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A Comprehensive Guide to Foreign Investment in the UAE in 2024

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Foreign Investment in the UAE in 2024

The UAE has been creating robust inroads over the last few years to position itself as an attractive location for Foreign Direct Investment (FDI). While there was a little decrease in Foreign Direct Investment (FDI) in the UAE in 2022 because of socio-economic and geopolitical issues, the country continues to be one of the most stable investment destinations in the world. 

According to the WIR of 2022 issued by the UN Conference on Trade and Development, the United Arab Emirates (UAE) recorded its highest Foreign Direct Investment (FDI) inflows at USD 22.7 billion,  which is 10% higher than the previous year. The figure also surpasses other countries of the Gulf Cooperation Council (GCC).

If you want information about Foreign Investment in the UAEyou have landed in the right place. You will get everything about FDI at this place. In addition, we will discuss some future and current trends in the Foreign investment or Foreign Direct Investment (FDI)

Foreign Investment

What are the major investors for the Foreign Investment in the UAE in 2024?

A significant milestone unfolded in 2022 with the UAE-India Comprehensive Economic Partnership Agreement (CEPA). The agreement aims at boosting trade and developing stronger economic ties.  CEPA has provided numerous initiatives, including zero percent custom duties on most traffic lines and preferential market access benefiting the two countries. After signing CEPA, the bilateral trade between these two countries grew by 27.5% in one year. 

Apart from India, the United Arab Emirates (UAE) has increased its involvement with China.  The involvement has been increased primarily in the UAE energy sectors. The country has signed three agreements with the Chinese nuclear energy organization to signify the commitment to growth between both countries in this sector.  Foreign investment in the energy space will always keep a robust foothold in the United Arab Emirates. However, with the improving importance of renewable energy deals at a global level, they have become even more essential. Despite this, the United Arab Emirates is noticing a growing diversification in its investor landscape, as time passes. 

The UAE has also become a hub for international tech business owners, using tools like the Abu Dhabi Global Market (ADGM) tech startup license to instantly set up innovative companies in the region. These tools let founders access a progressive tech ecosystem and investors that help to cultivate quick scale-up through an early stage to exit. The Gulf is an appealing new hub for significant startups, particularly the UAE, three of the six unicorns located in the Middle East.

Foreign Investment

What are the Key Sectors for Foreign Investment?

Indeed, the whole UAE is the perfect destination for foreign investment of UAE. However, there are a few sectors that are the most profitable in this country for FDI. The following is the list of the top sectors that are ideal for  Foreign Direct Investment (FDI) in the United Arab Emirates: 

 

1. Greenfield projects

According to the WIR, the UAE has obtained four significant greenfield projects (997 total), making an 84% increase from previous years.  The sector has been a popular investment sector for foreign investment. As an example, the Republic of Korea, via Korea Electric Power, invested in the UAE’s Greenfield project sector with the establishment of a USD 1 billion green hydrogen plant at Khalifa Industrial Zone in Abu Dhabi.

2. Real Estate

The real estate sector is among the ideal sectors for Foreign Direct Investment (FDI) in the UAE.  The transaction in the real estate sector across the GCC from January to October 2022 amounted to USD 143.1 billion. This is a substantial increase as compared to the $136.9 billion made across the entirety of 2021.  

The UAE played a significant role in real estate transactions. The country contributes over 48% of the total value transacted. The real estate sector in the UAE has performed well, due to an increased demand for luxury residential properties. This demand can be attributed to the growing number of foreigners who are choosing the UAE as their place of residence.

 

3. Stock market

The UAE’s ADX and DFM present attractive investment opportunities for foreign investors, especially in light of recent global geopolitical and socio-economic unrest. The ADX was the best-performing market in the GCC for a second consecutive year, with an enhancement of 61.4 percent in market cap led by the IPO Boom in 2022. 

The success of Fertiglobe PLC’s IPO led to a surge in free zone company listings on the ADX, including ADNOC Gas and ADNOC Logistics and Services. The UAE has also established a regulatory framework for investment funds and changed its working week to align with the West.

What are the opportunities for the Foreign Direct Investment (FDI) in the UAE?

The UAE has adopted several strategic measures in order to attract FDI. Waiving tax and restrictions on capital repatriation are some of these measures that allow the movement of free labor in this country and incentives to foreigners. The 2021 CCL reforms further boosted the FDI by enabling 100% foreign ownership of onshore entities in the UAE in certain sectors.

 

The investment avenues are of three significant types in the UAE:

 

  • Free zone entities enjoying 100% foreign ownership
  • 51% Emirati-owned and 49% foreign-owned onshore businesses
  • Positive list activities allow 100% foreign ownership of onshore entities

 

The UAE launched the NextGenFDI in 2022 to attract global digital businesses. The initiative facilitated fast company formation, pacified banking services, and gave lease incentives for tech companies moving to the UAE. 

 

UAE also established the Invest in Dubai platform to help investors procure trade licenses and introduced a new license for start-ups and entrepreneurs at only $1,500 yearly. Abu Dhabi’s Hub71 has established a unique tech ecosystem to gather investors and founders together and grow tech companies.

Foreign Investment

2024 Prediction for the Foreign Direct Investment (FDI) in the UAE

 

The future of the FDA in the UAE is very bright. The following is the list of the top three predictions about the UAE FDA this year:

 

  • Large established businesses focusing at environmental, social, and governance ratings given the country involvement in COP28
  • Businesses developing themselves in the UAE with an aim for technological and digital innovations.
  • M&A activities are driven by the greenfield and renewables sectors, with significant corporate restructurings and consolidations of asset portfolios to dispose of non-sustainable fossil fuel assets.

How Can Flyingcolour Help You?

Indeed, the Foreign Direct Investment (FDI) in the UAE is a profitable investment option. However, foreign investors might face challenges and problems while investing or running a business in this country. Flyingcolour Business Setup can help you to handle these challenges efficiently. In addition, we will help you to earn more profits on your FDI investment. 

To learn more about the Benefits of Mainland Business Setup Dubai, book a free consultation with one of the Flying Colour team advisors, simply call +971 50 5585305 or send WhatsApp messages to +971 4 4542366. you can also drop an email to info (at) flyingcolour (dot) com.

*Please note that this article was published on 09/03/2024 by the federal policies and updates at the time of writing. For the latest info please talk to our consultant

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