UAE emerges as global magnet for foreign investment amid regulatory reforms and mega deals
Foreign capital surges as investors tap the UAE’s policies, infrastructure, and talent
When German kitchens brand Nolte was looking to expand its reach across the Middle East, Asia and Africa, it made sense to invest in scaling up its UAE operations, as much for the country’s robust economy as for its role as a design and business hub for the wider region. The 67-year-old family business, which has operated in the Emirates since 2007, announced a multi-year investment worth Dh25 million into the country in October.
The inflow will see the company move from a distribution-led approach to operating as a mainland entity – something that has become possible with recent laws that enable mainland companies to be 100-per cent owned by foreign entities.
“Dubai’s role as a regional business and innovation hub made it the natural choice for our investment. Its robust economy, infrastructure, and accessibility provide an ideal base for establishing direct operations and expanding our footprint across neighbouring markets,” says Selva Kumar Rajulu, Managing Director at Nolte.
The company will launch a flagship store on Dubai’s Sheikh Zayed Road to engage directly with customers, with plans to expand into Abu Dhabi and the other Emirates. It’s also ramping up B2B operations, partnering with leading developers on large-scale projects while building a local team of designers, engineers, fitters and an after-sales team. “Based on current projections, we expect to close the ROI loop within three to four years,” Rajulu adds.
The investment shows how the UAE is becoming more attractive to international business investments following changes in ownership rules and other regulatory changes as the country looks to lead tomorrow’s economy.
While global foreign direct investment (FDI) contracted for a second year in 2024, dropping 11 per cent, according to UN Trade & Development (UNCTAD) data, the UAE moved in the opposite direction, growing 48.7 per cent to reach $45.6 billion, ranking tenth globally and capturing 37 per cent of the Middle East’s total.
In a midyear white paper to promote FDI, the UAE Ministry of Investment attributed the growth to investor-friendly policies such as full foreign ownership, a 9 per cent corporate tax rate, streamlined licensing and legal reforms – what Minister of Investment Mohamed Hasan Alsuwaidi described as ‘deliberate choices’.
At the government level, these include high-level diplomatic and local policy frameworks that amplify interest and help swell the investment pipeline.
Similarly, recent inbound-focused initiatives include the NextGen FDI programme, which aims to speed up licensing and visa issuance, improve banking services and provide property incentives for technology firms considering moving to the country. The programme has attracted more than 90 companies, including technology majors such as Coinbase, Qualcomm, Ripple, and XPENG.
Last month, His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, approved the establishment of the National Investment Fund with an initial capital of Dh36.7 billion. The fund is designed to boost incoming FDI through a suite of financial incentive packages, with the goal of raising annual FDI from Dh115 billion to Dh240 billion by 2031, and increasing the total accumulated FDI from Dh800 billion to Dh2.2 trillion.
Then there are the UAE’s free zones. Long a major pull for foreign capital, they have streamlined costs and operating burdens while attracting established players and start-ups to sectors of strategic economic importance. Dubai free zone companies, for example, can now operate on the mainland. Other have reduced fees, such as the Abu Dhabi Global Market (ADGM), which has cut registration and renewal fees for non-financial and retail firms by 50 per cent from 2025.
Hub71, the tech ecosystem that is part of the ADGM free zone, welcomed its 17th cohort in September, with 26 start-ups that collectively raised over $223 million, with the majority spanning AI solutions in healthtech, fintech, and climatetech.
Meanwhile in Dubai just weeks ago, Phillips Corporation launched its first Manufacturing Tech Center of Excellence in Dubai Silicon Oasis with a seed investment of $1 million.
The 5,000-sq-ft facility houses the US-based company’s additive and subtractive manufacturing lines as it looks to localise production as the UAE expands its industrial base.
UAE’s FDI Momentum
Last month, US-based edtech DataCamp announced the acquisition of Emirati AI-native learning platform Optima, to support AI adoption across the region, as part of an agreement valued at more than $15 million, the company told GN Focus.
“By bringing Optima’s AI-native learning experience into DataCamp’s global platform, and by creating free access for government employees, educators, and students, we have an opportunity to set a new standard for how people in the country learn online,” says Yusuf Saber, Founder and CEO of Optima.
But perhaps the biggest agreement in recent times is Microsoft’s commitment of $15.2 billion through to 2029 in capital expenses for artificial intelligence (AI) and cloud infrastructure, including data centres.
The deal also involves a previously announced $1.5 billion equity investment in Mubadala-backed digital technology company G42, and it is supported by both the UAE and the US governments, Brad Smith - Vice Chair & President wrote in a blog post last month.
Underscoring the importance of public-private collaboration, he described how both companies had consulted with political leaders and government entities in each country time and again over the past three years.
The UAE’s investment allure is rising
Michael Hasbani, MENA Clients & Industries Leader at EY, describes the UAE’s appeal as a combination of its strategic location, world-class infrastructure, and favourable regulatory environment – together with a high quality of life for professionals.
“At a time when many economies are turning inward, the UAE’s open economic model – strengthened by a growing network of CEPAs – positions it as a natural gateway between East and West,” he says.
Inflows are strongest in business, finance, software and IT, underpinned by talent attraction and predictable rules, he says, with priority sectors including AI, supported by plans for the world’s largest data centre cluster outside the US; logistics built on ports and free zones that allow firms to import, manufacture, and re-export goods duty-free; and renewable energy, which he says is advancing through economic incentives, environmental concerns, and technological advancements.
“Confidence in the UAE is reflected in investor sentiment, with 68 per cent of business leaders expecting the country’s attractiveness to rise over the next three years,” he adds, citing a recent HSBC study.
The UAE has certainly made concerted legal efforts to improve the investment and legal climate. As of 2022, there has been full foreign ownership in 13 sectors – from transport and manufacturing to renewable energy and healthcare – although strategic activities remain restricted. A new bankruptcy court in Abu Dhabi, announced in July, makes onshore incorporation more attractive.
“In recent years, our clients have witnessed a massive jump in international investment, especially in areas that require heavy funding, like logistics, infrastructure and financial services,” said Akef Khoury, Head of Legal at ETG, a company with offices in DIFC that operates in 45 countries.
“The local ecosystem is ideal to grow projects with high impact quickly but with limited financial risks. This blend of strong, modern laws and tight regulations creates a secure and efficient home base for global business operations. Also, having access to insurance options that provide asset protection for millions or billions of dollars in value is a great incentive for global investors,” said Khoury.
The company is currently spending millions of dollars to expand its insurance and reinsurance business to serve multinational clients that have relocated to the UAE from areas including Turkey and Southern Europe.
While it has become easier to enter and operate in the UAE, there’s one additional factor, says Amer Halawi, Head of Research at Al Ramz Capital, a DFM-listed brokerage and financial services firm. Investors are particularly drawn to the nation’s long-term political stability and robust governance, he says, while summing up the nation’s appeal to foreign investors.
“The UAE’s appeal stems from a mature regulatory regime, strong free zones, rapid licensing, and world-leading capital markets. Supported by CEPA-led trade, ambitious investment goals, and a 14.6 per cent rise in non-oil trade in 2024, the UAE [remains] the preferred FDI destination even as Saudi Arabia accelerates its reforms,” says Halawi.
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