UAE Greenfield FDI Clarified: Recent Developments and Key Considerations
Corporate Structuring / UAE
The United Arab Emirates (UAE) has firmly established itself as a global powerhouse for foreign direct investment (FDI), particularly in the realm of Greenfield Projects.
Law Update: Issue 376 – Transport & Insurance
Samer Qudah Partner, Head of Corporate Structuring
Sabeeha MoollaKnowledge Lawyer,Corporate Structuring
The United Arab Emirates (UAE) has firmly established itself as a global powerhouse for foreign direct investment (FDI), particularly in the realm of Greenfield Projects. This distinction is not merely a matter of chance, but a testament to the nation's unwavering commitment to economic diversification, strategic planning, and a business-friendly environment. In recent years, the UAE has witnessed a surge in FDI inflows, with Dubai consistently leading the charge as a premier destination for new investment ventures. As the nation continues to refine its regulatory landscape and open its doors to international capital, it's crucial for investors to navigate the complexities of the system with clarity and confidence. This article delves into the recent developments in Greenfield FDI in the UAE, demystifies the regulatory framework, addresses lingering misconceptions, and provides essential insights for those looking to capitalize on the country's burgeoning economic potential.
Dubai's remarkable achievement in maintaining its position as the world's top city for Greenfield FDI for the fourth consecutive year is a compelling narrative of success. According to the latest data from FDI Markets for 2024, the city attracted a staggering 1,117 Greenfield projects, a substantial 33.2% increase from the previous year. This surge not only highlights Dubai's attractiveness as an investment hub but also underscores the efficacy of its strategic initiatives. The total value of these projects reached an impressive AED 52.3 billion ($14.24 billion), demonstrating the scale and ambition of the investments.
These achievements are intrinsically linked to Dubai's D33 Economic Agenda, a visionary plan that aims to double the city's GDP by 2033.
This agenda is driven by a focus on innovation, sustainability, and the creation of a diversified economy that is resilient to global fluctuations. The influx of Greenfield FDI is a crucial component of this strategy, as it brings new technologies, expertise, and capital to the region, fostering a dynamic and competitive business environment.
The UAE's achievements in attracting Greenfield FDI reflect its commitment to fostering an open yet strategically regulated investment environment.
Beyond the impressive performance of Dubai, the UAE as a whole has solidified its position as a global leader in attracting Greenfield FDI. In 2024, the nation secured the second spot globally with 1,323 new projects, representing a robust 36% year-on-year increase. This growth is a testament to the UAE's ability to attract a diverse range of investments across various sectors. Total FDI inflows into the UAE reached USD 30.688 billion, a significant increase from USD 22.737 billion in 2022, showcasing the country's sustained momentum and investor confidence.
The UAE government has identified several key sectors as priorities for foreign investment, recognizing their potential to drive economic growth and innovation. These sectors include:
Renewable Energy: The UAE is committed to transitioning to a sustainable energy future, and renewable energy projects are a cornerstone of this strategy. The country has made significant investments in solar and wind power, and it welcomes foreign investment in these areas.
Advanced Manufacturing: The UAE is seeking to diversify its manufacturing base and attract investments in high-tech industries. This includes sectors such as aerospace, robotics, and advanced materials.
Healthcare: The UAE is investing heavily in its healthcare infrastructure and seeking to attract foreign investment in hospitals, clinics, and medical technology.
Financial Technology (Fintech): The UAE is a regional hub for fintech, and the government is actively supporting the development of this sector. This includes initiatives to promote innovation in areas such as digital payments, blockchain, and artificial intelligence.
Creative Industries: The UAE is seeking to develop its creative industries, including film, music, and design. The government is providing support for these sectors through initiatives such as free zones and funding programs.
Initiatives such as NextGenFDI have further streamlined the licensing and incorporation processes for technology companies seeking to establish operations in the UAE, making it even more attractive for innovative businesses.
Since 2021, the UAE has made significant strides in liberalizing its foreign ownership laws, allowing up to 100% foreign ownership across most sectors. However, the government recognizes the importance of maintaining oversight over certain industries that are critical to national security, economic stability, or cultural values. These industries are regulated under Cabinet Resolution No. 55 of 2021, which outlines the Strategic Impact List.
The Strategic Impact List includes sectors such as security and defense, banking and financial services, insurance, currency printing, telecommunications, Haj and Omrah services, and Quran centers. Foreign investors intending to operate in these sectors must obtain prior approval from relevant regulatory authorities, such as the Department of Economic Development (DED) or emirate-specific bodies.
Notwithstanding the implementation of significant legislative reforms aimed at liberalizing foreign ownership and fostering a conducive business environment, certain misconceptions persist regarding Foreign Direct Investment (FDI) regulations within the United Arab Emirates. To ensure clarity and facilitate informed decision-making, the following clarifications are provided:
Full Ownership Provisions under Federal Decree-Law No. 32/2021:
Pursuant to the amendments to Federal Decree-Law No. 32/2021 on Commercial Companies (UAE Companies Law), foreign investors are entitled to 100% ownership of mainland companies across the majority of sectors, with the exception of those stipulated within the Strategic Impact List.
This legislative reform has effectively eliminated the prior requirement for Emirati shareholders in most mainland business ventures, thereby affording foreign investors enhanced flexibility and control.
Regulatory Framework for Oil and Gas Activities:
Contrary to prevailing assumptions, oil and gas activities are not encompassed within the Strategic Impact List.
These activities are governed by distinct regulatory frameworks administered by emirate-level authorities,.
Comparative Analysis of Free Zone and Mainl and Operations:
While free zones have historically offered preferential conditions and streamlined administrative processes, recent legislative reforms have extended comparable benefits to mainland companies across a substantial range of sectors.
Consequently, investors now possess greater latitude in selecting between free zone and mainland operational structures, based on their specific business objectives and target market considerations.
Ownership Regulations Pertaining to Greenfield Projects:
Greenfield projects, defined as newly established ventures, are generally not subject to ownership restrictions, unless they fall within the purview of activities delineated in the Strategic Impact List.
For instance, a Greenfield project in the renewable energy sector would typically benefit from full foreign ownership rights. Conversely, a project involving defense-related manufacturing would necessitate regulatory approval in accordance with the provisions of the Strategic Impact List.
The UAE's remarkable success in attracting Greenfield FDI reflects its unwavering commitment to fostering an open yet strategically regulated investment environment. By allowing full foreign ownership across most sectors while maintaining oversight over critical industries through its Strategic Impact List, the country has struck a balance between openness and control.
Understanding the nuances of FDI regulations is crucial for investors seeking to capitalize on the opportunities within this dynamic market.
At Al Tamimi & Company, we provide specialized legal services tailored to the unique needs of investors. Our expertise encompasses strategic corporate structuring and comprehensive legal guidance to ensure seamless market entry and operational compliance. We assist in navigating the complexities of UAE regulations and optimizing investment structures. Our experienced lawyers offer bespoke solutions, empowering foreign investors to confidently capitalize on the opportunities presented by the UAE's dynamic investment landscape.
For further information,please contact Samer Qudah and Sabeeha Moolla.
Published in April 2025
