How Dubai is becoming a new capital of global finance
The upper echelons of global finance have long been split between the western poles of London and New York, and the eastern hubs of Tokyo and Hong Kong. But as the so-called ‘emerging markets’ of LATAM, MENA, and Southeast Asia grow in importance, investors are increasingly looking for alternative places to park their capital.
Leading the race to become the pre-eminent finance hub connecting east and west is Dubai. The recently announced Dubai Economic Agenda ‘D33’ has a stated aim of transforming the city into one of the top four global financial hubs, increasing FDI to over AED 650 billion (USD $176 bn) by 2033.
It’s a realistic goal. The emirate is already 17th in the Global Financial Centre Index (GFCI), published in September 2022, overtaking established centers like Frankfurt and Amsterdam, and its rating is rising.
But what is it that brings global investors to places like Dubai, rather than legacy hubs?
Back in 2014, Mark Yeandle, associate director of the Z/Yen Group, responsible for the GFCI, told CNN that, “You have to be a successful city in order to be a successful financial center.” In other words: finance hubs must be desirable places to live.
The food scene is one of the best in the world.”
— Alireza Valizadeh, CEO of Julius Baer Middle East
Alireza Valizadeh is the CEO of historic Swiss bank Julius Baer’s Middle Eastern arm, which received the first licence from the Dubai International Finance Centre (DIFC) in 2004. Having lived in Geneva, Los Angeles, and Tehran, he says Dubai has “a little bit from each of these cities in it,” creating a quality of life that is “excellent, very different from elsewhere.”
The food scene is “one of the best in the world,” he adds. Education is world-class, thanks to several international schools and universities. Healthcare is similarly top-notch, with the highest number of doctors per head in the world.
And while inflationary pressures squeeze western spending power, Dubai’s residents enjoy a markedly lower cost of living than other major hubs. Property in the city costs one third as much as London, and nearly an eighth as much as in Hong Kong.
Even so, while being “a successful city” may be a necessary condition for financial hub status, it is not sufficient. Investors are also interested in novel opportunities.
Financial hubs arise as access routes to important markets. New York for the U.S. London for Europe. Hong Kong for Asia and mainland China.
Valizadeh says Julius Baer initially set up in Dubai because the city lies, “halfway between the two financial centers of Switzerland and Singapore.” The UAE offered “a safe haven and business-friendly country in the MENA region,” which “brought us closer to our clients.”
How Dubai is bolstering investor confidence:
- 100% ownership available for foreign investors
- 25 free zones offering companies more independence
- One of the most competitive taxation frameworks in the world
- No currency restrictions & full repatriation of funds
- Strict laws to prevent money laundering
- Extensive network of double taxation treaties
- Investor-friendly FDI legislation covering incentives such as investment protection guarantee
Dubai is a major global logistical hub, offering an inroad into increasingly significant markets across Africa, LATAM and Southeast Asia. This position will only grow under the D33 agenda, which aims to add another 400 cities as key trading partners, doubling the emirate’s foreign trade to AED 25.6 trillion (USD $6.9tn) by 2033.
And there are other ‘emerging’ opportunities. Dubai is full-throated in its support for new and future tech – while the emirate established the world’s first virtual asset regulator, the Dubai Financial Services Authority (DFSA) regulatory sandbox will soon be joined by the emirate-wide Sandbox Dubai, and the Dubai Chamber of Digital Economy is working to both digitally transform Dubai, and grow its digital economy.
This focus on innovation may see Dubai leapfrog legacy hubs at finance’s digital frontier. Crucially, this restless spirit is matched by a stable foundation.
An oasis of stability
At heart, most investors are somewhat risk-averse. That’s part of the attraction of established hubs like London. But right now, the west isn’t necessarily the safest place for capital.
The situation was underlined by the Covid-19 pandemic. While other markets locked down, the UAE managed to remain open for business, thanks to nimble handling of supply chains, and a world-beating vaccine rollout. It’s a striking illustration of resilience in an increasingly chaotic world.
For Dubai, the future is now. I am really proud to be part of this success story.”
— Alireza Valizadeh, CEO of Julius Baer Middle East
Additionally, the regulatory regime is “at par with European and Asian standards,” according to Valizadeh. The recently introduced gold (5-10 year) and green (5 year) visas, meanwhile, offer flexibility for investors and talent.
And Dubai has made it as easy and attractive as possible for investors to set up, with 100% foreign ownership and zero taxation.
The future is now
The growing importance of ‘emerging markets’ and the race for digital finance dominance has opened a window for a new generation of global finance centers. Dubai is grabbing the opportunity with both hands.
“For Dubai, the future is now,” says Valizadeh. “I am really proud to be part of this success story.”