GCC region recorded 1,889 FDI projects valued at US$47b in 2023

• The UAE led in project count, recording 1,327 FDI projects in 2023 which accounted for 70% of total GCC projects
• Of the US$47b FDI capital into the GCC, KSA had the most capital investment with projects accounting for 62% of the total value
• Decision-makers find the two biggest challenges to continued FDI growth in the region are climate change and geopolitical risk

According to the inaugural EY Attractiveness Survey for the Gulf Corporation Council (GCC) region, Foreign Direct Investment (FDI) by international companies reached a record 1,889 projects valued at US$47b in GCC countries in 2023 .

The United States of America (US) and the United Kingdom (UK) are the two leading sources of FDI projects.

Business services and software and IT services have emerged as the primary sectors for FDI in the GCC, with project numbers in these sectors growing 512% and 373% respectively between 2018 and 2023.

Across the GCC, Dubai, Riyadh, and Abu Dhabi were the top three cities receiving FDI projects in 2023.

Michael Hasbani, EY MENA Markets Leader, says:
“Previously, the six GCC countries had a tendency to look outside of their borders for opportunities. However, over the past five years, a notable shift has taken place as the region’s governments have begun to show greater confidence in their own nations and a marked willingness to invest in their domestic economies.”

“Now GCC governments are deploying even more of their considerable financial power into projects aimed at reshaping their national economies and reducing dependence on the oil and gas industry. So far, this transformation has been largely driven by domestic, government-linked capital, but if GCC governments’ ambitions for their economies are to be realized, large quantities of private investment by foreign companies will also be needed.”

FDI projects highly concentrated in KSA and UAE

GCC countries are targeting significant increases in FDI. The Kingdom of Saudi Arabia (KSA), for example, aims to more than triple FDI from US$29b in 2023 to US$100b a year by 2030.

KSA had the most capital investment in the GCC from 2020 to 2023. In 2023, the country’s capital investment doubled to US$29b. Of all GCC projects recorded in 2023, 62% of total capital investments were in KSA, across 390 projects in the kingdom.

The United Arab Emirates (UAE) continues to outpace other GCC nations in terms of project count, having received the highest FDI projects in the GCC over the last six years. In 2023, the UAE recorded 1,327 projects – accounting for 70% of total GCC projects and representing US$15b in capital investments. During 2023, the UAE saw activities that require significant project involvement, such as business enablement and sales and marketing, account for more than three-quarters of the total number of projects.

Executives drawn to GCC region’s business stability and vision

The EY report further explored the GCC’s attractiveness to investors by surveying decision-makers both inside and outside of the region, with many positive about the region’s prospects for FDI going forward.

According to the survey respondents, the GCC, followed by North America ranks as the most attractive region for investment in the world and almost two-thirds expect the region’s attractiveness to increase significantly (4%) or slightly (62%) over the next three years.

In addition, globally and regionally, as interest rates and inflation have risen in tandem in recent years, GCC countries have stood out for stability in the form of fixed exchange rates, continuity in policymaking, low energy prices, and a favorable tax environment.

A majority of the respondents agree that the GCC provides a business-friendly tax environment, saying that it performs better than other regions when it comes to the rate of corporate tax (56%), degree of pragmatism and flexibility of tax authorities (54%), and tax certainty and stability (54%).

Executives have also indicated that the ambitions set forth by GCC countries through national development plans such as Saudi Vision 2030, We the UAE 2031, and Qatar National Vision 2030, have positively influenced their investment strategies.

Hanne Jesca Bax, EY Global Vice Chair – Markets, says:
“The GCC countries have a strong case for seeking FDI due to their attractive economies, national development plans, and focus on building industries of the future. The ability of the region’s governments to plan for the long term, along with the willingness to kick off initial funding, positions them well to foster industries that will become a magnet for foreign companies. GCC nations are already providing active support for renewable energy and associated clean power industries as well as advanced technologies such as artificial intelligence, cybersecurity, and even space exploration.”

Challenges to GCC FDI growth

When it comes to risks to FDI in the region, there are two clear themes among the executives surveyed: climate change and geopolitical risk.

Almost a fifth of respondents (19%) identified geopolitical tension and conflicts as the single biggest threat to the GCC’s attractiveness over the next three years, twice as many as those who selected any other risk. For executives in companies with revenues of more than US$1.5b, that figure rises to 31%.

However, when considering the top three risks identified by companies rather than a single concern, climate change and the threat of environmental disasters becomes the leading concern. More than a third of executives, and 40% of those in companies with revenue of more than US$1.5b, list climate change among their top three risks.

Other challenges include talent-related investment risks, independence of courts, making inward investment a priority, and addressing the rising cost of living.

Marc Lhermitte, EY Global Lead – FDI & Attractiveness, says:
“International companies are eager to be part of the GCC region’s growth story, with strong indications that this momentum will continue. However, to achieve greater economic diversification, GCC nations must actively attract fresh players. Key to this is addressing the challenges identified in this year’s attractiveness survey. Clear priorities include incentivizing private investment in renewable energy, empowering youth and women in the workforce, and building trust in the region's dispute resolution mechanisms. These steps will be crucial in drawing a new wave of forward-looking investors and industries.”

The EY Attractiveness Survey report reviewed FDI projects in the GCC region that were cross-border investments in a new physical project or expansion of an existing investment that created new jobs and capital investment. Joint ventures were only included when they lead to a new physical operation, while mergers and acquisitions and other equity investments were not included.

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About the EY Attractiveness program

By examining the attractiveness of a particular region or country as an investment destination, the EY Attractiveness surveys are designed to help businesses make investment decisions and governments remove barriers to growth.

A two-step methodology analyzes both the reality and perception of FDI in the country or region. Findings are based on the views of representative panels of international and local opinion leaders and decision-makers.

The program has a 23-year legacy and has produced in-depth studies for Europe, a large number of European countries, Africa, the Mediterranean region, India, Japan, South America, Turkey, and Kazakhstan.

About EY

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