In 2023, Abu Dhabi solidified its position as a premier destination for Foreign Direct Investment (FDI), showcasing remarkable growth across various sectors. This article delves into the latest FDI statistics, identifies the leading investor countries, highlights the most attractive sectors, and examines the emirate’s investor-friendly environment.
Surge in FDI Inflows
The United Arab Emirates (UAE) experienced a significant uptick in FDI inflows, reaching USD 30.688 billion in 2023, up from USD 22.737 billion in 2022, marking a 35% year-on-year increase. This growth propelled the UAE to the second position globally in terms of FDI inflows.
Abu Dhabi played a pivotal role in this national achievement. The emirate attracted USD 4.48 billion in FDI capital inflows, accounting for a substantial share of the UAE’s total. Notably, Abu Dhabi ranked sixth globally in the number of greenfield FDI projects, with 172 projects, reflecting a 74% increase from the previous year.
Leading Investor Countries
The United States emerged as the foremost source of greenfield FDI into the UAE in 2023, with investments surging by over 137% year-on-year to USD 3.78 billion. India followed, contributing significantly to the investment landscape.
In Abu Dhabi, the real estate sector witnessed a remarkable 363% growth in FDI by individuals during the first half of 2023, totaling AED 834.6 million. This surge underscores the emirate’s appeal to foreign investors, particularly from countries with strong economic ties to the UAE.
Sectors Attracting the Most Investment
Several sectors in Abu Dhabi have become magnets for foreign investment:
Real Estate: The sector experienced unprecedented growth, with individual foreign investments reaching AED 834.6 million in H1 2023, a 363% increase compared to the same period in 2022. Key areas attracting investment include Saadiyat Island (34%), Yas Island (28%), Al Jurf (12%), Al Reem Island (11%), and Al Shamkha (8%).
Manufacturing and Industry: The Abu Dhabi Industrial Strategy, launched in July 2022, aims to double the emirate’s manufacturing sector to AED 172 billion and increase non-oil exports by 143% by 2031. This initiative has drawn significant foreign investments into chemicals, machinery, electronics, and food processing industries.
Technology and Innovation: Programs like the Ministry of Economy’s NextGen FDI have facilitated investments in advanced technologies, including vertical take-off and landing (VTOL) aircraft for regional distances.
Investor-Friendly Environment
Abu Dhabi’s pro-business policies have been instrumental in attracting foreign investments:
Regulatory Reforms: The UAE allows 100% foreign ownership in most sectors, eliminating the need for a local partner.
Tax Incentives: The absence of personal income tax and a competitive corporate tax rate of 9% make Abu Dhabi an attractive destination for businesses.
Free Zones: Abu Dhabi hosts several free zones, such as the Abu Dhabi Global Market (ADGM), offering benefits like tax exemptions and simplified business setup processes.
Economic Diversification: The Abu Dhabi Economic Vision 2030 aims to increase the non-oil sector’s contribution to GDP to 64% by 2030, fostering a diversified and resilient economy.
Notable FDI Examples
Several high-profile investments underscore Abu Dhabi’s attractiveness:
Mubadala Capital’s Acquisition: In May 2023, Mubadala Capital secured approval to acquire a majority stake in Fortress Investment Group for USD 3 billion, enhancing its global investment portfolio.
International Resources Holding (IRH): A subsidiary of Abu Dhabi’s International Holding Company, IRH expanded its mining ventures in Africa, including a USD 1.1 billion acquisition of a 51% stake in Zambia’s Mopani Copper Mines.
Abu Dhabi’s robust FDI performance in 2023 reflects its strategic initiatives, investor-friendly policies, and diversified economic landscape. The emirate continues to attract substantial foreign investments across various sectors, reinforcing its status as a global investment hub.
Source: Partner, Market Research Abu Dhabi
