News
Dubai Ranked #1 City
Posted on 01/25/09
Dubai is the top city in fDi’s latest Middle East ranking and Jebel Ali is the top free zone. Charles Piggott reports on the leaders.
Dubai is back at the top of fDi’s Middle East Cities of the Future ranking after losing ground to Manama two years ago. Dubai scored higher than any other city for economic potential, business friendliness, infrastructure and quality of life.
Saudi Arabia’s commercial capital, Jeddah, which was not ranked by fDi’s 2007 survey, takes second place, reflecting recent development of both the city and its infrastructure, closely followed by Abu Dhabi in third place, up from sixth in 2007. Ras Al Khaimah in the United Arab Emirates (UAE), which is still competitive on costs, ranks as fDi’s most attractive city for FDI.
“This is an exciting time,” says Kamal Ahmed, chief operating officer of Bahrain’s Economic Development Board. Oil-rich governments across the Gulf are investing heavily in infrastructure and human resources to stimulate non-oil industries and this has created unprecedented levels of investment opportunities for foreign investors.
Mr Ahmed says: “More companies are relocating, standards of living are rising as a whole and all countries are booming as a result.” Despite the financial crisis, he says the Middle East has remained liquid, although the difficulty of attracting international bank finance has made developers reluctant to announce large new projects.
“We have no plans to slow development. If we continue to utilise our resources wisely, we’ll see the Gulf region become a much more important regional economy, maybe not on the same scale as China and India, but a much more important market, particularly as we move towards economic integration.”
Rising investment in real estate, particularly in the Gulf states, has driven costs higher and fDi’s 2008/09 rankings reflect this. Despite less sophisticated infrastructure, lower-cost alternatives are moving higher up fDi’s rankings. Alexandria, Cairo, Amman and Aqaba all score in the top five cities for cost-effectiveness – behind Sanaa in Yemen – but ahead of major cities in the Gulf.
Free trade zones
The long-established Jebel Ali Free Zone keeps its place at the top of fDi’s ranking of special economic zones. Saudi Arabia’s King Abdullah Economic City, one of the world’s largest construction projects, ranks at number two. By 2020, the Saudis expect two million people to live and work in a city that will be four times the size of Manhattan and one of the most high-tech cities in the world.
Bahrain’s International Investment Park, located adjacent to the new Khalifa Bin Salman Port (due to open December 2008) and a short drive from both the international airport and causeway to Saudi Arabia, ranks third. The new zone has been given a key role in Bahrain’s ambition to transform itself to become a gateway to the Gulf.
Meanwhile, fDi’s introduction of a ‘ones to watch’ category reflects the large number of dedicated investment zones under construction or at the planning stage. Saudi Arabia’s breathtakingly ambitious King Abdullah Economic City project is the judges’ clear winner in this category, followed by Dubai World Central’s Aviation City.
Methodology
Cities are ranked according to 76 criteria (see below) based on information supplied by cities themselves in answer to a questionnaire, and from third-party sources such as the World Bank, news wires and other sources. During the spring and summer of 2008, fDi magazine sent questionnaires to cities and special economic zones across the Middle East and north Africa. We asked them to give detailed information on inward investment conditions and their plans for future development.
Cities provided information in four main areas:
* Economic potential: Cities were asked to describe their economic potential – recent GDP growth, government initiatives and economic priorities.
* Inward investment: They also provided information on recent inward investment, including the volume and number of investments made during the past two years, the most significant investments made in 2007 (including the level of investment and number of jobs created) and the most significant investments of 2006.
* FDI strategy: Respondents also told fDi about their promotional strategy for attracting inward investment, including recent initiatives, incentives and regulatory changes introduced during the past two years.
* Major projects: Cities gave details of current and recently completed major infrastructure and urban planning projects, including projected costs.
Cities were also asked to complete a tie-breaker question in which they outlined their unique selling point for investors. Answers to the above questions were put before fDi magazine’s panel of judges. Cities were scored out of 10 for certain criteria, with 10 points awarded to the best city in each category. (In the categories of business friendliness and unique selling point, a maximum of 20 points was available.) Scores were awarded on the basis of cities’ answers and the judges’ own experience. Categories based on third-party data, for example 2009 national GDP growth forecast, were scored on a pro rata basis, with the top city scoring 10 points and the lowest city zero.
Special economic zones
Special economic zones were asked to provide information in four main areas.
* Facilities: Special economic zones were asked to describe main facilities, including amenities such as hotels, convention centres, restaurants, housing and security. They also gave details of office, industrial and warehouse facilities and other high-tech or specialist activities supported by their zone. fDi also asked about the range of onsite administrative services available.
* Costs: Zones were asked to outline costs per square metre for industrial facilities, warehouse space, commercial facilities, office space and undeveloped land. They were also asked to outline all financial and non-financial incentives such as tax exemptions and training grants.
* Infrastructure: Participants were asked to describe all major land, sea and air transport routes accessible from their zone. They were also to asked to detail all current, recently completed and planned infrastructure projects, including costs.
* Development and promotion: Zones gave details of recent business growth, expansion projects (including costs), recent investment and the development of specialist facilities.
fDi researchers also gathered information from special economic zones’ websites, from news wires and other sources.
Scoring
Special economic zones were scored out of 10 on each of the following criteria:
* Facilities: Recent development; success in attracting growth industries; amenities (for example, restaurants, health and leisure facilities, security); quality of office space; quality of warehouse space; quality of industrial facilities; availability of business and other services; high-tech or specialist features.
* Costs and incentives: Financial incentives; non-financial incentives; cost of industrial space; warehouse costs; cost of commercial space; cost of office space; cost of undeveloped land.
* Development potential: Transport links; recent or planned infrastructure projects; business growth in the past 12 months; development plans; leading investors and partnerships; unique selling point.