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Mazaya Monthly Real Estate Report -
Week 1 - September 2016
Al Mazaya Holding's Weekly Real Estate
Report points out that the regional
economies possess ideal investment
attractiveness to foreign companies – this
attractiveness is attributed to type, volume
and number of the projects as well as the
timeframe required for completion. This
has encouraged companies to continue
investing for a long period of time on
the one hand, while on the other hand,
the profit level has led these companies
to expand their activities. Moreover, the
development of legislative framework –
which has been kept apace of reported
development – has played an important
role inachieving thesuccesses targetedby
both governments and the private sector.
Furthermore, the big challenge in
this respect lies in the economic
capacity of the region's countries
to attract foreign companies in
order to benefit from them through
techniques, experiences, and capital
investments. It is no longer feasible to
attract foreign companies to acquire
transactions, contracts and investment
opportunities alone. This is the case for
the power sector, real estate sector or
even the services sector, unless these
investments are medium to long-term.
It is worth mentioning that the volume
of financial and economic pressures
impedes the entry of further direct
investment companies at present due
to the accelerated pace of events and
amendments introduced to investment
plans over a short span of time.
With regards to the UAE model, Al
Mazaya's Report states that the open door
policy adopted by the UAE for attracting
foreign companies and investment has
contributed to improving its rating among
the region's countries in terms of its ability
to attract diverse investments, thanks
to its economic resilience in the face of
global economy developments. This is
in addition to low taxes on imports, and
even zero taxes on imports for companies
registered in free trade zones. Other
factors include the low level of credit risks
and constant improvement in the elements
of competition. It is worth mentioning
that the number of branches of foreign
companies in the UAE is increasing
daily, reaching 1,941 branches at the
end of first quarter of the current year.
Professional and trading licenses
accounted for the largest portion of
companies coming to invest, while
the industrial companies acquired
the lowest portion. It’s worth noting
here that the strength of the UAE's
economy – which mainly depends on
oil and gas sector – has declined and
affected foreign investments as well as
the number of the companies entering
the market. This is because, as an
entry plan, foreign companies were
relying on major industrial projects
and huge investments, which were
being prepared during the period
before the drop in oil revenues. Thus,
the decline in the total investment
capitals at the domestic level will have
a negative impact on the desire of
foreign companies to enter and invest.