Dubai International Financial Centre, DIFC, has cemented its position as the leading financial hub in the Middle East, Africa, and South Asia region, MEASA, with a record-breaking 12 months that saw the Centre reach new heights as it enters its 15th year of operations.
In 2018, DIFC reported a year of unprecedented growth, bringing the number of new company registrations to a record high of 437 as of 31 December – the highest since the Centre’s inception in 2004. This growth has resulted in a 15 percent year-on-year increase in the total number of active registered companies operating from the Centre to 2,137, from 1,853 in 2017. Of these, 625 were financial firms. The DIFC has also attracted an influx of local and international talent with 1,226 new jobs created, bringing the size of the Centre’s workforce to 23,604 professionals as at year-end 2018.
The Centre also achieved strong financial performance with net profit increasing by 11 per cent to USD 88 million, from USD 79 million in 2017, excluding fair value (FV) gain on Investment properties.
H.H. Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Ruler of Dubai and President of DIFC, said: “Dubai International Financial Centre was established in 2004 with the vision to become a global financial hub, which we have successfully achieved under the guidance and support of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President, Prime Minister and Ruler of Dubai, over the last 15 years. Today, the Centre’s enabling environment and infrastructure have solidified Dubai’s positioning as a preferred business and lifestyle destination.”
“As the region’s leading financial centre enters a new period of growth through the recently announced plans for DIFC 2.0, this pioneering spirit underpins a new vision to drive the future of finance in MEASA and across the globe. By aligning with the national government agenda that aims to ensure Dubai’s sustained prosperity and accelerate the development journey of the emirate, DIFC will remain at the forefront of financial sector advancement.”
Essa Kazim, Chairman of DIFC Authority Board of Directors and Governor of DIFC, said: “The success of 2018 demonstrates that DIFC is clearly on track for our ambitious 10-year strategy to triple in size by 2024. Over the last 15 years, we have achieved the scale, flexibility and sophistication of the world’s most advanced financial ecosystems, bolstered by Dubai Financial Services Authority, our internationally recognised regulator, and the Dispute Resolution Authority, our platform for delivering legal excellence in the Middle East.
“The Centre is home to the largest cluster of financial institutions and most diverse pool of financial talent in the MEASA region. We continue to deliver on our commitment to lead the way towards a new financial landscape, and reinforce the foundations of a thriving business community and an inclusive financial sector.”
The geographic representation in DIFC remained consistent year-on-year, with 36 per cent originating from the Middle East, 33 per cent from Europe, 11 per cent from Asia, 10 per cent from the United States, and 10 per cent from other countries.
Arif Amiri, Chief Executive Officer of DIFC Authority, said: “2018 has been a year of unprecedented success for DIFC, not only in terms of growth, but also the depth of our offering and partnerships.
“We have seen increased momentum across all our key sectors, and particularly in FinTech, wealth management and aviation financing, all benefitting from the evolving legal and regulatory environment we offer. The new partnerships we have forged around the world, and the existing relationships we have strengthened, ensure the transfer of knowledge and continuous development of human capital in the region, which remains a priority for us in the year ahead.”
DIFC is today home to some of the biggest names in the financial services industry, working side by side with start-ups and entrepreneurs with a vision of being the leaders of tomorrow. In 2018, among the firms that joined our thriving community were Al Ahli Bank of Kuwait, Berkshire Hathaway Specialty Insurance, Middle East Venture Partners, and State Street Global Advisors.
The aviation financing sector in particular has gathered momentum in 2018, with firms utilising flexible structure solutions such as special purpose companies and vehicles. As a result, an increased number of sector-related companies are operating in the Centre, which stood at 25 firms as at the end of 2018 doubling from 13 in 2017. This momentum was driven by the projected growth of aviation in the MEASA region, as well as the rising importance of aircraft financing as an alternative asset class. DIFC is the only jurisdiction in the MEASA region to offer such a diverse collection of carefully considered aviation clients.
The DIFC FinTech ecosystem has also demonstrated remarkable growth over the course of 2018, fostering a dynamic community of over 80 sector-related companies, 35 of which are active registered companies in the fields of FinTech, InsurTech and RegTech.
The Centre has also expanded its international partner network into 11 global FinTech hubs, including New York, London, Hong Kong, Kuala Lumpur, Singapore, and Mumbai, and hosted the sixth annual International Finance Corporation (IFC) FinTech CEO Summit, which was the first edition to be held outside the IFC’s Washington D.C. headquarters. The Summit gathered close to 200 of the world’s leading CEOs and innovators in the world of FinTech in Dubai.
Additionally, FinTech Hive’s accelerator programme achieved significant success in its second edition, doubling the number of its participants and financial institution partners, and resulting in 20 proof of concepts, of which four were executed during the course of the programme.
The greater depth and breadth of the DIFC FinTech offering is the result of the Centre’s efforts to broaden its focus beyond FinTech to include InsurTech, RegTech and Islamic FinTech. The Centre’s innovation-friendly environment, driven by the USD 100 million fund launched in 2017, offers FinTech companies access to world-class accelerator programmes, in partnership with Accenture and Startupbootcamp, cost-effective licensing solutions, fit-for-purpose regulation, and a collaborative workspace at FinTech Hive. This has also laid the foundation for further direct investment from the DIFC FinTech Fund into growth-stage startups in 2019.
The growth in company numbers over recent years, combined with a focus on shaping the future financial landscape, means the Centre’s attention will turn towards planning for DIFC 2.0, allowing Dubai to cement its position as the pivotal economic and commercial hub for the region.
DIFC is constantly upgrading its legislative and business environment, in line with the growing importance of Dubai as an investment hub, and to cater for the growing relevance of the MEASA region in the global financial landscape.
In 2018, His Highness Sheikh Mohammed bin Rashid, enacted a series of significant changes to the Centre’s legal and regulatory framework. This included amendments to the DIFC Companies Law, which brought in new classifications of public and private companies, as well as the Trust Law and Foundations Law, aimed at improving and expanding the Centre’s proven private wealth management and succession planning platforms.
The changes update the DIFC’s companies and property regimes, as well as the overall operating environment for entities based in the Centre. They aim to achieve greater flexibility for ease of doing business, balanced with appropriate levels of oversight and protection and the compliance with the latest best practice requirements. Earlier in the year, DIFC also introduced enhancements to its wealth management platform, creating an appropriate environment for the operation of trusts in the Centre. The enhancements also provide greater certainty and flexibility for private wealth management and charitable institutions, in line with international best practice.
The year also saw The Academy, a state-of-the-art DIFC facility, curating a full range of impactful, regionally relevant executive education programmes, expand its offering, such as by entering into a partnership with The University of Paris II Pantheon-Assas to launch a joint Master of Laws (LLM) in International Business Law. The Academy, which was opened to strengthen the DIFC’s commitment to the development of human capital, also held its first open day in 2018, which welcomed representatives from The Academy’s partners and the DIFC vibrant community.
DIFC has a 15-year track record of facilitating trade and investment flows across the MEASA region, connecting its fast-growing markets with the economies of Asia, Europe and the Americas through Dubai.
In 2018, DIFC announced plans to further these efforts with three strategic initiatives that aim to support economic growth in Dubai and cement its global status as a competitive business destination. The new initiatives, which came off the back of the economy-boosting initiatives approved by Sheikh Mohammed bin Rashid, focus on attracting foreign direct investment (FDI), particularly from south-east Asia, enabling Dubai Government entities to complete financial services within DIFC, and facilitating the provision of financial products through Dubai.
A recent client survey conducted also showed that Assets under Management (AuMs) in the DIFC stood at USD 99 billion as of the third quarter of 2018, demonstrating the continued development of the Wealth and Asset Management sector in the Centre.
Additionally, DIFC has made great strides in deepening its strong relations with China, having signed a landmark Memorandum of Understanding (MoU) with China Banking Association (CBA) to collaborate on sharing best practices and delivering enhanced services to their respective communities. The Centre has also received high-profile delegations from China over the course of the year who are interested in exploring collaboration opportunities between DIFC and China as part of its Belt and Road Initiative (BRI). DIFC signed a Memorandum of Understanding (MoU) with China Everbright Group (CEG) to support the Group’s business development across the MEASA region, such as opportunities relating to the BRI.
Serving a growing community of 23,604 professionals and an average footfall of 8.5 million visits a year, the premium real estate and retail offering of DIFC continued to gather momentum in 2018, cementing its position as Dubai’s most prestigious business and lifestyle address.
In 2018, DIFC leased over 314,200 sq. ft. of commercial space, with The Exchange, the newest addition to the Gate Village, leasing 98 per cent of its 114,000 sq. ft. of office space just months after completion in March 2018. The tenant base at The Exchange includes global names such as Nasdaq Dubai, CNBC International, and Alsharq News Services, the future home for “Bloomberg Asharq” television.
To support the expanding community of businesses, residents and tourists, the number of retail and lifestyle entities which are connected through Gate Avenue grew to 281 from 226. Gate Avenue now provides a seamless connection across the DIFC and is also home to the Grand Mosque.