Dubai ranked first globally in attracting FDI projects in 2021 amid economic rebound

The emirate was also ranked second globally in terms of attracting corporate headquarters last year

Dubai's economy continues to recover from the impact of the coronavirus pandemic. AFP

Dubai took the top spot globally for attracting foreign direct investment projects in 2021 and was ranked second in terms of attracting corporate headquarters as the emirate’s economy continues to rebound from the coronavirus pandemic.

The emirate — the tourism and commercial hub of the Middle East — attracted 418 greenfield FDI projects during the period, Sheikh Hamdan bin Mohammed, Crown Prince of Dubai and Chairman of the emirate's Executive Council, said on Sunday, as he unveiled the annual Dubai FDI Results & Rankings Highlights Report 2021, published by Dubai Investment Development Agency (Dubai FDI), an agency of the Department of Economy and Tourism (DET).

In total, Dubai attracted 618 FDI projects in 2021, including greenfield as well as reinvestment projects and other forms of investment, with the value of FDI capital flows into the emirate estimated at Dh26bn ($7bn), up 5.5 per cent from the previous year, according to a statement on Sunday by the Dubai Media Office.

The number of jobs created through FDI projects also surged 36 per cent to 24,868 in 2021.

“Dubai has created a stable, sustainable economic environment and a vibrant business ecosystem for companies and entrepreneurs to launch new ventures, tap new opportunities and expand their business both in the country and beyond its borders,” Sheikh Hamdan said.

“Over the years, Dubai has also demonstrated its resilience to global economic fluctuations, earning the confidence of global investors, and enhancing its reputation as one of the world’s leading lifestyle and business destinations.”

The UAE, the Arab world’s second largest economy, has recovered from the effects of the pandemic on the back of surging oil prices and a bounce back in its tourism and travel sectors as Covid-19 restrictions ease globally.

The country's gross domestic product is expected to grow 5.7 per cent in 2022, up from 3.8 per cent in 2021, helped by an increase in oil production, according to Emirates NBD. Japan's largest lender MUFG projects the UAE's economy will grow 4.9 per cent this year, while Abu Dhabi Commercial Bank forecasts a 5.4 per cent expansion.

Dubai's economy grew 6.3 per cent year-on-year in the first nine months of 2021, according to preliminary data from the Dubai Statistics Centre. Emirates NBD estimates Dubai's economy grew about 5.5 per cent for the full year 2021 — an upwards revision from its earlier forecast of 4 per cent.

The emirate attracted Dh15.9 billion ($4.3bn) in foreign direct investment from 378 projects in the first nine months of 2021, according to official data.

The latest data showed that Dubai continued to maintain and improve its position across key FDI attraction metrics. It ranked first in the Middle East and North Africa in FDI capital inflows, and third globally, up from fourth place last year.

Dubai also ranked first in the Mena region and fifth globally in job creation through FDI, up from sixth place last year.

“Dubai’s remarkable performance in FDI attraction in 2021 reflects the confidence of investors, multinational companies, start-ups and global talents in the investment and business environment in Dubai, notably the emirate’s success in overcoming the impact of the recent global health and economic challenges while promoting economic growth and creating new opportunities in the future economy,” Helal Al Marri, Director General of the DET, said.

The year 2021 is “the largest legislative transformation in the history of the UAE, with over 50 laws in all fields updated and reformed, paving the way for the adoption of new policies and regulations that will further enable the economy in Dubai to keep pace with global developments and sustain its leading position in future”.

Last year, President Sheikh Khalifa formally approved the most extensive legal reforms in the country’s history, including greater protection of personal data, stronger copyright rules and stricter measures to tackle fake news.

Other initiatives include amendments to the law on electronic transactions and trust services that give digital signatures the same weight as handwritten signatures. A law to protect industrial property and regulate the procedures for its registration, use and assignment was also issued.

The government will also allow investors and entrepreneurs to establish and fully own onshore companies in almost all sectors, except activities deemed to be “strategic” as part of the new changes.

Dubai also attracted 43 Headquarters FDI projects in 2021, leading regionally in this category and ranking second globally behind Singapore, surpassing major cities such as London and New York, in hosting global and regional headquarters of international companies, the report showed.

The emirate was ranked third globally in terms of HQ FDI capital flows, which amounted to Dh2.8bn, according to the data.

“These achievements reaffirm the strength and strategic advantages of the highly developed infrastructure of specialised free zones in Dubai and the emirate’s pioneering initiatives in adopting legislations to encourage and facilitate investment in the future economy in line with its ambitious strategy to lead the digital economy,” Mr Al Marri said.

Dubai was also ranked first in Mena and 10th globally in Global Venture Capital FDI Projects, according to the Global Venture Capital FDI Ranking 2022 report published by fDi Intelligence, based on data gathered during 2003-2021, the DMO statement said.

Further data from ‘Dubai FDI Monitor,’ supported by Magnitt, revealed that 84 Dubai-based start-ups successfully attracted Venture Capital-backed FDI worth Dh2.34bn in 2021, it added.

Meanwhile, the UK emerged as the top source for the FDI into Dubai last year, with a 27 per cent share of the total FDI capital inflows into the Emirates. The US followed closely with 18 per cent, France 13 per cent, Germany 11 per cent and India 6 per cent.

The accommodation and food services sector topped with 28 per cent share of total FDI capital flows into Dubai in 2021, followed by residential building construction at 15 per cent, electric power generation at 10 per cent and management of companies and enterprises at 6 per cent, among others.

“Dubai has successfully attracted a record share of the total greenfield FDI projects globally for the second year in a row. The share of greenfield FDI projects attracted into Dubai exceeded the two per cent barrier for the first time in 2020 with 2.1 per cent, and reached a new high of 2.8 per cent share in 2021,” Fahad Al Gergawi, chief executive of Dubai FDI, said.