Potential risks in the market

However, it should be noted that there are several questions that are needed to be discussed in this respect. It is true that the present position of Dubai as a commercial centre is a very affirmative one but there are bound to be challenges from different dimensions in terms of investors and professional executives. The first and foremost of these questions depends on the political scenario of the region. It is difficult to ascertain in the moment the future of political trends in the region. Thus the important question is that whether the political stability is secured or not?

Again, the future trend of trading and finance also raises questions and there are scepticisms in the context of long termed financial development and the ability to sustain it for a long term. Furthermore, it is just an assumption whether the government of UAE would be instrumental in sustaining the city as a free trading area or not? The geographical advantage of Dubai also puts questions from some quarters of the potential investors and economist. They ask for the guarantee about the status of the city in future as a thriving economical centre.

These are posing questions that could be a possible risk for investors. As of the moment, the UAE is very confident in giving the opportunity to Dubai’s growing economy and as a business-friendly zone compared to other nations of the UAE. Risks such as terrorism and international economic depression are more likely to strike if problems would arise. Strategies are being developed like developing local laws and keeping faith with the international laws on market and business codes and ethics.

New laws now permit investors to own the freehold of certain real estate in Dubai keeping them attracting more buyers to invest in overseas property. Though a major comment was placed regarding over expansion of large volumes it may have an over supply of real estate. It should be mentioned in this context that these risks are possibilities in theory but to negate these potential risks the authorities of the city are working hard to develop a full scale model in terms of tourism. It can be ascertained that with such successful methods the risks can be well countered.

Colossal properties such as the Dubailand would add to this process of attracting investments and tourists. The authorities of the Dubai Cultural Village are making the region more attractive by developing several constructions dedicated to art and culture. These would include centres for rare bookstores, music schools, libraries, museum of art, dance institutes and other centres for performing arts (Marr). Apart from these the city authorities are working of massive constructions as properties in the middle of the sea- The World.

As stated earlier, risk is always present in any investments. This part of the paper would be discussing the business risks that the foreign investor may face in investing in Dubai. All the Emirates including Dubai are willing to fascinate and create a centre of attention to foreign investment. However, it should be mentioned that the main aspect of problem relating to foreign investments in UAE is that the requirements of a company or establishment indicate that no sole foreign ownership is possible in this region.

If a company or organization or business is to be instrumented in this region it is necessary to include a local partner and enter a joint venture where the local partner would be holding no less than 51% of the company at any time. However, there is an exception to this rule and that indicates that total ownership of a company by foreign investors is possible only in the free trade zone. During the winter of 2002 it was found that the number of such zones were 11.

In accordance to the principals of 2002 the UAE development policies indicated that there would be some exemptions available to foreign investors. This includes recruitment of labours and professionals where there would be assistance provided in this context. Furthermore, there was the advantage of services and multilayer leases. Financially, the principals of 2002 the UAE development policies indicated that there would be profit and capital repatriation, levies in commercial sector, tax exemption in export and import and all there would be totally exempted from any from of tax (Nations Encyclopaedia).

Currently, financial investors from different parts of the world are experiencing at least good signs of cash flows and earnings from investment. Positive flow of tourism and shareholding companies keeps on moving to the frontline and continuous creation of employment and powerful engine of business since there are no foreign quotas, tax, exchange controls and trade barriers. However, risks on the side of investors are definitely unmanageable. Such risks include lending money, market risk, and international risks.

Competition among different investors will extend and complication since Dubai is a small nation to attract big investment. Moreover, businessmen are not permitted to own properties and are only allowed to lease or rent locations of their business. Few thorns to ponder for businessmen are the rising cost of leasing and renting since foreign ownership is not allowed. This is a clear indication that the most of the shares of all organizations or establishments would be occupied by the locals or in the hands of the UAE.

At this point this phenomenon may seem to pint at an uncertain future under which there parameters of the business can be very dicey in case there is a serious disagreement in terms of economy and commerce in times to come. It is possible that the share holders with minority segment would be the biggest losers. However, it should be noted that such concerns are dependent on future proceedings. For a while, investors are enjoying and putting huge trust in Dubai by acquiring a local to put their name on the ownership deed.

All are having faith in economic prospects and security and transparency for their investment (Lowtax Library). Furthermore, international risks are also important to consider since global politics and world trade is intensely unpredictable and another factor that could contribute to risk is the aggression which is prevalent in many nations with interests in oil-producing countries. International markets will be affected from the instability of economic and political situation when facing a huge dilemma.