UAE Financial Centre Growth in DIFC and ADGM

The Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM) are two major financial free zones in the United Arab Emirates (UAE), each with its own unique regulatory framework and legal systems based on English Common Law.

Both financial centres have grown significantly and made required changes and advancements to adapt and grow with demand for international financial centres (IFC) in the region.

As the DIFC approaches its 20-year anniversary in September 2024, it recently reported outstanding results for the first half of 2024. The total active registered companies in DIFC surpassing 6,000, for the first time. This shows growth of 24% compared to the same period last year. A record 820 new registered entities joining between January and June of 2024.

Growth and Expansion Projects Underway

There are many initiatives and projects underway to simulate growth for the financial centres. ADGM recently announced fee reductions of 50% for obtaining commercial licences for non-financial and retail licences within ADGM’s jurisdiction, effective from 1 January 2025.

In 2023, ADGM announced its expansion into Al Reem Island in Abu Dhabi. ADGM have been very proactive by hosting community events and offering support for businesses transferring their license to the free zone. Existing businesses on Al Reem are being incentivised to transfer their licenses before the 31 October 2024. ADGM has stated that they will strip the fees for obtaining the ADGM licence until this time, urging businesses to make the transfer sooner rather than later.

DIFC also has plans to expand, bringing an additional 1.6 million square feet of commercial space to the market over the next three years. These expansion plans in ADGM and DIFC highlight growth ambitions and the commitment to providing commercial spaces for the businesses licensed in their jurisdictions.

Growth Industries and Sectors

DIFC has historically been strong in financial advisory, banking and wealth management while the newer ADGM attracts virtual asset service providers (VASPs) and sustainable finance companies.

Sectors in innovation and FinTech have seen the most significant surge, with firms in these sectors growing by 33% compared to the same period last year totalling 1,081 firms in DIFC.

DIFC has increased from USD 444B to USD 700B in assets under management, reflecting a 58% increase. ADGM similarly reported a 211% increase in assets under management from Q1 2023 to Q1 2024.

At the end of June 2024, ADGM issued 1,271 new licences showing a 20% increase in licences than the year before, reflecting rapid growth for both IFC’s.

Employment Surges

Employment in the UAE is surging, DIFC and ADGM are two core jurisdictions attracting global talent. A reported 4,647 new jobs have been created in DIFC over the past 12 months. That brings the total DIFC workforce to 43,787.

Companies in ADGM anticipate expanding their workforce during 2024. Out of 70.8% of companies in ADGM who responded to the survey, 29.93% expect to significantly increase their workforce while the remaining 40.88% plan for moderate growth.

The jurisdictions are very optimistic for the economic health of the IFC’s. They are active in developing their employment landscape and attractiveness from a company and employee perspective. ADGM recently made proposed amendments to the 2019 Employment Regulations. ADGM has shown collaborative efforts with its licensed companies in developing legislation and regulations that take public feedback into consideration and build the foundations in which these companies operate.

New Technology and Artificial Intelligence (AI)

The Dubai AI Campus newly launched at the DIFC Innovation Hub is set to drive the Centre’s next phase of growth by promoting AI adoption across industries. When the Dubai Universal Blueprint for Artificial Intelligence (DUB.AI) was launched in May 2024, DIFC was one of the first jurisdictions to develop an AI framework.

The AI Campus is designed with co-working spaces for start-ups in tech and AI, with 75 companies already operational. The second phase of the AI Campus will be to expand campus to be able to host more than 500 companies and create over 3,000 jobs by 2028, further boosting the surge in employment for IFC’s.

Similarly, in ADGM, technology is being used to innovate and transform the IFC. The Arbitration Centre in ADGM has launched the first ever ‘Mediation in the Metaverse’. Designed to digitise the delivery of mediation across the globe, the Arbitration Centre is transforming the court-annexed mediation scheme conducted by ADGM Courts by using Web3 technology. It allows individuals to access a 3D office space to provide a more immersive and virtual mediation experience.

Why set up in ADGM and DIFC?

DIFC and ADGM’s expanding influence is shaping the future of finance in the UAE. The international financial centres are setting the standard and boosting the UAE’s status as a preferred ecosystem for innovation and growth. We anticipate this growth will continue to increase for the IFC’s as they develop and implement further initiatives and support for business setup in the region.

If you require assistance with setting up a business in DIFC and ADGM, contact Sovereign PPG and we would be delighted to assist.