Dubai attracted 523 FDI projects that have led 25,000 new jobs being generated in the emirate
Dubai attracted $10.5 billion (AED38.5bn) worth of foreign direct investment (FDI) in 2018, up 43% compared to 2017, climbing to the sixth place in global FDI capital flows ranking.
In 2018, Dubai attracted 523 FDI projects, resulting in the emirate rising from fourth to third in the global ranking of number of new investment projects.
These FDI projects have led to 25,000 new jobs being created by investors, with medium and high-tech FDI projects being the main driver.
“Some of these figures have been a 10-year high for Dubai. These are an impact on investment and also the city for the next year or two," Fahad Al Gergawi, CEO of Dubai FDI told Arabian Business.
"A very important figure came from international ranking for Dubai as the highest growth globally. In terms of FDI on AI (artificial intelligence), we ranked third globally. Dubai FDI has looked at contributing 6 percent to the UAE’s GDP and we are always within that healthy number and sometimes even higher.”
Al Gergawi agreed that a lot of FDI projects have been related to Expo 2020 Dubai but added that the government has a long-term sustainability plan, which will ensure that the event will not be the last big project for the city.
“This is not the only project and this will not be the only project,” he added. “Expo 2020 will be one of the components the city depends on for investment but definitely once the Expo finishes, there are other things that the government has taken on.”
Speaking about the size of investment, he said: “We look at investments that are AED2 million and above. But we also look at strategic investments that comes with AED50 million in terms of capital with companies with an overall value of AED300million”.
Dubai as a city provides an attractive FDI ecosystem to mainly three types of projects, according to the Group CEO of Wavteq.
Greenfield projects, for which Dubai is the third most attractive location in the world, mergers and acquisitions, and projects that are classified as new forms of investment (NFI).
Greenfield is when a foreign company establishes a new subsidiary in Dubai, which is wholly owned by the parent company.
“For example, if Amazon sets up a very large operation in Dubai [as it did recently], which is wholly controlled by Amazon and creates hundreds of jobs, that’s a Greenfield investment,” Dr Henry Loewendahl explained.
“As we’ve seen recently with Uber buying Careem, Dubai is seen as centre for merger and acquisition activities in the region and can create billions of dollars of investment,” he added.
As the name suggests, NFI is a fairly new concept in the market that is helping shape future trends and growth. NFI accounted for 28.9 percent in total investments in 2018.
“Foreign companies have a big impact on the economy from other types of investment. A good example would be Marriott. Marriott generally doesn’t build hotels. It manages and operates the hotels transferred to them through marketing and brand and knowledge of how to run a hotel. But It is a local company that is building and owning it,” he explained.
Currently, the major contributors to Dubai’s FDI are the United States (37 percent), India (12 percent), Spain (9 percent), China (7 percent), and the United Kingdom (5 percent) with FDI flows largely concentrates on accommodation and the food services sector, followed by constructs, entertainment, and finance and insurance.