Beers at Ramadan: Dubai Relaxes Rules as Gulf Adapts to Draw Business

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Other Saudi neighbors also have relaxed rules for international investors to boost economic growth. Qatar has loosened foreign residency requirements, and Kuwait and Bahrain both last year approved a law to allow 100% foreign ownership of some businesses.

People can also play pool at the Axe House.

But the United Arab Emirates, with Dubai its most populous city, has long held the edge as the region’s most accommodating place for foreigners to live and do business—and has much to lose if its ally Saudi Arabia is successful in liberalizing and lessening economic dependence on oil.

For tourists and expats in Dubai during Ramadan, that means no longer having to wait until sunset to get a beer in a bar. In the past, few cafes and restaurants opened in daylight and they rarely played music, to abide by traditions of piety.

Many outlets in this city—where more than 80% of the population is foreign-born—are now competing for non-Muslim customers with knockdown deals on food, alcohol and entertainment.

One of Dubai’s most popular bars threw a beach and pool party for Britain’s royal wedding last month: It broadcast

Prince Harry

and his bride

Meghan Markle

on giant television screens as half-naked patrons sipped alcohol in a swimming pool, a previously unthinkable sight during the holy month.

It is a major shift for Dubai, and the new rules set the city apart. Saudi Arabia and Kuwait both ban sales of alcohol at any time of the year. Qatar allows liquor but not during Ramadan. Oman only permits it after daylight hours during the holy month.

Dubai’s authorities say they risk losing tourism dollars and foreign talent if they don’t ease rules in Ramadan.

In May, the U.A.E. extended the time some foreign professionals can work in the country to 10 years from one to three years, and said it would allow some foreign firms to fully own operations. The government also waived corporate fines for businesses that had failed to renew licenses on time.

The most visible changes are around Ramadan. The changes extend to cinemas in Dubai, which now allow popcorn during Ramadan daylight hours. The U.A.E. censorship authority also greenlighted the uncut Ramadan release of “Deadpool 2”—a film rated R in the U.S. for strong violence and language and drug and sexual references.

Jonathon Davidson, the founder of Davidson Co, a boutique law firm in Dubai, said the changes to visa, foreign ownership and Ramadan rules would attract more foreign workers and companies to Dubai and Abu Dhabi, the U.A.E. capital.

Signs cautioned people at a Dubai shopping mall that food can only be consumed inside a restricted area for kids and non-Muslims.

“Dubai and Abu Dhabi want to see themselves more as a place where people establish lifestyles, rather than do one or two-year stints to work,” he said. “It’s a natural evolution.”

It is also a matter of survival. Saudi Arabia is planning theme parks, opening cinemas and lifting a ban on women driving this month. It is also building a financial district in Riyadh to compete with Dubai’s vibrant banking and investment center.

“As Saudi seems to be moving in the direction of social reform, Dubai believes it needs to keep the first-mover advantage it has always had as the more liberal place,” said

Jason Tuvey,

a Middle East analyst at Capital Economics in London.

The new rules come as the Persian Gulf monarchies struggle with sluggish economies.

The U.A.E.’s real-estate sector is softening, stirring memories of the property crash that nearly left Dubai bankrupt in 2009. Qatar is grappling with an economic boycott imposed by its neighbors over allegations that it supports extremism in the region, which Qatar denied. Saudi Arabia’s economy is still smarting from the 2014 oil-price crash, while consumers there are buying less because of new taxes and fuel-subsidy cuts.

Foreign direct investment into Gulf countries has dropped from over a decade ago and struggled to recover, United Nations figures show.​​ ​​In Saudi Arabia, foreign direct investment fell to a 14-year low of $1.4 billion in 2017 from an average $18.2 billion in the years 2005 to 2007. The U.N. cited one-off decisions by foreign companies to sell Saudi assets and an economy still stifled by the 2014 oil-price crash.

Restricted areas allow non-Muslims and children to eat in Dubai without being seen by fasting Muslims during Ramadan.

The Ramadan changes have rankled some local Muslims. Recent advertisements showing racy female underwear by Souq.com,

Amazon.com
Inc.’s

local subsidiary, sparked customer complaints about the timing during Ramadan. The ads have since been removed. An Amazon spokesman declined to comment.

U.A.E. media reprimanded Dubai restaurant Barbary Deli and Cocktail Club for advertising a $80 all-you-can-eat “dirty brunch” during Ramadan, with limitless alcohol and pork, a meat forbidden in Islam. Lifestyle news site LovinDubai said abuse of the loosened holy-month rules showed “no class.”

The restaurant’s owner,

Joey Ghazal,

called the advertisement a “PR mistake” and apologized. “It’s culturally insensitive. Dubai is very good to us,” said Mr. Ghazal, a Canadian who operates several restaurants in Dubai.

The U.A.E. government declined to comment. In the past, the government has said most restaurants and hotels respect the region’s cultural sensitivities.

A hospitality worker drinking a pint of beer in a Dubai pub on a recent afternoon said she appreciated being able to drink and smoke a cigarette—another vice previously banned in public during Ramadan.

“For the people who live here, it makes a big difference,” she said.

The main entrance to the Axe House is closed during Ramadan and guests have to go through an underground garage.

Write to Rory Jones at rory.jones@wsj.com and Nicolas Parasie at nicolas.parasie@wsj.com

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