Dubai and Abu Dhabi are two of the most popular emirates for doing business in the UAE. Both have developed rapidly over the past few decades and offer great infrastructure, economic incentives, and opportunities for entrepreneurs and companies. However, there are some key differences between the two that may make one a better fit for your specific business needs.
The United Arab Emirates (UAE) has become a hub for global business, attracting companies and entrepreneurs from around the world. Within the UAE, Dubai and Abu Dhabi stand out as major commercial centers.
Both emirates have thriving business communities, excellent infrastructure, and pro-business government policies. However, there are some notable differences in the business environment of each area that companies should consider when deciding where to establish themselves in the UAE.
A key factor in selecting a location to launch or expand operations is the existing infrastructure to support business growth.
Dubai has invested heavily in developing state-of-the-art infrastructure and logistics facilities including:
Ports and airports to support import/export activities
Modern road networks, metro system, and tram services
Smart government services and electronic business licensing systems
Special economic zones with tailored regulations and services
Extensive real estate developments with commercial office space and facilities
While not as extensive as Dubai, Abu Dhabi also offers excellent infrastructure:
Expanding airport and seaport facilities
Developing metro and road systems
New economic zones in development
Commercial and residential real estate projects underway
Abu Dhabi is actively ramping up development projects so gaps compared to Dubai are expected to narrow in coming years.
Cost of Doing Business
The cost of operating a business is another essential factor companies need to evaluate.
Dubai has worked extensively to attract foreign investment and new companies entering Dubai can access various incentives, including:
Corporate tax exemptions
100% foreign ownership permitted in certain areas
Competitive import duties and tariffs
Low utility and setup costs for businesses in economic zones
Combined with an extensive transport network and availability of cost-effective commercial real estate, Dubai has created a very competitive operating environment.
Abu Dhabi has introduced incentives aimed at diversifying the economy and supporting private enterprises, including:
Reduced business setup costs and fees
Subsidized industrial land rentals
Low utility rates for industries freeing up operating capital
Tax holidays for major projects bringing economic diversification
Various subsidies and increasing availability of office/retail space make Abu Dhabi attractive from a cost perspective as well.
Access to Funding and Investment
Access to capital and funding sources is vital for any business expansion plans.
Dubai has established itself globally as a magnet for investment capital given massive development projects and growth potential.
Sources of funding available for businesses in Dubai include:
An established stock exchange to raise funds via IPOs or bond issuances
Over 500 regulated financial advisory firms located in Dubai
Active venture capital and private equity sources looking to deploy funds
Commercial banks willing to lend to viable business proposals
Easy repatriation of profits to deploy elsewhere
While Abu Dhabi has abundant investment wealth, accessing capital can be more challenging for new/smaller ventures compared to Dubai, with sources limited to:
Local commercial banks
Government venture capital for key priority sectors
Networking directly with private investment firms and family offices
However, as Abu Dhabi continues to transform its economy, broader funding channels for entrepreneurs and commercial ventures are developing aligned to growth sectors designated by the government.
The ability to hire qualified and skilled professionals and staff is essential for companies to execute their business plans successfully.
Dubai has established itself as an attractive employment destination creating a very diverse talent pool including:
Strong base of skilled resident expatriates attracted by Dubai’s lifestyle and tax-free salaries
Ability to hire foreign talent easily
Increasing focus by Universities in Dubai to align degree programs with key industries
This gives most businesses in Dubai access to a large pool of qualified candidates and flexibility in building out their organizations.
While Abu Dhabi has a smaller overall population than Dubai, recent government-led efforts improve talent availability including:
New education capacities focusing on priority sectors
Attractive expat packages in line with cost of living
Loosening of hiring regulations to attract foreign workers
Launch of subsidized housing to retain expats long-term
Abu Dhabi offers a more limited talent pool currently but gaps are expected to reduce going forward.
An appealing quality of life helps attract and retain talent over the long run.
Dubai offers an unmatched lifestyle including:
Iconic attractions and entertainment options
Beaches, quality healthcare, and premier housing communities
High-end shopping malls and dining for well-heeled residents
Vibrant nightlife and venue options
No income tax boosting savings
Combined Dubai allows residents to maximize disposable income for leisure activities contributing to better quality of life.
Abu Dhabi also offers attractions for residents:
Growing cultural facilities including Louvre and Guggenheim museum branches
Nature getaways and luxury beach resort communities
Upscale restaurants and expanded retail options
Large public parks and recreation centers
Income tax free salaries
While Abu Dhabi has invested to create cultural and lifestyle attractions, the scale and buzz of Dubai is hard to match currently.
Government Backing and Local Commitment
The economic visions and commitments set by local government leadership impact the outlook and stability for industries in focus.
Dubai has clearly established itself as a global hub for tourism, transportation, trading and financial services with huge long-term commitments including:
Continued infrastructure upgrades to airports, shipping hubs supporting global trade
Extensive tourism capacity expansion planning leading up to Expo 2020
Major financial district development with attractive policies for financial firms locating regionally
Dubai’s established track record and concrete long-range plans provide stability for its priority sectors.
Abu Dhabi has also laid out strategic visions for targeted sectors
Investments in aerospace, fintech, ICT, healthcare and renewable energy sectors via public and sovereign wealth funds
Support for local manufacturing and industrial capabilities particularly in defense
Cultural and tourism investments to boost visitor rates
Abu Dhabi’s commitments provide clarity for businesses aligned to priority areas as the emirate looks to diversify from oil and gas.
In summary, Dubai currently maintains advantages in core areas key for business success including infrastructure, cost competitiveness and ease of funding access. The Dubai government continues doubling down on sectors where it has established global leadership positions already.
However, Abu Dhabi has recognized gaps preventing business growth and instituted attractive policies lowering operating costs, improving talent pools and developing sectors requiring public backing to flourish in the region.
So while historically Dubai has led economic development in the UAE – Abu Dhabi cannot be ignored by companies assessing expansion given changing business conditions and government priorities. The optimal location depends greatly on aligning your business with the strengths and focus areas of each emirate.
Dubai currently maintains the edge overall – offering stellar infrastructure, operating cost advantages and abundant funding sources key for business expansion.
Abu Dhabi narrowed gaps in recent years – through subsidies, real estate development and talent availability initiatives.
Dubai succeeds attracting tourism, transportation and trading firms given sector-focused development.
Technology, renewable energy and industrial manufacturers find strong government commitment in Abu Dhabi currently.
The perfect base comes down to matching your business priorities and growth plans with the strategic focus of each emirate.
Frequently Asked Questions
- Which emirate has better infrastructure for business?
Currently Dubai has more extensive infrastructure crucial for business operations including ports, airports, roads and real estate availability. However Abu Dhabi is actively developing as well.
- Which location has lower business operating costs?
Dubai has very cost competitive operating costs – through low utility expenses in economic zones, corporate tax incentives and affordable commercial real estate. Abu Dhabi however has introduced subsidies on setup fees, industrial land rentals and utility costs to enhance competitiveness.
- Where is it easier to access funding for my startup or enterprise?
Businesses can tap into more abundant funding sources in Dubai including banks, equity markets, private investors and VC funds compared to Abu Dhabi currently. However Abu Dhabi channels sovereign wealth selectively into startups in focus sectors.
- Which emirate offers a better talent pool to hire professionals and staff?
Dubai has built a broader and deeper talent pool given relaxed visa norms and long-standing private sector job creation attracting expatriates. But Abu Dhabi is ramping up higher education opportunities and economic incentives to attract skilled residents.
- Which location provides a better lifestyle for residents?
Dubai is recognized globally for over-the-top luxury attractions, entertainment venues, beaches, restaurants and shopping – providing premium lifestyle offerings funded by tax free incomes. While Abu Dhabi offers attractive lifestyle components, Dubai remains unmatched currently.
- Where is the local government more supportive of business growth?
Dubai has established robust long term economic plans focused on transportation, tourism, trading and financial services reflecting strategic priority sectors for government backing. Abu Dhabi is channeling resources into newly targeted industries – technology, pharmaceuticals, specialty manufacturing where government support is strongest.
- Should my business set up operations in Dubai or Abu Dhabi?
The optimal UAE location depends on matching your business service area and strategic growth priorities with the economic visions set by leadership in each emirate. Dubai likely suits companies in established industries like tourism or shipping given sector-focused backing while Abu Dhabi provides government commitment for its emerging strategic priority areas.
- Does one location offer greater long term stability for businesses?
As the economic priorities of both Dubai and Abu Dhabi have been articulated in long term development plans – companies that align with focus sectors can expect government supported stability regardless of choosing between the two emirates. However assessing policy shifts as economic transformations evolve is prudent.
- Do taxation policies vary for firms operating in each area?
Tax advantages are available to both Dubai and Abu Dhabi businesses currently including corporate tax exemptions, no personal income tax, low duties for various sectors and ability to fully repatriate profits. However nuances on specific import or activity related duties may vary.
- How easy is it for staff and professionals to relocate to either location?
Dubai has more relaxed visa and residency policies enabling hiring expatriates from abroad directly aligned to corporate priorities. Abu Dhabi has historically had tighter regulations though recent shifts make it easier for targeted roles in priority sectors to relocate maintaining a balanced population vision.
- Which location sees higher influx of foreign direct investment?
Dubai remains the primary destination for foreign firms setting up Middle East operations given its world class infrastructure and long term economic vision. Abu Dhabi is catching up, chanelling sovereign wealth into focus sectors attracting increasing flows as opportunities expand for international firms to service emerging industries.
- How satisfied are expatriate residents in each emirate?
Expat surveys indicate higher satisfaction and longer term retention intention in Dubai given lush lifestyle offerings, ability to integrate into local culture easily and maximize income potential relative to cost of living. Abu Dhabi scores closely though gaps exist in entertainment/dining options. Planned investments improving quality of life may push greater satisfaction ahead.
- Which location processes business registration/licensing faster?
Dubai offers very streamlined electronic and smart services for company registrations completed swiftly in economic zones. Digitalization efforts in Abu Dhabi also enable faster licensing though obtaining certain trade permits may involve more extensive verification processes currently.
- How strong are the technology and innovation ecosystems?
Dubai has developed specialized zones, incubators and funding channels focused on supporting technology startups serving local corporates. Abu Dhabi is looking to play catch up seeding emerging technologies via government backed labs and economic channels targeting priority focus areas.
- Which emirate has better intellectual property protections?
Robust regulatory frameworks supporting copyright, trademark and patent protections exist equally under federal UAE laws across both emirates. However specialized IP regulations are more evolved in Dubai given more extensive technology ecosystem while Abu Dhabi continues boosting expertise.
- What options exist to build professional networks for business development?
Numerous global chambers of commerce, expatriate associations and targeted industry networking platforms exist in Dubai to enable establishing connections. Similar options are developing in Abu Dhabi as well though currently Dubai edges out in breadth of professional networking choices.