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Companies line up for Abu Dhabi’s Masdar City as set-up costs lowered

Another 200 companies likely to sign up in 2022



A large majority of the companies located in Masdar City are local startups, but there are a lot of firms coming in from South Asia as well.
Image Credit: Supplied

Dubai: Companies have made a beeline for Abu Dhabi’s Masdar City as the free zone slashed business set-up rates to a highly competitive Dh1,000 last year, and more than 200 companies could set up shop in 2022.

“We generally announce specific targets, but it wouldn’t surprise me at all if we had easily a couple of hundred new companies in 2022 to continue with the growth rate we had in 2021,” said Stephen Severance, head of program management and marketing at Masdar City.

Masdar City, which currently hosts around 1,100 firms, has introduced new packages and offers to lure companies and investors as competition among UAE’s free zone operators heats up. “We have some very attractive pricing for startups and new innovation companies – the market is pretty competitive out there,” said Severance.

“Dubai Economy has made it possible to have 100 per cent foreign ownership with a DED license – we need to compete with that,” said Severance.

As per the guidelines from Dubai Economy, 100 per cent foreign ownership is available for more than 1,000 commercial and industrial activities, excluding economic activities with a strategic impact, which relate to seven sectors.

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From an economic view, you can go to many different free zones, but from a regional platform point of view, only Masdar offers a global reach.

- Stephen Severance, Masdar City

Meanwhile, DMCC – among Dubai’s largest free zones – signed up another 2,485 companies in 2021 to raise its total past 20,000 member companies. The gains were also led by the crypto-linked initiatives the free zone had rolled out. “This year, I have seen first-hand how crypto interlinks across our industries, so I am proud that DMCC is championing the cryptographic space in Dubai,” said Ahmed Bin Sulayem, Executive Chairman and CEO, DMCC.

Earlier this month, the Abu Dhabi government announced that licensing fees for companies in the tourism business in the emirate will be capped at Dh1,000 per annum.

This fixed-fee structure covers fees payable to several Abu Dhabi government entities, including Abu Dhabi Department of Economic Development, the Department of Municipalities and Transport, Abu Dhabi Chamber membership fees and the Certificate of Conformity issuance fee.

It also covers Abu Dhabi’s regulation fees, with the amount adjustable depending on the type of business applying. Overall, the changes represent an almost 90 per cent reduction in total license fee costs.

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New packages

Last year, Masdar City introduced a new set of licensing fee options for businesses wanting to set up there.

There are three packages as part of the latest initiative, with the first allowing a business set-up for Dh1,000. A business can engage in two activities under this Package A, though no visas will be issued. Package B costs Dh7,000 and allows four activities and one visa. A third package costs Dh12,000 for the license fee, allows five activities and two visas. (Masdar City is part of Abu Dhabi wealth fund Mubadala’s portfolio.)

Mostly local

A large majority of the companies located in Masdar City are local startups, but there are a lot of firms coming in from South Asia as well, said Severance.

“The economic ties between UAE and South Asia are very strong, so you’re seeing a lot of regional companies here,” said Severance. “There are investors from other Arab countries and we are also seeing companies from Europe and US”

“From an economic view, you can go to many different free zones, but from a regional platform point of view, only Masdar offers a global reach,” he added.

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The pandemic saw a growing number of businessmen from South Asia and Europe relocating to UAE to avoid lockdowns at home. Severance said that UAE was viewed as a “middle ground” during the outbreak and that although COVID measures were put in place, the country never went into a complete lockdown situation. “We also did not have some of the terrible outbreaks that have happened in some places - UAE is also viewed as a safe haven in terms of rule of law and openness.”