its Manhattan Luxury Apartments project, despite the current market dynamics.

The company revealed that it has successfully poured 7500 cubic metres of concrete for 50 hours, covering 46,500 square feet for the basement level of Manhattan Development in Jumeirah Village.

The 12-metre cavity, with high density supports and piling, will house the basements and foundation of a signature collection of the New York-inspired apartments, comprising studios, single, double and triple bedroom units.

Manhattan Luxury Apartments offers high-quality apartments with signature amenities designed to offer a healthy lifestyle to its residents. The amenities include world-class gymnasium, swimming pools, sauna and steam facilities, and well-equipped children play area.

Majority of projects that are currently in progress in Jumeirah Village are that of Al Fara'a Properties. The Le Grand Chateau which won the CNBC Arabia's best development award is also one among the projects nearing completion by Al Fara'a.

The Director of Al Fara'a Properties, Natasha Gangaramani, when speaking about the scheduled delivery of the apartments, mentioned that the company has deployed 1200 strong workforce, which constitute a team of experts who would lead the project into successful completion.

With a planned property portfolio worth Dh.10bn, Al Fara'a Properties has launched successfully several residential, mixed-use and commercial developments spreading across Jumeirah Village, Downtown Jebel Ali and Dubai Maritime City.

Mounting redundancies determine drop in housing prices

Mounting redundancies determine drop in housing prices

The increasing number of job layoffs will determine the amount of drop in residential prices in the next couple of months, revealed a top real estate agent in Dubai.

Vince Easton, the Sales Director at Sherwoods, when speaking during the event of Dubai International Property Show, said that the uncertain job market in the city, which is likely to see a new wave of layoffs in March, will leave a major impact on the prices within the next three months.

"We are a nation of expatriates, and if the jobs are under threat, it makes the life of expatriates more difficult," he pointed out.

The mass job cuts in Dubai, particularly in the property and construction sectors, were triggered by the market downturn, and the global economic crisis.

According to Easton, although it is known that prices have fallen by 50 percent in majority of the area, the market would hit the bottom by summer, with the prices of properties in areas such as Dubailand, predicted to fall further, during the period.

Rents had come down to as much as 40% in Dubai during the last three months, and overall sales too went down during the same period.

The key to recovery of the housing market lies with the banks offering more liquidity for financing, and this is unlikely to happen until the market has bottomed out, Easton said.

Leading property developers offer flexi-payment options to investors

Leading property developers offer flexi-payment options to investors

Friday, February 20, 2009

Leading property developers in Dubai and Northern Emirates have come up with the option of easy payment schedule for investors and end-users to off-set the impact of credit crunch.

With the International Property Show 2009 (IPS 2009) entering its second day, and the visitors showing up to feel the pulse of property market, the organizer of the show, Dawood Al Shirawi, said that holding the show during such a difficult phase is a huge success, and the organizers hope to sign few serious deals during and after the show.

He expressed confidence that towards the end of 2009, the property market would recover from the crisis and new regulations will help in consolidating the industry even further.

One of the leading freehold property developers in Dubai and Northern Emirates, Chapal, has announced an extension of one year for payment schedules to property buyers in Dubai and Ajman. By extending such an offer, Chapal aims to relieve its clients during tough times of economic crisis.

Chapal mentioned that this payment extension plan would benefit several thousands of investors and property end-users who booked villas and apartments in freehold projects of Chapal in Dubai Sports City, Emirates City Ajman, Emirates Lakes Towers (Ajman), Jumeirah Village Dubai, Chapal Flora Residences (Ajman).

The payment relaxation terms are currently being reviewed to support buyers of plot in master development in Ajman. IPS has been earmarked as the biggest transactional property event in the region.

Introduction

UAE government policy recognizes that the private sector is of major importance in the drive for diversified economic growth and full employment for nationals. The creation of a facilitative business environment, which encourages local investors to put their wealth to productive use, as well as attracting foreign investment, has been an important aspect of this policy. Key elements in the UAE’s incentive strategy have been the provision of first-class industrial facilities and business support services, the reduction of red tape and streamlining of administrative procedures, as well as the updating of commercial laws and regulations to meet international obligations, increase transparency and ensure effective protection for investors. Favorable tax laws and political stability also assist in making the UAE a prime business location.

World Trade Organization

The UAE joined the World Trade Organization (WTO) in 1995 in the knowledge that developing countries, including Arab states, cannot ignore WTO - sponsored agreements and their impact on the global economy. At the time, the Ministry of Economy and Commerce argued that joining WTO would provide an opportunity for the country to contribute to future commercial decisions and policies and that, as a country aspiring to become a regional trade hub, adherence to the General Agreement on Tariffs and Trade ( GATT), a WTO - sponsored multilateral trade treaty, would help boost the UAE's industries and exports. Other relevant WTO treaties are the General Agreement on Trade in Services (GATS) and the Agreement on Trade - Related Aspects of Intellectual Property (TRIPS ) . Although the WTO prohibits discrimination in investments or shareholding between nationals and non-nationals, the UAE has been granted certain exemptions for its financial services sector. Nevertheless, WTO agreements will have a direct impact on domestic services such as insurance, banking, transport, tourism, property, brokerage, investment, construction, communications and information, all of which will be required to improve performance to be able to compete globally.

Abu Dhabi Chamber of Commerce and Industry

A bridge between the private sector and government has been provided by the Abu Dhabi Chamber of Commerce and Industry (ADCCI) for over 30 years. Since its inception in April 1969, operating from a two-room apartment in the capital, the ADCCI has grown in stature to become the largest chamber of commerce in the AGCC states, with a membership of 51,399 at the end of 1998, increased from 27 in 1969. It is now housed in an imposing building on the Corniche.

for more information, visit www.adcci-uae.com

Private Sector Partnership

Policies pursued by ADCCI have enhanced the private sector's partnership in local enterprise. In addition to developing economic regulations and offering advice to the government in this field, ADCCI provides a wide range of services, including setting up the Sheikh Khalifa Fund to provide technical and financial support for small and medium enterprises initiated by national youth; establishing a database to furnish businessmen and investors with up-to-date commercial information; organizing trade fairs in Abu Dhabi; sending delegations abroad to promote Abu Dhabi as a commercial center; as well as initiating training programmes such as 'Passport for Work’, which trains nationals to join the private sector.

Trade Fairs

To mark its thirtieth anniversary, in 1998 the chamber opened a new hall for membership registration and the processing of official documents. It also established a new center for businessmen and another for businesswomen, issued 6,118 certificates of origin and organized 37 trade fairs. The chamber participated in the Cairo International Fair, the Lisbon International Expo Fair, the Second UAE Exhibition in Beirut and the Baghdad International Exhibition. In addition, during 1998 the chamber received 39 international trade delegations and official delegations from the ADCCI visited Oman, India, Taiwan, Britain, Thailand, Malaysia, Sing a pore, Australia, Finland, Sweden, Norway and Denmark, to promote Abu Dhabi as an investment opportunity.

One-Stop Shop

ADCCI has also been concerned with setting up a one-stop shop at Abu Dhabi Municipality to facilitate the issue of trade licenses in the capital. The measure, initiated by the Higher Consultative Committee of Abu Dhabi Emirate, is aimed at simplifying and expediting procedures for issue of trade licenses. By the end of 1999 applications for commercial licenses sent by e-mail were due to be processed within four hours, instead of three to four months. The multi-departmental section comprises representative offices of the Ministries of Labour and Social Affairs, Economy and Commerce, Information and Culture, the ADCCI, Civil Defence and Abu Dhabi Police. The project is the first phase of a comprehensive development of the municipality's infrastructure.

New Business Support Services in Dubai

Dubai has also been streamlining its administrative procedures to provide an efficient service for investors. A telephone and fax hotline has been installed at the Dubai Naturalization and Residency Department. The 24-hour computerized system, operating in Arabic and English, can handle enquiries about documents needed for all types of visas, including visit, transit, investor, work and domestic servant visas. Callers can access information about documents needed to open a company file at the department, documents for stamping and canceling visas, court appointments, changing visas and departure certificates. A 50 percent reduction in municipality fees levied on business in Dubai, which was announced during 1999, should also assist business development in that emirate. The municipal levy, originally set at 10 percent of the lease rental, is a major establishment cost for any company. Dubai Municipality, the Department of Economic Development and the Dubai Chamber of Commerce and Industry are working together to ensure that the new system operates efficiently.

Intelak

In an effort to ensure that the smallest investor is not forgotten, Dubai has also launched an innovative programme in which ‘individual establishment’ trade licenses are granted to UAE nationals to set up businesses at home once they have satisfied home ownership requirements. The experimental programme aims to encourage housewives, nationals with spare time, and those who have low-budget projects to establish businesses without facing the competitive risks of the open marketplace. Introductory seminars and technical and economic advice will be provided. Products from such businesses will be marketed through promotional shows and on the Internet.

Offsets

The UAE has made it a condition that foreign firms bidding for lucrative defence contracts should invest a portion of the value of the deals in joint venture projects with local partners. The UAE Offsets Group (UOG), which manages this offset programme, has developed its role to become a pioneering institution playing a vital part in the establishment of joint vent ures . Under the offsets programme, foreign defence firms are entitled to hold up to a 49 percent stake in the joint ventures with the rest being held by local private investors. Projects must generate added value to the UAE within a period of seven years. Since 1992 the offsets programme has announced 31 projects, 17 of which are in operation, with a total investment of around Dh 2 billion. The projects range from a ship-building company to a health care center. Abu Dhabi Shipbuilding Company, a Dh 178 million venture, was one of the first public shareholding firms to be set up under the scheme. The two biggest ventures are The Oasis International Leasing Company, an aircraft leasing firm, and TABREED, which has developed innovative cooling systems, each capitalized at Dh 500 million. Assault, with which the UAE signed a US $3.2 billion defence deal, has contributed to five separate offset projects, including a horticulture project, a plant for manufacturing fire-fighting materials, a business services company, as well as fish processing and fish farming companies.

Dolphin Gas Network

UOG's participation in the Dolphin Regional Gas Network, a US $8–10 billion project to build a regional gas network from Qatar to UAE and Oman was announced in early 1999 (See section on Oil and Gas). The Dolphin project represents a strategic initiative to attract i n vestment in industrial sectors in the UAE and other regional countries by modernizing the gas supply infrastructure and is intended to provide a framework to stimulate investment in a variety of related industries throughout the value-added gas chain. It will provide employment and wide investment opportunities in financial and other industrial fields. Key potential regional customers for gas from Dolphin will include the offset programme’s own initiatives, especially Sina'at which has been set up with a capital of Dh 550 million to develop basic industries and petrochemical facilities. Other customers will include independent power producers, aluminum smelters, iron and steel plants and gas trading operations.

Free Zones

The increased number of free zones operating in the country is serving to offer a wider range of options to potential investors, including 100 percent ownership of investments. The massive Jebel Ali Free Zone (JAFZ) has become one of the largest industrial complexes worldwide which, together with the adjacent port, the world's largest manmade harbour, has continued to attract investors. Fujairah Free Trade Zone (FTZ), which was awarded an ISO 9002 certificate in 1999, offers businessmen the location advantage of an east coast port as well as the benefits of partnership with the Fujairah Government. FTZ has been growing at a rate of 20–22 percent annually and currently has over 125 projects registered at the zone, representing sector investment worth Dh 750 million. Trade value out of the zone by the end of 1999 should top Dh 1 billion. Arab, Gulf and international capital investment in Sharjah’s Hamriyyah Free Zone had exceeded Dh 2.5 billion by the end of 1999, with local investment accounting for 50 percent. The Sharjah Government has invested Dh 600 million in infrastructure projects in the zone.

Saadiyat Free Zone Authority

The US $3.3 billion Emirates Global Capital Corporation (EGCC), which was incorporated in April 1999, has been granted a 50-year concession by Saadiyat Free Zone Authority (SFZA) to establish a major new commodities market and free zone on Saadiyat island near Abu Dhabi. The concession covers an area of 26 square kilometers. EGCC will develop a 50,000 square meter trading center with a stock exchange, futures exchange and clearing house and warehouses, the requisite commercial and residential real estate and physical infrastructure, including a port with storage facilities and a freight airport. Construction of the necessary infrastructure is scheduled to take three years to complete. Planned facilities on the island, which will have a six-lane bridge to link it with Abu Dhabi, will include a marina, an extensive exhibition center, a luxury hotel, a golf course, an equestrian club, a motor racing circuit, water and power plants, a telecommunications network and other utilities. The Basic Law for the Authority imposes no restrictions on foreign ownership of companies and assets and allows full repatriation of capital and profits as well as exemption from all taxes. Companies and residents will be offered land on lease for periods of 50 years or more and leases will be fully transferable. Since the announcement of its creation in July 1996, the Saadiyat project has attracted considerable attention from regional and global investment and banking circles. The project will have a major impact on many economic sectors including trade, industry, agriculture, real estate, building contracting and engineering, banking, brokerage, insurance, tourism, hotel, entertainment and services, as well as providing employment for nationals. Saadiyat Free Zone, shares in which will be offered on domestic and international markets, will give a major boost to the UAE ’s investment policy and is intended to complement the Jebel Ali Free Zone and other zones in the country and the AGCC.

Dubai Airport Free Zone Authority

Dubai Airport Free Zone Authority (DAFZA), one of the most recently established free zones in the UAE, grants licenses to companies with an international reputation who intend to invest properly in environment-friendly projects that are not labour-intensive. The emphasis is on long-term gains within the context of a five-year business plan. By mid-1999, 54 percent of the 50 companies operating out of DAFZ were European, 32 percent American, 4 per cent each from the Far East, Middle East and GCC states and 2 percent from Africa. Applicants to date include global dealers in the jewellery, diamonds, crystal, cosmetics, electronics and computer industries. The free zone has been allocated an area of 1.2 million square meters, including 473,000 square meters of apron space, which will be developed in stages over the coming years.

Ajman Information Technology Park

Ajman Free Zone (AFZ) commenced work in July 1999 on the region's first information technology park. The park will be developed in two phases, the first of which, a pilot project of 10 offices, is under way. A further Dh 5 million will be invested in a purpose-built block that will house 100 offices. The IT park will offer a ‘move in and plug in’ facility in which a company can start operating as soon as it occupies designated premises . The park offers all the facilities needed for an effective business operation – PCs, ISDN, phone and fax lines, Internet access and related services – to attract IT developers and IT support centers, besides emerging Internet retailing, wholesale and e-commerce business. AFZ already has a wide cross-section of companies involved in textiles, medical equipment, furniture, foodstuffs, tobacco derivatives, watches, electrical appliances, paper, metal and plastic products. In 1998 the number of companies operating out of AFZ quadrupled and in the first six months of 1999 the zone grew by 7.5 percent from 400 to 430 companies. Total capitalization of companies now stands at Dh 1.1 billion (US $300 million).

Intellectual Property

Recognition of the close link between the protection of intellectual property rights and foreign investment has acted as an incentive for vigorous action against intellectual property violations in the Emirates.

International Obligation

The UAE is a member of the Paris Convention for the Protection of Industrial Property, the World Intellectual Property Organization (WIPO), and a signatory of the WTO Agreement on Trade - Related Aspects of Intellectual Property (TRIPS) with which it must comply by the year 2000. The latter deals with such issues as copyright, trademarks, patents, industrial designs and trade secrets. The country also acceded to the International Patent Cooperation Treaty in 1998, which protects inventions registered with the International Bureau at WIPO and local patent offices.

Domestic Law

Federal Law No. 40/92, Protection of Intellectual Works and Copyright, was issued on 28 September 1992, embracing all aspects of intellectual property such as trademarks, patents, industrial design and copyright. After an extended grace period, the law was implemented in the second half of 1993. In June 1999 the UAE National Committee for Industrial Property Protection discussed amending the federal law within the context of TRIPS, including regulations governing the protection of patents on pharmaceuticals. The initiative to amend the law in line with WTO obligations was announced by the Ministry of Finance and Industry in mid-1997 and work has been under way ever since. All articles of the legislation as well as subsequent by-laws are being reviewed.

Enforcement

Enforcement of trade marks comes under the purview of the Ministry of Economy and Commerce, the copyright law under the Ministry of Information and Culture and the patent and design law under the Ministry of Finance and Industry. Enforcement is also assisted by the Ministry of Interior, particularly the police and the Criminal Investigations Department, Dubai's Department of Economic Development and Sharjah Municipality. International organizations that are also engaged in the anti-piracy drive in the UAE are the Motion Pictures Association (MPA) the Business Software Alliance (BSA) and the International Federation of the Phonographic Industry (IFPI). In July 1999 thousands of pirated audio and videocassettes, compact discs and computer play station tapes confiscated in a series of government raids we re destroyed and some shops selling the goods were shut down. The raids on video and CD shops in Dubai and the Northern Emirates were carried out by the Ministry of Information and Culture, Dubai Police Economic Crime Section and the Business Software Alliance. In August, a trader who had been convicted of selling pirated videocassettes had his sentence increased from the original Dh 5,000 fine to three months’ imprisonment following an appeal brought by the Motion Picture Association Middle East.

Reduction in Piracy Levels

In the last few years the UAE has achieved tremendous results in fighting piracy at the local and federal levels. As a result the UAE continues to have the lowest piracy level in the Middle East according to statistics released by the Business Software Alliance (BSA). Of the US $190 million re venue estimated to have been lost by the IT industry on account of illegal copying of software in the Middle East, the UAE's contribution was a mere US $3.6 million. On a global scale, the estimated loss of revenue in the UAE is not even 1 percent of losses perceived to be suffered by IT companies due to software piracy in countries such as the UK, Canada, Germany and France.

E-Commerce

In order to keep abreast of commercial trends worldwide, the UAE intends to set up an Internet-based central financial forwarding and clearance facility known as the Payment Gateway Server (PGS). Several top companies are working with government departments to establish the facility which is expected to be the first of its kind in the AGCC area.

PGS, a major step in the introduction of e-commerce, is the equivalent of central clearing and forwarding of financial transactions carried out on the Internet. The server, which will permit secure electronic transactions, is an intermediary between Web-based merchants, financial institutions and consumers.