The Pearl of Hospitality Umm Al Quwain
Real Estate & Construction and Hotels & Leisure
UAQ has witnessed growth and prosperity in various sectors including real estate and hospitality, accompanied by substantive legislative development.
Law Update: Issue 359 - Real Estate & Construction and Hotels & Leisure
Ali BachrouchPartner, Head of Corporate Structuring – Northern Emirates
Hussam HelalAssociate,Corporate Structuring
Riad HaidarLegal Assistant,Corporate Structuring
The Emirate of Umm Al Quwain ("UAQ") is the second smallest Emirate in terms of area in the UAE, and it is located on the coast of the Arabian Gulf on Khor Al Bayda. Dating back more than 5,000 years, it is the oldest pearl diving area in the world, and it is also distinguished by the presence of many archaeological sites that date back to the dawn of Islam. UAQ has witnessed growth and prosperity in various sectors including real estate and hospitality, accompanied by substantive legislative development. In this article we will highlight the main legal developments in the real estate and tourism sectors, and we will tackle on the main requirements for setting up a business in the hospitality field.
In 2021, his Highness Sheikh Saud bin Rashid Al Mualla, the Ruler of UAQ, has issued Law No.1 of 2021 on real estate ownership in Umm Al Quwain. It is worth mentioning that this law confirmed the eligibility of foreign persons and companies to own the storeys but not the land in certain investment areas and arranged rights including the usufruct right in a long-term contract for a period of 99 years, or in a long-term musataha contract up to 50 years, renewable by agreement of the two parties for a similar period.
In 2022, his Highness the Ruler of UAQ has issued Law No. 2 for 2022 on the establishment of a "Real Estate Foundation" in UAQ, which is a governmental institution that aims to regulate the real estate sector in UAQ by contributing to the preparation of strategies related to this sector and the development and implementation of action plans necessary to advance the sector and keep pace with the growth of the urban movement in UAQ due to the urgent need to reorganize and rehabilitate the real estate sector in UAQ to meet the increasing demands from investors, to construct more investment properties in UAQ, and exploit them for all residential, commercial and industrial purposes.
Moreover, the government of UAQ has always been keen to develop the tourism sector, whereas, in 2019, his Highness the Ruler of UAQ, has issued Law No. 1 of 2019 regarding the establishment of Department of Tourism and Antiquities in UAQ (“DTA”). The aim of establishing DTA was to preserve the historical and cultural heritage of the Emirate, the antiquities, and national identity in line with the values of its society and to coordinate the development and promotion of tourism internally and externally in a way that benefits the local government economically, socially, and culturally.
The licensing of tourism activities in UAQ, including hotels, hotel apartments and resorts, is governed by the DTA being the competent regulatory authority.
Foreign investors can carry out such business activities through the formation of a limited liability company in partnership with UAE local partner. The UAE partner’s percentage should not be less than 51% of the share capital however such requirement may vary in the near future due to the current developments in the application of the new foreign direct investment regimes. In order to obtain a tourism license from DTA, the main stages are as follows:
The first stage: obtaining the initial approval from DTA, based on the following main requirements:
Initial approval from the immigration authority for each foreign investor.
A certificate of trade name reservation of the company issued by the Department of Economic Development in UAQ.
UAE ID/passport for individual investors and corporate documents for corporate investors.
Preliminary study of the project (feasibility study).
A lease or investment contract attested by the municipality.
A copy of the identity card and passport of the general manager who will be appointed to the company, and it is required that he has an educational qualification and experience in the hotel field, duly certified.
DTA inspects the site and then provides the investor with the initial approval to practice the activity.
The second stage - completing the construction of the site:
It is a stage in which the investor follows up with the UAQ municipality to complete the site construction requirements in order to obtain a building completion certificate. During this stage, DTA conducts several inspection rounds on the site according to the completion percentages, as the classification certificate depends on this inspection:
Initial Inspection: Upon completion of 30% of the site and it is reviewed on the general structure of the building.
Second inspection: upon completion of 50% of the site, depending on the size of the rooms, Jacuzzi bathrooms and the rest of the room facilities.
Third inspection: upon completion of 70% of the site and depends on the cladding and interior accessories of the building and on modern equipment such as air conditioners and furniture.
Fourth inspection: upon completion of 100% of the site and depends on the additional facilities and appendices of the hotel. Swimming pools - gyms - massage parlors - parking lots - various stores.
The third stage - obtaining the final tourism license certificate and classification certificate where the following main additional documents will be required:
Certificate of completion of the site.
The initial approval issued by the Department of Tourism and Antiquities.
Signature specimen for the authorized manager.
A letter of undertaking not to practice the activity until after obtaining the final license and specifying the classification and a letter to start operating.
Undertaking to provide DTA with complete and correct data about the guests and the reservations program.
Undertaking to notify DTA of any accidents or changes related to the facility.
Apart from DTA, the main regulatory approvals required to carry out the business in the establishment are:
Civil defense certificate related to security and safety standards.
A letter from the Public Health Department at UAQ Municipality.
NOC from UAQ Police General Headquarters.
Its apparent that there are a lot of regulatory developments in the real estate and tourism sectors in UAQ, where the creation of the Department of Tourism and Antiquities played an instrumental role in developing the regulatory framework and the business landscape in the Emirate. Such developments entailed positive impacts on the investment environment in the Emirate, and its expected to witness further developments due to the rapid changes in the local implementation of foreign investment regimes.
For further information,please contact Ali Bachrouch, Hussam Helal or Riad Haldar.
Published in June 2023
