The United Arab Emirates has clinched the second spot internationally, right behind the United States, in greenfield foreign direct investment (FDI) project announcements for 2023.
According to UNCTAD’s World Investment Report 2024, the UAE registered 1,323 projects, indicating a 33 percent increase from 2022.
The UAE received $30.688 billion in FDI in 2023 as compared to $22.737 billion in 2022. This indicates a 35 percent increase over the previous year. The study also highlighted that the UAE’s FDI outflows decreased to $22.328 billion in 2023 from $24.833 billion the year before.
Dubai leads in greenfield projects
Dubai has maintained its status as the leading hub for new greenfield headquarters projects with 60 projects in 2023, surpassing Singapore and London, which had 40 and 31, respectively. Riyadh was in fourth place with 22 new greenfield projects last year.
U.S. the biggest source of greenfield FDI inflows
In 2023, the United States emerged as the primary source of greenfield FDI inflows into the UAE, which increased by over 137 percent y-o-y to $3.78 billion. India came in second with $3.21 billion, a significant increase of 413 percent y-o-y. The United Kingdom came in third with $1.19 billion, a 151 percent y-o-y increase. France followed with $1.1 billion, a slight decline of 7 percent y-o-y. China came in fifth with $935 million. The United Kingdom led in the total number of greenfield FDI projects with 216 projects. The United States came in second place with 207 projects. India followed with 201 projects. France came in fourth with 58 projects and Italy came fifth with 46 projects.
Tactical reforms and trade ties spur UAE’s FDI goals
The remarkable growth in greenfield FDI in the UAE for 2023 can be attributed to a confluence of strategic regulatory reforms and ambitious trade agreements. The introduction of regulatory reforms, including the allowance of 100 percent foreign ownership in specific sectors, enhanced intellectual property protections, and streamlined licensing procedures, has significantly bolstered the UAE’s appeal to international investors.
These changes have not only facilitated ease of doing business but have also instilled confidence among foreign investors regarding the protection of their investments. Moreover, the substantial increase in the value of goods exported from the UAE, which saw a 37 percent rise between 2019 and 2022, underscores the country’s expanding role in global trade. This growth is further supported by the UAE’s proactive approach in signing Comprehensive Economic Partnership Agreements (CEPAs) with several countries, including India, Cambodia, Israel, Indonesia and Turkey, while also engaging in ongoing negotiations with at least 16 other countries. Such agreements have enhanced trade relations and opened new markets for the UAE, contributing to a more favorable environment for FDI.
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