Dubai has once again topped the ranking of the world’s cities attracting the most foreign direct investment (FDI) to new projects. The pirate emirate implemented 1,070 new foreign direct investment projects last year, according to Emirati news agency WAM, citing data from fDi Markets.
In total, Dubai completed 1,650 foreign direct investment projects worth just over Dh39 billion, or about $10.7 billion, in 2023, up 39% from the previous year. It also ranked first in the world for greenfield foreign direct investment in several key sectors, including consumer goods, energy, e-commerce and tourism.
Greenfield FDI refers to either the creation of a business from scratch or the expansion of an existing business initiated by companies based abroad. Dubai’s pole position in the ranking is notable given Saudi Arabia’s growing efforts to encourage multinational corporations to establish or headquarter in the kingdom. Riyadh is pursuing plans including the Vision 2030 initiative to reduce its dependence on hydrocarbon revenues.
Analysts say Dubai has defied predictions of corporate atrophy despite Riyadh’s pressure on multinationals. Although Saudi Arabia is the region’s largest economy, 60 companies chose Dubai as their headquarters last year. According to WAM, its share of global new projects has tripled to 6%.
But Dubai’s competitiveness can be tested through schemes such as Project HQ in Saudi Arabia, which aims to persuade multinationals to establish a permanent presence in the kingdom.
“This initiative could pose problems for Dubai given the significant value of Saudi government contracts,” says Vijay Valecha, chief information officer at Century Financial in Dubai.
Despite this, the emirate has a track record of overcoming such challenges and maintaining a competitive advantage. Companies are also attracted to a strong regulatory framework, which is often in line with global best practices. Dubai’s determination to maintain its position as an investment destination in the Middle East continues unabated. In a government-backed initiative known as D33, it has committed to doubling the size of its economy in the next decade to just under $9 trillion to become one of the world’s top three cities.