Home Headline News Dubai Grows Despite Covid

Dubai recorded exceptional inflows of foreign direct investment (FDI) in 2020 with 455 projects worth AED24.7 billion, according to data from the Dubai FDI Monitor released by the Dubai Investment Development Agency (Dubai FDI), an agency of Dubai Economy. An estimated 18,325 new jobs creation by inbound FDI in 2020, according to the Dubai FDI Monitor, which uses the Organisation for Economic Cooperation and Development’s (OECD) methodology to track FDI data.

This performance places Dubai among the top global FDI locations in 2020, ranking first in the Middle East and North Africa (MENA) region and fourth globally in attracting greenfield FDI capital, according to the Financial Times’ fDi Markets, the leading global source of data on greenfield FDI.

The 455 FDI projects implemented in Dubai in 2020 exceed the annual average of 441 over the past five years, reaffirming Dubai’s strong FDI location fundamentals as well as its economic resilience, sectoral diversity, and FDI future-readiness.

Dubai continued to lead regional and global FDI locations in facilitating global business growth and expansion, ranking first in the MENA region and third globally in attracting greenfield FDI projects, according to fDi Markets. Dubai also achieved a record global market share in greenfield FDI projects, attracting 2.1% of all such projects in 2020, exceeding the 2% mark for the first time.

H.H. Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Dubai Crown Prince and Chairman of The Executive Council of Dubai, said: “Dubai’s regional leadership and global prominence in FDI attraction and future economic opportunities for global businesses and startups are the result of the great vision of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, that laid solid foundations for Dubai’s emergence as a smart and sustainable city of the future, the main gateway to regional growth markets, and a pivotal hub in the global economy.” Sheikh Hamdan added: “Dubai’s sustained FDI flows and its leading position in regional and global rankings as a major FDI destination in 2020, reflect the continued attractiveness of Dubai’s investment environment and the confidence of the investor community in Dubai’s future economic potential. Dubai’s success in combating the COVID-19 pandemic and starting the recovery phase in record time is a testament to our commitment to provide the best investment environment in the world and transform global challenges into new opportunities for growth, driven by technology and innovation, and powered by Emirati and global talent, making Dubai the best place in the world to work, live, and invest.” Dubai’s outstanding FDI performance in 2020 was achieved in the face of extremely challenging global investment circumstances created by the COVID-19 pandemic and its economic impact. According to the Global Investment Trends Monitor published in January 2021 by the United Nations Conference on Trade and Development (UNCTAD), global FDI “collapsed” in 2020, falling 42% from AED5.5 trillion in 2019 to an estimated AED3.15 trillion.

The UNCTAD report goes on to say that “the effects of the pandemic on investment will linger and investors are likely to remain cautious in committing capital to new overseas productive assets.”

Sami Al Qamzi, Director General, Dubai Economy, said: “Through the leadership of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, and the directives of His Highness Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of The Executive Council, Dubai’s economy has continued to demonstrate high levels of resilience, diversity, and speed of adapting to changes, supported by its world-class infrastructure, legislation, and ease of doing business.” Highlighting Dubai’s achievements in regional and global rankings as a leading FDI Global City of the Future in 2021/2022, His Excellency added: “Dubai has become a pivotal hub in the global economy, offering growth and expansion opportunities for investors across strategic and future-oriented sectors in financial services, logistics, hospitality and trade as well as leading Industry 4.0 technologies, accelerating digital transformation across all sectors, industries, and smart city services in Dubai. We look forward to supporting this success, growth, and expansion as we move to a new phase of sustainable economic growth and future opportunities, inspired by our leadership’s vision and enabled by strategic plans and government initiatives, as we get ready to host Expo 2020 Dubai and share new opportunities arising from the 2040 Urban Plan.”

The “FDI Global Cities of the Future 2021/2022” report published by fDi Intelligence, a division of the Financial Times, in February 2021 ranks Dubai third among the top global FDI locations. Dubai is also ranked second globally in the ‘Major Cities for FDI’ subcategory as well as in ‘Economic Potential and Business-friendly Environment’. Dubai is third in the ‘Connectivity’ subcategory. These achievements highlight and further strengthen Dubai’s future-readiness and are a key indicator for future investor confidence.

Fahad Al Gergawi, Chief Executive Officer, Dubai Investment Development Agency (Dubai FDI), said: “While we take pride in Dubai’s achievements as a leading FDI Global City of the Future 2021/2022, we also take inspiration from the hundreds of investors that choose to invest in Dubai to grow their future business sustainably, despite the unprecedented global challenges of 2020. Thanks to the strategic foresight of Dubai’s leadership and the emirate’s future-readiness, global investors and entrepreneurs have realised success and growth in Dubai over the years. Our performance in 2020 flows from the success stories that drive investor confidence and the opportunities shaping future economic potential.”

With more than 50% of all announced FDI projects in the emirate classified as greenfield FDI, Dubai’s consolidated its status as a smart and sustainable city of the future, a gateway to regional growth markets and a leading global business hub in 2020, despite the stringent measures it took to combat the global pandemic.

Highlights of Dubai’s FDI performance in 2020 Reinvestment FDI: FDI capital from reinvestment projects reached AED1.6 billion in 2020, exceeding the AED1 billion mark for the first time since 2016, as per data from Dubai FDI Monitor. Dubai ranked first in the MENA region in reinvestment FDI projects as well as capital, and fourth and 11th globally in the two categories respectively, according to fDi Markets.

Venture capital FDI: Dubai’s dynamic innovation, entrepreneurship, and venture capital ecosystem enabled Dubai-based startups to attract an estimated AED2.36 billion in FDI capital through 31 investment deals in 2020, according to data from MAGNiTT, a Dubai-based firm that captures and analyses startup funding information. Dubai ranked first in the MENA region and 11th globally on the “Global Venture Capital FDI 2020” report by fDi Intelligence.

Strategic sector FDI: The share of FDI projects in strategic sectors reached 57 percent of all announced FDI projects in Dubai in 2020, which further strengthens the foundation for Dubai’s sustainable economic development. These investments accounted for 91 percent of estimated FDI capital flows, reaching a record AED22.5 billion. The Dubai Government’s strategic plans and accelerated future-readiness have especially attracted strategic FDI into high and medium-tech sectors in 2020, as 76 percent of all strategic FDI projects in 2020 were high and medium-tech with a total of AED11.2 billion in estimated FDI capital.

Top source countries: The United States was the top source country, accounting for 21 percent of FDI capital and 22 percent of FDI projects. France (16 percent), Japan (11 percent), the United Kingdom (7 percent), and Germany (6 percent) made up the rest of the top five source countries for FDI capital into Dubai in 2020. The UK (14 percent), France (6 percent), India (6 percent), and the Netherlands (4 percent) made up the rest of the top five in FDI projects. The top five source countries accounted for 60% of the total FDI capital flows and 52% of the total number of announced FDI projects.

Top sectors: The top five sectors with FDI flows, accounting for 69 percent of the total estimated FDI capital flows into Dubai in 2020, were Accommodation & Food Services (40 percent), Electric Power Generation (13 percent), Other Information Services (8 percent), Healthcare & Social Assistance (4 percent), and Retail & Whole Trade (4 percent). The top five sectors that received FDI projects, accounting for 54 percent of the announced FDI projects into Dubai in 2020, were Accommodation & Food Services (18 percent), Retail & Wholesale Trade (14 percent), Software Publishers (10 percent), Finance & Insurance (6 percent), and Management of Companies (6 percent).

Despite the challenges of the global pandemic in 2020, Dubai was able to strengthen its position as a global economic and financial hub. Taking advantage of Dubai’s strategic geographical location, thriving business ecosystem and quality of life, more multinational corporations established their regional headquarters in Dubai, creating new jobs and attracting global talent to live and work in the city. At the same time, regional and global startups considered Dubai’s infrastructure and connectivity to be the ideal combination to launch, test and expand their business.

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