Complex Made Simple

Leave Dubai and head to Cairo? Best city to run your business revealed

Where is the cheapest place to rent office space in the GCC? How easy is it to set up a business? What are the ownership laws?

AMEinfo dives head first into the region’s business world to find out the best place from where to run your business and why.

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Rental costs

We scoured the region’s lettings agencies to compare office prices across the region. Of course, there are many factors that affect the price. A penthouse office with Downtown views does not come cheap, similarly, a back street office may help to save the pennies, but does little for making a good impression at client meetings. So we have taken an average costing for offices in the region’s business capitals: Dubai, Riyadh, Bahrain, Abu Dhabi,  Kuwait, and Cairo. Prices were calculated by using classified websites OLX and Propertyfinder.

Ease of setting up a business

Dubai: Cost-wise, Dubai tops the list, with office space costing, on average, a whopping $300 per sqm.

As per a World Bank survey from June 2017, Dubai is one of the easiest cities in which to conduct business in the world, coming in at no. 21, just behind Germany. New Zealand came first, while Somalia came last.

With new Visa laws in effect allowing expats to obtain a 10-year visa, the high rent prices are perhaps justified.

Situated on the Persian Gulf, the city of Dubai is a renowned global city whose importance to the global economy is almost unparalleled.

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The city has established itself as an emirate and city on its oil industry and through that industry has fueled its current success as a cosmopolitan metropolis.

However, if you want to start a business in Dubai, there are a few things to be aware of before proceeding.

Firstly, as a result of ownership laws in the UAE, foreigners cannot hold a majority share of any business in Dubai and must have an Emirati partner who holds at least 51% of the venture.

Notable exceptions to this ownership rule are in Dubai Free Zones, where non-nationals can own 100% of a business.

Secondly, the process to start a business can be daunting for someone who does not know how to navigate the tricky business registration process, so it would be best to have someone who has gone through the process before as a guide.

Thirdly, Dubai is tax-free but does not hold a free trade agreement with the US, so tariffs can still be raised when engaging in trade between the two nations.

However, there is an Investment Framework Agreement (TIFA) between the two nations, which offers local business a 10% preferential price in government procurement.

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Riyadh: Riyadh is ranked as the 92nd easiest country in the world in which to conduct business, according to the World Bank survey. The capital of one of the world’s richest nations, Riyadh is an economic titan and the most prosperous city in Saudi Arabia.

In terms of trade, the Kingdom imports a great deal of produce and other goods such as textiles and machinery, due to a lack of arable land and the weakness of non-oil industries.

Riyadh benefits from trade agreements with several nations, including the US. In fact, Saudi Arabia is the United States’ biggest trade partner in the Middle East.

One major potential drawback of doing business in Riyadh, depending on the business, is a lack of seaports or ocean access, due to the city being landlocked.

It does, however, have relatively quick access to the city of Jeddah, which sits on the Red Sea to the west, and Dammam, which sits on the Persian Gulf.

The Saudi Arabian General Investment Authority (SAGIA) offers 100% foreign ownership of property and companies in certain industries.

Office space in Riyadh costs $200 per sqm.

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Bahrain: Coasting in the Persian Gulf, the tiny, island nation of Bahrain stands out as another beneficiary in the Gulf Coast oil boom. In fact, Bahrain was the first place in which oil was found on the Arabian side of the Persian Gulf.

It offers ownership rights that are more extensive than the regional norm, allowing for foreigners to unexceptionally fully own their companies. Non-nationals are still not allowed to own land or property, except in certain designated zones.

Fortunately Manama, and Greater Manama is one of these zones, so you can purchase real estate there. These make Manama one of the easiest places to do business, without having to go through the hurdle of having a business partner who is a national.

Bahrain currently has a trade agreement with the US along with other nations all throughout the world, particularly those in Asia.

Bahrain is considered average in terms of ease of doing business, according to Trading Economics, scoring 48.50.

Office space in Bahrain costs $190 per sqm.

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Abu Dhabi:

In 2015, the Abu Dhabi Government issued a new law concerning the regulation of the real estate sector in the Emirate which contributed towards the growth of the economy, as well as attracting foreign investments.

Abu Dhabi has one of the most stable and fastest growing markets in the Middle East, which is ideal to launch a successful business, as the procedures are highly transparent and flexible.

For commercial agencies or branches of foreign companies, the Law on the Regulation of Commercial Agencies stipulates that the business of the commercial agency in the UAE shall be limited to UAE nationals only.

The accepted legal forms of companies in Abu Dhabi are Limited Liability Company, Partnership Company, Limited Partnership Company, Private Shareholding Company, and Public Shareholding Company.

To perform any economic activity, both national and foreign investors are required to join the Abu Dhabi Chamber of Commerce and Industry.

A certificate of membership is deemed to be necessary for the issuance or renewal of a business licence in the Emirate.

Again, as per UAE law, foreigners cannot hold a majority share of any business in Abu Dhabi and must have an Emirati partner who holds at least 51% of the venture.

Office space in Abu Dhabi costs $50 per sqm.

READ: Abu Dhabi registers 26% more business licenses in Q1 2018 compared to 2017

Kuwait: Like most nations in the Arabian Gulf, Kuwait is welcoming. The small nation’s strong economy and high-income levels offer plenty of opportunities for enterprising in domains such as imports, services and consulting.

Another factor that makes Kuwait attractive is the low corporate income tax rate (15%) for foreign-owned businesses run by Kuwaitis or nationals of any other Gulf country; they are exempt as well of any sort of personal income tax.

Kuwaiti corporate law is not the easiest to digest, and the process of setting up a business can be rather convoluted, however.

If you’re primarily looking to export to Kuwait, or to enter contracts with Kuwaiti firms or the government, finding a commercial agent with the requisite trade license may be the easiest option.

When it comes to labor laws, a business registered in Kuwait has to ensure that at least a certain percentage of its employees are Kuwaiti nationals.

If you’re looking to import goods into the country, note that the customs duty is 5%, with exemptions for a few basic food staples, as well as higher rates on some items such as tobacco.

Office space in Kuwait costs $30 per sqm.

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Cairo: Thanks to its geographical position, Egypt is at a crossroads between Africa and the rest of the world. In fact, the country has signed a score of bilateral and regional free trade agreements and programs.

In general, Egyptian nationals, either natural persons or legal entities (regardless of their ultimate ownership), have the right to own property in different areas of Egypt. These rights are subject to various terms and conditions set out by the government.

There are restrictions on foreign ownership; for example, a foreigner who owns a plot of land must erect a building on the land within five years of registering his ownership with the Notary Public. Ownership of non-residential property by foreigners is regulated by other laws. For example there are restrictions on the surface area and number of properties a foreigner may own (currently limited to a maximum of 4,000 square metres and two properties).

Investing in Egypt has several advantages, especially in terms of highly qualified manpower (particularly in the finance, tourism and information and communication technology fields), the low cost of manpower, a reliable local telecommunications network, etc.

Despite the discrepancies relating to the concentration of economic activities around the Nile, the growth rate remains favorable, thus encouraging the setting up of businesses in the country.

The incorporation certificate is issued by the GAFI once it has validated the company’s statutes. This document is issued within 24 hours. You then have to request for an operating certificate from the Chamber of Commerce.

Thereafter, you are required to officially register the company at the Registry of Commerce. The legal incorporation notice will then be published in the Official Gazette by the Companies Department within 15 days in case of no objection.

Lastly, keep in mind that your country’s embassy in each of the aforementioned country, as well as the chambers of commerce and export promotion offices, are all useful sources of advice and assistance.

Office space in Cairo costs $5 per sqm.

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