UAE ranks 2nd and draws $30.7B in greenfield FDI projects

The United Arab Emirates has secured the second position globally in greenfield foreign direct investment (FDI) project announcements for 2023, trailing only the United States. As detailed in UNCTAD’s World Investment Report 2024, the UAE saw 1,323 new projects, reflecting a 33% rise from 2022.

The country’s FDI inflows reached $30.688 billion in 2023, up from $22.737 billion in 2022, marking a 35% increase. Conversely, FDI outflows from the UAE decreased to $22.328 billion in 2023 from $24.833 billion in the previous year.

Dubai continued to dominate as the top destination for new greenfield headquarters projects, with 60 projects in 2023. This placed it ahead of Singapore and London, which had 40 and 31 projects, respectively. Riyadh followed in fourth place with 22 new greenfield projects.

In 2023, the United States emerged as the leading source of greenfield FDI inflows into the UAE, with investments soaring over 137% year-on-year (y-o-y) to $3.78 billion. India ranked second, with a substantial increase of 413% y-o-y, bringing in $3.21 billion. The United Kingdom was third with $1.19 billion, a 151% y-o-y rise. France contributed $1.1 billion, a slight 7% y-o-y decline, and China was fifth with $935 million. The UK led in the number of greenfield FDI projects with 216, followed by the U.S. with 207 projects. India had 201 projects, France 58, and Italy 46.

Reforms and Trade Pacts Drive FDI Growth

The significant growth in greenfield FDI in the UAE in 2023 can be attributed to strategic regulatory reforms and ambitious trade agreements. Key reforms included the allowance of 100% foreign ownership in specific sectors, improved intellectual property protections, and streamlined licensing procedures. These changes have enhanced the UAE’s attractiveness to international investors, easing business operations and ensuring investment protection.

Additionally, the UAE’s exports saw a 37% increase between 2019 and 2022, reinforcing its growing influence in global trade. The UAE’s proactive approach in signing Comprehensive Economic Partnership Agreements (CEPAs) with countries such as India, Cambodia, Israel, Indonesia, and Turkey, along with ongoing negotiations with 16 other countries, has strengthened trade relations and opened new markets, fostering a favourable environment for FDI.

Original article reference: Economy Middle East.

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