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UAE capital markets are well placed for a stellar year

Investor confidence and strong GDP growth point to a good 2025

The DIFC building in Dubai. Strong real estate, construction, tourism and hospitality markets in the UAE are all reasons for optimism Dubai Tourism
The DIFC building in Dubai. Strong real estate, construction, tourism and hospitality markets in the UAE are all reasons for optimism

In 2024 the UAE solidified its position as a major regional financial centre with growing global relevance, driven by the expansion of its capital markets.

Dubai Financial Market (DFM) was the year’s fastest-growing Mena exchange, adding around 19 percent to its market cap by early December, reaching AED 801 billion. ADX expanded with new listings and a market cap approaching AED 3 trillion. 

All markets have cycles, but recent trends are likely to continue through 2025, with local exchanges strengthening their global position. This is underpinned by investor confidence in the UAE economy and the strength of its businesses. 

A strong real estate market, construction and infrastructure projects, tourism and hospitality, and increasing retail sales all provide added reasons for optimism. 

In a global comparison, the UAE moves into the new year offering investors an appealing proposition. The economic outlook remains favourable, with the Central Bank of the UAE indicating real GDP growth of around 4 percent in 2024, increasing to 6 percent in 2025. 

Non-oil GDP, seen as a short-hand measure for economic diversification, is estimated at 5.2 percent for 2024, rising slightly to 5.3 percent in 2025. 

By contrast, the International Monetary Fund estimates global growth at around 3.2 percent for 2024 and 3.3 percent for 2025. Most sources estimate US growth at below 3 percent, while the UK and EU achieve barely 1 percent.

This growth imbalance highlights an investor advantage in directing capital into the UAE. Population growth, especially of higher-income expats, is also boosting consumer spending, which is positive for the retail sector, telecoms, tourism and hospitality. 

Companies are now choosing Abu Dhabi or Dubai as a location for their primary listing

Domestic and regional equities provide immediate access to a high-performing economy, give businesses additional funds for growth and allow founders and existing private shareholders to unlock liquidity. 

These factors will help to maintain buoyant IPO activity in the year ahead. Together with Saudi Arabia, the UAE is one of the world’s most dynamic locations for new listings. 

Many companies are following this now well-established path. Companies raised $13 billion from initial public offerings in 2024. Significant listings included NMDC Energy, Lulu Retail, Parkin, Spinneys, Talabat – which was the UAE’s largest private sector IPO – ADNH Catering and construction company Drake & Scull International. 

Anticipated listings for the coming year include FIVE Holdings and Dubizzle Group. In 2025, Etihad Airlines is widely expected to become the first Gulf carrier to go public; reports indicate that Dubai Holding is also considering listings for parts of its business. 

2025 will see a continued trend toward public listings of marquee government-related entities. The upcoming IPO pipeline also includes a good selection of private-sector companies, which add range and depth to the equity offering. 

Companies are now consistently choosing Abu Dhabi or Dubai as a location for their primary listing rather than an established centre such as London. While many retain a secondary listing abroad, the centre of gravity has definitively shifted onto home ground.

This evolution, which may be at a tipping point, is likely to entice more foreign investors, particularly institutional ones, to bring funds into the UAE market as part of their global strategy. 

While up-to-date data on foreign holdings of UAE shares is limited, and many companies are subject to foreign ownership limits, there is a significant group of listings where shares are 100 percent available to outside buyers.

Even for those with restrictions, there is typically a significant gap between the actual foreign holdings and what is allowed.

Official policy supports increasing foreign investment across the economy, including regulatory reforms, changes in labour laws, new visa options and, despite the introduction of a corporation tax at the start of 2024, a still favourable tax regime. 

The country's financial markets also collaborate with listed companies and international investment banks to host global investor conferences, sustaining a strong presence of institutional and foreign investments.

The numbers show these policies are gaining traction. In 2023, Emirati enterprises welcomed around 63,000 new investors, 47 percent foreign. In May 2024, around 19,000 institutional investors were registered with ADX, 43 percent of them foreign. 

If 2025 increases those percentages, the UAE will take a significant step forward in its ambitions to become a global financial powerhouse.

Derek Nicholson is director of strategy & planning at Alpha Dhabi Holding