Dubai remained by far the most favoured city as the Middle East and Africa (MEA) regional headquarters for the world’s largest 500 companies, according to a new study.
Dubai was well ahead of the next favoured city, Johannesburg, South Africa, according to the analysis of the 500 largest companies by revenue, as compiled annually by Fortune magazine.
Research company Infomineo found that of these 500 companies some 196 had a dedicated office to cover the region.
Of that total, 138 companies had their MEA headquarters in Dubai, way ahead of Johannesburg’s 58 and up 11 on the previous year, despite the pressure on Arabian Gulf economies because of the lower oil prices.
“Companies make these decisions on long-term trends and probably decided well in advance of the oil price slump,” said Martin Tronquit, Infomineo’s managing partner. “Dubai is by far the best place to be operating in the region from a legal standpoint, for connectivity and for living conditions.”
The emirate also benefits from what he calls “the network effect”, which explains why nearby Abu Dhabi, which has virtually the same infrastructural benefits and high living standards, has failed to get much spillover in terms of attracting major companies.
“There is not much difference between Abu Dhabi and Dubai, but historically Dubai didn’t have the advantage of being the oil capital and government centre so had to develop as the commercial and financial centre; so now is benefiting from that legacy,” Mr Tronquit said.
Last year, Dubai gained 11 new regional company HQs including Lockheed Martin, which changed from Abu Dhabi as it took a permanent chalet at Dubai World Centre, while Boeing also set up an office at Dubai South’s airport city.
Dubai was also favoured by the world’s largest financial institutions and auto companies, gaining five new regional HQs in the latter sector last year.
The region’s fastest growing city was Casablanca, growing by more than 150 per cent last year to 33 corporate regional HQs.
“Eventually when companies become really serious about Africa they need to set up sub-regional headquarters, because you cannot cover 54 countries from one location,” Mr Tronquit said.
Johannesburg is dominant in the south, Nairobi for the east and Lagos in the west and Casablanca is essentially the only choice for the north, he said. It is also the favoured HQ for francophone Africa.
“It has attracted a really diverse range of industries,” said Mr Tronquit. “It is the regional hub for Renault and has growing aeronautics manufacturing and FMCG [fast-moving consumer goods] sectors who want to serve Africa’s 200 million French-speaking customers.”