The UAE has announced plans to permit full ownership and visa incentives to foreigners, hoping to attract investors and innovators. The decision will allow foreign investors 100 percent ownership of companies, coupled with 10-year residence permits for them and their families. DUBAI/ABU DHABI: The UAE’s decision to relax foreign ownership restrictions on local companies and grant longer visas will benefit the country’s economy and attract higher foreign direct investment, according to analysts, especially in the local real estate sector. The landmark policy change may prompt other Gulf countries to follow suit as the region drives non-oil growth. “Approval for 100 percent business ownership outside of free zones is a welcome development, which enhances the FDI potential of the UAE,” said Ayub Ansari, senior analyst at SICO Bank in Bahrain. “This, in addition to longer term visas should incentivize expats to invest more within the UAE, making expat deposits more sticky.” The state-run news agency WAM announced on May 20 that overseas investors would be allowed to own up to 100 percent of UAE-based companies by the end of the year. Currently foreigners can only own up to 49 percent unless a company, is based in one of the UAE’s free zones. The government also said it would allow long-term visas for up to 10 years for investors and specialists working in medical, scientific, research and technical sectors, as well as their dependents, according to WAM. “(We) await the fine print on the decision for a more meaningful assessment of the impact on the economy,” said Ansari. Foreign investment in the UAE represents a relatively low proportion of GDP, said Zahabia Gupta, associate, sovereign and international public finance ratings at S&P Global. “For the UAE as a whole, foreign direct investment inflows currently comprise less than 3 percent of GDP. “Allowing foreign investors to own 100 percent of companies should help attract higher investment into the UAE and could facilitate the transfer of technologies and skills to UAE companies from their foreign owners,” she said. She added that the policy could drive growth in non-oil sectors such as retail, trade, and manufacturing. The decision to grant longer-term visas is forecast to impact the local real estate sector in particular. It has languished in recent years thanks to increasing supply and sluggish economic conditions. The visa move “will surely boost the performance of the real estate sector and give comfort to the investors there and especially property owners,” Marie Salem, director of capital markets at FFA Dubai, told Reuters. Shares in Emaar Properties, the UAE’s largest listed real estate devloper, rose 2.9 percent yesterday to their highest level in nearly two weeks. The rest of the Gulf region is likely to follow the UAE’s lead in relaxing rules around foreign ownership in an effort to encourage greater foreign investment, said Gupta. “Other GCC countries, including Saudi Arabia and Qatar, are also implementing or planning to implement similar measures,” she said. “We believe that this will, over the medium term and in conjunction with other business-friendly regulations, support the governments’ efforts to gradually diversify Gulf economies away from their dependence on hydrocarbons.” The UAE and Saudi Arabia both introduced value-added tax at the start of this year with the aim of creating a new source of non-oil government revenue. A report by rating agency Moody’s Investors Service, published yesterday, warned that the UAE’s main credit challenge remains its “fiscal reliance on hydrocarbons.” Oil revenue represented 42 percent of total government revenue in 2017, compared to 70 percent in 2014, according to the report. The price of oil — which fell below $30 per barrel in early 2016 — has recovered to around $80 per barrel, thanks to an agreement led by Saudi Arabia and Russia to curb production, which has coincided with an increase in global demand.