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Following the announcement made by Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and the Chairman of the Executive Council of Dubai, the emirate took first place in the global ranking of countries that have received the largest amount of foreign direct investment (FDI).
In 2021, the metropolis recorded 418 Greenfield FDI projects. It was stated in the annual "DUBAI FDI Results and Rankings Highlights Report 2021" published by the Dubai Investment Development Agency (Dubai FDI).
Sheikh Hamdan pointed out that this growth was driven by, among other things, a consistent policy of establishing a stable and sustainable economy, and an attractive business ecosystem for new entrepreneurs and companies.
For several years, particularly in the last two years, the city has shown the ability to remain sustainable during the worst economic and non-economic fluctuations. An example of this sustainability is the emirate’s development in the midst of and after the COVID-19 pandemic, especially in real estate. This made the city one of the most attractive places for foreign investors.
Content:
- Annual report indicators in detail
- Expo 2020 and other factors that influenced the Dubai rating
- Dubai results against competitors
- What does it mean
Annual report indicators in detail
As it was previously stated in the annual report "DUBAI FDI Results and Rankings Highlights Report 2021", Dubai placed first in the general global ranking of countries to attract FDI.
With these mentioned 418 projects, the city was able to move up from third place in the list in just one year. The calculations used information provided by the Financial Times "fDi Markets" among other things.
It was recorded in the investment attractiveness section of fDi Markets that during 2021 the emirate was first in the MENA region (note: the Middle East and North Africa) and third in terms of capital inflows through FDI in the world. Previously, the city ranked fourth in this list.
The city also ranked first in the MENA region and third in terms of reinvestment in FDI projects in the world. The emirate has moved up from eleventh to seventh place in indicators of capital inflows for reinvestment.
In terms of employment created by FDI inflows, the metropolis ranked first in the MENA region and fifth in the whole world. Previously, the city took sixth place.
In general, reports show that the emirate has grown in all key indicators of foreign direct investment in comparison with the previous year. Estimated capital inflows through these investments exceeded $7.07 billion.
618 FDI projects were announced last year. This is an increase of 5.5% compared to 2020. The new FDI projects and employment indicators showed an annual growth of 36% in 2021. It is supposed that 24,868 jobs were created during that year. A year earlier, there were 18,325 work places.
The explanation of terms and the sources of the DUBAI FDI Report 2021
As already explained, FDI is foreign direct investment. This is about investments, when investors from one country invest in the assets of another country, while receiving a certain share or the right to control these assets directly.
The investor receives long-term control over the economic activity of an investment object. The range of such objects is the widest, from industrial enterprises up to office spaces.
Greenfield and Brownfield FDI projects should be clarified and distinguished within foreign direct investment.
Greenfield investment is an economic contribution in another country to the creation of an entire project and production from scratch. A good example is the purchase of a land plot to create a completely new assembly hall for some high-tech electronic equipment with no analogues on the "receiving" side.
On the other hand, Brownfield investment is an investment in the foreign economy as part of the acquisition of existing assets, real property, and companies that meet the current needs of the investor. For example, an investor may purchase the required office space to establish a regional headquarters (HQ FDI).
Returning to the sources of the DUBAI FDI Report 2021, it should be specified that most of the information is based on data from the Dubai FDI Monitor. It is the Dubai FDI index that monitors the performance of FDI projects of all types:
- Information on Greenfield FDI projects;
- Information on reinvestment indicators in FDI projects;
- Indicators of mergers and business acquisitions;
- Information on international joint ventures;
- Indicators of New Investments (NFI);
- Indicators of venture capital from FDI.
- Etc.
Expo 2020 and other factors that influenced the Dubai rating
First of all, the high attractiveness of Dubai for foreign direct investment is conditioned by the high level of investor confidence in the economy of the emirate.
This is about local and foreign investors, international corporations, start-ups, highly-qualified workers, and other prominent individuals. A key point of this confidence is exceptionally successful results achieved in the struggle against the spread of COVID-19.
Being open to foreigners is added to an effective containment policy, a successful nationwide vaccination programme, even in the most difficult periods of the pandemic, and a flexible support policy for key economic sectors.
The real estate market has become one of the key sectors and the main drivers of recovery and growth in the city and the UAE.
The world exhibition Expo 2020 was held from October 2021 to March 2022 inclusive and played a big role in the real estate sector's development. Representatives of 192 countries attended this event. The metropolis received more than 24,000,000 visitors during the six months of the exhibition.
The exhibition was able to get a huge number of international companies and professionals back to the market, attract new entrepreneurs and professionals, and provide a clear roadmap for the city’s development for the next 10–20 years.
After the exhibition, the Expo 2020 site has begun to be rebuilt into a new residential and commercial area. District 2020 is scheduled to open in October 2022. It will be the city's new business hub.
At the same time, in 2021, the UAE government implemented 50 reforms in various economic sectors and social spheres. They included the simplification and expansion of various visa programmes, also for start-ups and freelancers, not to mention big businesses and various super-wealthy investors.
Dubai results against competitors
In 2021, the emirate could attract foreign direct investment to create 43 regional headquarters for large international corporations (HQ FDI projects).
According to this information, the city took first place in the MENA region and second place in the world. However, Singapore remained the traditional leader. At the same time, the emirate came ahead of cities such as London and New York. Dubai also ranked third in HQ FDI capital inflows. According to fDi Markets, it reached $762 million.
Dubai left behind Singapore in terms of the number of Greenfield projects. Last year, 50 Greenfield projects were recorded. This is a historic achievement. In fact, the city sets a record for these projects for the second year in a row. In 2020, the metropolis received a share of 2.1% among all global Greenfield FDI projects. In 2021, the share rose to 2.8%.
Based on the Global Venture Capital FDI Ranking 2022 with information for the period 2003-21, the emirate was first in the MENA region. And it took tenth place in attracting global venture capital for FDI projects in the whole world. In 2021, 84 Dubai-based startups raised $637 million in venture capital.
What does it mean
It means that all of the above is a long statement in dry analytical language that Dubai is gaining more and more attention in the global market. And it establishes itself as the most attractive destination for wealthy buyers willing to purchase a villa by the sea, for real economic growth, for large companies, for highly skilled workers, and for outstanding professionals in their own field of expertise.
The emirate is attractive not only in economic terms. The science sphere, healthcare, and IT are developing. Dubai, just like the UAE, is trying to bring various specialists to the country: scientists, doctors, IT specialists, visionaries, start-up creators, artists, and even crypto enthusiasts.
