One popular question many of our clients are asking us here at The Dubai Navigator is whether it is safe to invest in Dubai and the UAE.
Specifically, clients are wondering whether it is safe to relocate their business here, buy real estate in Dubai, and live here with their families.
In this article, we are covering how safe your financial investments really are in Dubai and the UAE.
Let’s Talk About Legal Safety In the UAE.
If you come from a Western country or democracy like India, you may wonder whether an Absolute Monarchy, like the UAE, can reliably protect your business and property assets.
The UAE does not have free elections, and its leaders are appointed based on family ties.
And in theory, this means that the UAE’s government leaders can introduce or change laws as they please.
So what does this mean for the safety of your local investments?
There are 3 main issues to consider:
(1) The speed of decision making
(2) The UAE’s dependence on investors
(3) The UAE’s rapid liberalization
Let’s discuss all three in detail.
The Speed of decision making.
Democracies are slow in changing laws and regulations - simply because everyone wants and to some extent does have a say.
This of course means that radical political changes such as expropriations or changes in immigration law are unlikely.
In a way, the slow and complex decision-making process in democracies protects you from radical changes that could adversely affect your investments.
However, it also means that democracies struggle to reform and attract business.
Developed Western countries suffer from high debt burdens and relatively stagnant economies.
Cutting down on bureaucracy and regulations has become virtually impossible, and as a result, there is little hope for urgently needed economic reforms to boost business activity.
The UAE, as an absolute monarchy, can pass needed reforms in no time.
If UAE government leaders see an opportunity to attract investors and businesses from overseas, they quickly introduce laws and incentives that allow this happen.
For example, the recently introduced 10Y Golden Visa, which is easily the world’s most generous residence visa, as we cover in article here on our website.
Of course, the fast speed at which laws are passed, and the lack of a democratic process may in theory put foreigners and investors at risk.
However, these risks remain low, due to the following important factor:
The UAE’s dependence on foreign investors
As of 2023, just 35% of the UAE’s economy is based on the oil industry.
And in the case of Dubai, one of the 7 emirates that make up the UAE, less than 5% of the economy is oil-based.
Dubai’s economy is based on tourism, real estate, and retail trade.
All of these depend almost exclusively on a large number of foreign visitors and investors.
More than 90% of Dubai’s residents are foreigners.
And those residents support the economy by renting and buying property and purchasing everything from food to clothes and cars.
That’s why the UAE and Dubai in particular are making it easier for foreigners to come and invest here.
More foreigners mean more business for local, Emirati-owned companies.
Almost every local hotel, retail store and even the local franchises of international businesses are Emirati-owned.
Obvious local-owned businesses include the Atlantis Hotel, Dubai Mall, Emaar properties and Emirates Airline.
Less obvious local businesses are Majid Al Futtaim and the Al-Futtaim Group, which control the local franchises of Carrefour, Ikea, Toyota, and Honda.
Without foreign tourists and foreign residents, those businesses simply couldn’t survive at their current scale.
It is because of this dependence on foreigners that local business elites and the UAE government need to keep welcoming foreign investors.
The UAE’s rapid liberalization
The UAE has liberalized its laws faster than any other country in recent times.
In 2018, the UAE introduced its Golden Visa program, which allows investors to obtain 10 year residency visas. More on that in another video here on our YouTube channel.
In 2020, the UAE legalized cohabitation of unmarried couples.
In 2021, Dubai allowed non-muslims to openly consume food and beverages during the holy month of Ramadan, a period during which Muslims must fast during day time.
Before the change, restaurants had to serve food during the daytime hours behind curtains and barriers.
In 2022, the UAE changed its weekend from Friday and Saturday, as is customary in many Arab nations, to Saturday and Sunday.
And as recently as this year, in 2023, Dubai scrapped its 30% tax on alcohol sales.
These are rapid and far-reaching changes for a historically Muslim nation.
If you are considering relocating to the UAE, or moving your business to Dubai, we can help.
We are 100% independent and never earn commissions.
Our services include everything from tax-saving company structures to tax-optimized property and stock investment strategies.
If you have any open questions about our services, feel free to book a free consultation with us. today.
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