Dubai FDI surge makes it top Mena foreign investment destination

Dubai received Dh38.5bn of foreign direct investment capital flows last year, against Dh27.3bn in 2017 and Dh25.5bn a year earlier

Burj Khalifa in Dubai lit up with the UAE flag. The country's banking regulator cut key interest rates following the Fed's move. Leslie Pableo / The National

Foreign direct investments into Dubai rose more than 41 per cent in 2018, propelling the emirate to the top among FDI destinations in the Middle East and North Africa, and improving its global ranking by four positions.

The commercial and trading hub of the Middle East received Dh38.5 billion in terms of FDI capital last year, against Dh27.3bn recorded in 2017 and Dh25.5bn a year earlier. This is the first time the emirate has achieved total FDI capital in excess of US$10bn in a financial year, said Fahad Al Gergawi, chief executive of Dubai FDI, the government body responsible for the promotion of foreign investments in the emirate.

“There is a big jump that Dubai achieved last year”, which is an indication of the readiness of Dubai’s investment ecosystem, offering growth opportunities from start-ups to global conglomerates, Mr Al Gergawi told a press conference in Dubai on Sunday.

The surge in capital flows to the emirate has also helped Dubai’s global ranking in terms of FDI inflows to rise to sixth position, he said, citing fDi Markets data.

Dubai last year also proved itself to be one of the most attractive destination for global talent. Foreign investments resulted in about 25,000 new jobs in the emirate, putting it ninth in the ranking of countries creating jobs through FDI, according to FDI Monitor figures, a Dubai FDI portal that tracks and analyses investment data.

“Medium and high-tech FDI projects, being a major tool in job creation, accounted for 29 per cent of the total jobs added in 2018,” Sami Al Qamzi, director general at Dubai Economic Department, said in a statement.

Attracting foreign investment is high on the UAE’s agenda as the second-biggest Arab economy continues to diversify its revenue base, cutting dependence on oil proceeds. The UAE, which last year passed the FDI law, which streamlines and facilitates capital inflow, is expecting a significant boost in the foreign investments this year.

At the emirate level, Dubai has launched several initiatives of its own relating to improving the ease of doing business and attracting young entrepreneurial talent.

Dubai remained among the top three globally, together with Singapore and London, in terms of number of projects initiated with foreign investments, which includes greenfield development and new forms of investments such as existing businesses setting up new ventures with foreign partners.

The total number of FDI-initiated projects in the emirate climbed to 523 last year, a 43 per cent year-on-year jump. About 55 per cent were classified as "strategic for Dubai" by FDI Monitor

“Dubai was especially able to attract a lot of small and medium-sized investments with a high technology component and large innovation capabilities. More than 58 per cent of the investments in the emirate go into medium and high-tech areas, Mr Al Gergawi said.

The US remained the top FDI source market for Dubai, accounting for 37 per cent of the total capital inflows, followed by India at 12 per cent, Spain at 9 per cent, China on 7 per cent and the UK with 5 per cent. In terms of the number of the investment projects initiated last year, the US also maintained its top position followed by the UK, France and India and China, according to FDI Monitor data.

The accommodation and food services sector was the top FDI recipient, accounting for 46 per cent of the capital inflows into Dubai in 2018. Non-residential building construction with 15 per cent, residential building construction with 8 per cent, entertainment with 5 per cent finance sector with 4 per cent were the other sectors in the top five, data showed.