Dubai International Financial Centre (DIFC), the Middle East, Africa and South Asia (MEASA) region’s leading global financial centre has reported its best annual performance to date.
The performance, which reflects the success of strategic measures undertaken to grow the DIFC community under the directives of His Highness Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Ruler of Dubai, Deputy Prime Minister, Minister of Finance, and President of the Dubai International Financial Centre (DIFC), contributes significantly to the UAE’s economy and positions the Centre as a significant player in the global financial industry.
DIFC further reinforced its global profile with a year of strong growth against the backdrop of the worldwide pandemic. The Centre achieved its 2024 Strategy growth targets three years ahead of schedule during the first half of 2021. DIFC recorded 996 company registrations last year, the highest ever recorded in a single year for the Centre, a 36 per cent increase from 2020. The growth in company numbers is more than triple the average number across the last decade. The total number of active registered firms operating in DIFC increased by 25 per cent to 3,644 entities from 2,919 in 2020. A total of 1,124 financial and innovation related entities are now active and operating within DIFC, increasing by 23 per cent, versus 915 in 2020.
In 2021, DIFC also recorded its highest-ever annual revenue and operating profit. Revenue increased by 16 per cent to AED897million year-on-year versus AED774million in 2020, and up by seven per cent from AED838million in 2019 (pre-pandemic levels). The increase in revenue and cost control measures resulted in an increase in operating profit. Operating profit for 2021 reached AED573million, an increase of 26 per cent versus AED457million in 2020 and up by 13 per cent compared to AED510million in 2019. For the first time, total assets crossed AED14.80billion ($4billion), which reflects the strong financial position of DIFC.
DIFC continued to benefit from strong appetite for its A-class, centrally located premises. In the past year, an additional 350,000 sq. ft. of commercial space was leased across DIFC versus 201,900 sq. ft. in 2020, up by 73 per cent.
Total banking assets booked in DIFC increased to $198.5billion from $189.4billion in 2020, up by five per cent. This represents about 20 per cent of consolidated UAE financial sector banking assets. An additional $108.1billion of lending was also arranged by DIFC firms, up from $64billion in 2020, an increase of 69 per cent. DIFC based Wealth and Asset Management portfolio managers invested $151.4billion in 2021 compared to $145.6billion in 2020, up by four per cent. Gross Written Premiums for the insurance sector reached $1.8billion, rising from $1.7billion in 2020, an increase of eight per cent.
His Highness Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Ruler of Dubai, Deputy Prime Minister, Minister of Finance and President of the Dubai International Financial Centre, said: “DIFC’s best-ever annual performance reflects Dubai’s position at the forefront of global recovery in the financial sector and the broader economy. The Centre’s ability to continue building a thriving financial community amidst a rapidly changing international environment demonstrates the far-reaching vision of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, which has enabled the emirate to create a strong economy fuelled by innovation.”
“DIFC’s exceptional results are also a testament to the trust that local, regional and global businesses have placed in the Centre as a financial industry hub that promotes growth and business enterprise. DIFC’s continued success has also been driven by the solid and enduring partnerships Dubai has built with leading global financial companies by providing them the high-quality hard and soft infrastructure needed to raise their competitiveness in an evolving industry,” His Highness added.
Amongst its 3,644 entities, DIFC is home to 17 of the world’s top 20 banks, 25 of the world’s top 30 global systemically important banks, five of the top 10 insurance companies, five of the top 10 asset managers and many leading global law and consulting firms.
Significant growth has been achieved across business sectors, including banking, capital markets, wealth and asset management and professional services. Exponential numbers of new clients came from the Fintech and Innovation sectors. In 2021, these increased to 503 from 303 in 2020.
Notable firms joining DIFC in 2021 included: Air Liquide Middle East and India Holding Limited, BentallGreenOak Advisors (UK) LLP, DP World Financial Services, Dual Corporate Risks Limited, General Reinsurance AG, Howden Insurance Brokers Limited, Hines, Mamopay, Richemont and Thunderbird Global Innovation Center.
His Excellency Essa Kazim, Governor of DIFC, commented, “Dubai’s economy rebounded more quickly than many global economies following the impact of the covid-19 pandemic. DIFC has helped drive this new phase of growth and we are proud to be a significant contributor to Dubai’s GDP. Our focus in 2022 will be on driving the future economy by attracting more financial sector investment into the UAE.”
Arif Amiri, Chief Executive Officer of DIFC Authority, said: “DIFC had an exceptional 2021 and delivered its 2024 Strategy growth targets three years ahead of schedule. The performance was impressive for any financial centre against the current global macroeconomic environment. We expect DIFC’s approach will help Dubai continue to build its reputation as a hub for technology and innovation, as well as allow us to further differentiate ourselves as the region’s leading global financial centre.”
Spearheading Dubai’s future economic growth
Further to DIFC’s success in delivering its 2024 growth targets three years ahead of schedule, the last year also saw the approval of Strategy 2030. The new strategy reflects DIFC’s important role in supporting sustained economic growth and further differentiating Dubai as a global hub for financial institutions, Fintech businesses and innovation companies. The strategy embraces Law No. (5) of 2021 relating to the expanded duties and responsibilities of DIFC and promotes the values of efficiency, transparency and integrity.
As part of the Centre’s Strategy 2030, the last year witnessed the launch of the DIFC Innovation Hub, the largest cluster of Fintech and innovation companies in the region. Following the Innovation Hub’s immense success, DIFC will nearly triple the size of the Hub to 315,000 sq. ft. by the end of 2023. More than 500 technology and innovation firms, ranging from start-ups to global unicorns, are now based in DIFC, representing over 60 per cent of all those across the GCC.
The Centre also established the DIFC Innovation Panel, which brings together global and regional thought leaders in the Future of Finance from industry, academia and regulation. An AED 1 billion venture capital fund was also launched by DIFC and Dubai Future Foundation as the Dubai Future District Fund to anchor Dubai as a global start-up and venture capital hub.
Whilst DIFC is already the region’s leading global financial centre, the ambitious 2030 strategy will see it become a global hub for business and innovation, which will enable the Centre to double in size and its economic contribution to Dubai’s GDP.
Over 900 applications were received for the sixth cohort of DIFC Fintech Hive’s accelerator programme. The 44 finalists selected for the programme are active in the areas of fintech, regtech and Islamic fintech. They address key technology innovation themes including open banking, SME banking, insurtech, retech, Wallets and Payments, ESG, Credit Scoring and more. The 2021 cohort saw participation from USA, UK, India, Singapore, France and the UAE. A total of 163 technology firms have been through the programme since 2017.
Startups that were previously part of the DIFC FinTech Hive’s accelerator programme have collectively raised over $530million, an increase of 76 per cent from last year ($298.8million), which enabled the ventures to scale up quickly.
Market-leading legal and regulatory frameworks
DIFC introduced and updated laws and regulations to support the centre’s position as the leading global financial centre in the MEASA region.
His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, issued Law No. (5) of 2021 concerning the DIFC. This law replaced Dubai Law 9 of 2004, which was the original founding law of the DIFC, and expanded the objectives by providing greater clarity on the duties and responsibilities of the President, the Governor and the centre bodies in DIFC. This was to ensure the DIFC’s operational, financial and administrative independence.
Employment Law Amendment Law No. (4) of 2021 was enacted, which clarified the application of limitation periods to claims made under the Employment Law. Amendments to the employment regulations brought the Qualifying Scheme regime under the Employment Law, in line with DFSA’s Employee Money Purchase Scheme, so that only a single layer of regulation is applied to these schemes.
The Board of Directors of the DIFC Authority also issued new IP regulations. This supports the DIFC’s focus on fostering innovation by identifying and protecting intellectual property rights, which is of key importance to technology companies.
During 2021, DIFC’s regulated community continued to grow with the DFSA authorising 50 firms. The DFSA also introduced a regulatory framework for investment tokens and consulted on the introduction of credit funds, both of which will enable further growth in the centre.
The DFSA continued to support and engage with firms in DIFC through targeted outreach programmes, such as the Cyber Risk Forum, RegTech Live and the Annual Audit Outreach.
Collaborating for Dubai and the industry’s benefit
During the year, 16 MoUs were signed with strategic partners to strengthen the partnership with the Ministry of Economy, Mohammed Bin Rashid Space Centre, MENA Fintech Association, Mastercard (Cyber and Intelligence Solutions), Department of Economic Development (now called DET) and Centre for the Fourth Industrial Revolution (C4IR) with Dubai Financial Services Authority (DFSA).
DIFC will continue to strengthen the UAE’s competitiveness by collaborating closely with the Central Bank of the UAE to drive the digitisation of the UAE’s financial sector. This was formalised by both governors signing a memorandum of understanding at the Future of Finance event at Expo 2020 to cooperate in the field of FinTech and digital transformation of the financial sector including events and industry forums, joint projects and initiatives such as advancing Open Finance, development of a co-sandbox and FinTech talent development.
Reflecting upon the importance of environment, social and governance (ESG) principles, and to position Dubai as the region’s leading sustainable finance city, DIFC has been driving collaboration between industry players through the Dubai Sustainable Financial Working Group, which has published industry guides on sustainable investing and sustainable issuing, and launched in a virtual event with the 20 members and representation of the UN Global Compact. In addition, DIFC has conducted hybrid events and trainings on ESG-related topics and is supporting the Sustainable FinTech Alliance.
A magnet for financial talent
Employment grew by 11 per cent to 29,700, with a net increase of around 3,000 employees, indicating the highest net growth in over a decade. These jobs represent a high-skilled workforce, across 150 nationalities who have the highest contribution to GDP per person across all economic sectors in Dubai.
To help industry talent with their professional development, the DIFC Academy expanded its list of partners that focus on compliance and anti-money laundering (AML). The academy partnered with K2 Integrity, a leading US compliance and investigations firm, and the Society of Corporate Compliance and Ethics to provide certified programmes for the compliance and ethics profession. 60 per cent growth in number of students graduating from leading higher education programmes from London Business School, Bayes Business School and the University of Paris 2 Pantheon-Assas are based in DIFC.
Additionally, the DIFC Academy signed a partnership agreement with The Emirates Institute for Banking and Financial Studies (EIBFS), a regional leader in banking and finance education and training. The Academy now has a total of 31 active global and regional partnerships to support professional development in finance, future of finance, legal and management.
In 2021, Innovation Hub One Building project was approved by His Highness Sheikh Maktoum bin Mohammed to expand the current innovation ecosystem at DIFC and cater to the growing demand from tech start-ups. The project is currently under construction and will be an extension of the existing DIFC Innovation Hub at Gate Avenue. The 315,000 sq. ft. hub will accommodate 1,000 start-ups and 3,000 employees by 2023, making the DIFC Innovation Hub one of the largest hubs for FinTech and Innovation companies globally.
Becoming one of Dubai’s leading destinations
The destination is quickly gaining recognition as a vibrant business and leisure community, thanks to its 367 retail and dining outlets, of which 80 were newly opened in the Centre in 2021.
DIFC hosted several art and cultural events at its destination following the easing of the COVID-19 restrictions, including the prestigious Art Dubai, which was the first in-person international art fair to take place since the pandemic began. Reaffirming the fair’s commitment to providing a physical platform and marketplace for artists and galleries from across the world, visitors were able to explore galleries from across the Middle East and Asia including Lebanon, Palestine, Turkey, Saudi Arabia, India, Vietnam and Philippines during the month-long event.
In 2021, DIFC also welcomed more than 18 fine and casual dining concepts as well as a number of international brands, some of which are exclusive to Dubai.
DIFC also entered into an agreement with Dubai Festivals and Retail Establishment to promote Dubai’s key festivals, which will help raise Dubai’s profile as a global destination.
DIFC has helped drive this new phase of growth and we are proud to be a significant contributor to Dubai’s GDP. Our focus in 2022 will be on driving the future economy by attracting more financial sector investment into the UAE,” Essa Kazim, Governor of DIFC