As the financial crisis infected economies across the globe in 2009, the Dubai International Financial Centre — with its office towers buttressed by ground floor restaurants — became so sleepy that the offshore district’s denizens jokingly dubbed the Gulf’s banking hub the “Dubai International Food Court”.
Back then, it took a $20bn bailout to pull Dubai out of its debt crisis. No such rescue was needed after the next great economic contagion. When Covid-19 hit, the autocratic emirate bet that a rapid reopening would lure hordes locked down elsewhere. While bankers in London, Hong Kong and Singapore endured isolation, those in Dubai got to work.
Today, the Dubai International Financial Centre is heaving. In four and a half years, the DIFC’s number of active registered companies has more than doubled to 7,700; the first half of 2025 was its best for new company registrations. It now counts 47,900 workers — 21,000 more than in 2020 — from gilet-wearing Canary Wharf transplants to traders from Mumbai.
Almost nobody seems to have expected that the DIFC would get this big — even those who championed its development. “I was here in those early years,” said Ian Johnston, who stepped down in May as head of the Dubai Financial Services Authority (DFSA). “We had no idea that the centre would grow to this size.”
With offices full, the centre is building 1.6mn sq ft of extra commercial space by 2027. A bald tract of land on its periphery points to further expansion plans.
But while Dubai has spent decades trying to build a financial centre to challenge the world’s best, the city long defined by boom and bust now has to fend off competition from ascendant cities in its own backyard.
Abu Dhabi, the United Arab Emirates’ oil-rich capital, dangles its estimated $1.7tn in sovereign wealth funds to attract asset managers and hedge funds. Saudi Arabia, the region’s biggest economy, wants bankers and consultants to make their base in the kingdom instead of flying into Riyadh from glitzy Dubai.
Dubai believes it has transcended its status as a regional business hub and become a global financial centre, and its relatively diverse and open economy — for decades, an anomaly in the region — has become a test case for mass immigration and a more liberal lifestyle.
The government is supportive of businesses as long as they “do things properly and work within their rules and regulations, and don’t get involved in politics or get involved in things that are disruptive to the economy or to the population”, said May Nasrallah, a Dubai dealmaker at advisory firm PJT deNovo.
Both Dubai’s promise in terms of quality of life and its infrastructure are showing the strain of the tens of thousands that have relocated to the city, however.
Many junior employees feel that salaries have not kept up with rising living costs, while rocketing property prices may be unsustainable. “It’s surprising just how far prices have risen and it makes them more susceptible potentially to a correction,” said James Swanston of Capital Economics.
More foreign workers are choosing to stay in Dubai for longer, making the city feel less transient but increasing pressure on its road network. Bankers complain about the traffic, which is especially bad around the DIFC: everyone has a story of someone missing a meeting while trapped in gridlock just a few blocks from their destination.
Dubai’s “sharp rise in population . . . since the pandemic has increased domestic demand”, said Monika Malik, chief economist at Abu Dhabi Commercial Bank, “but also the need for increased critical infrastructure”.
The increasingly crowded feel has not stopped Chinese banks, for instance, flocking to open branches in the DIFC, along with hedge funds and asset managers. Beyond the DIFC, the emirate’s commodities centre — the Dubai Multi Commodities Centre — has also boomed.
Some of that growth has been for geopolitical reasons. Russia’s full-scale invasion of Ukraine triggered a wave of émigrés from both countries. Russian traders in particular quit Switzerland for a new base in the DMCC. Others have followed suit.
Those moves hint at some of the reputational issues Dubai has had to fend off.
The Russian influx troubled European nations looking to use financial sanctions to pressurise Russia’s President Vladimir Putin, and in 2022 the UAE was placed on a watchlist by the Financial Action Task Force, an anti-money laundering watchdog.
The country has since been returned to normal status by the FATF. But the low-tax jurisdiction has struggled to shed its image as a dirty money laundry and hub for sanctions-busting. Its multitude of free zones still provide little transparency, despite reforms that followed the UAE’s grey-listing.
“We’re in a jurisdiction and in a city in a country that’s very open and has an open economy. So we are always alive to the risk of financial crime,” said former regulator Johnston. “We’ve always recognised that it’s the greatest reputational risk.”
The DIFC has faced its share of scandals too, notably the high-profile collapse of Dubai-based private equity group Abraaj in 2018. The DFSA fined two Abraaj companies $315mn in 2019, accusing them of “serious wrongdoings” including misleading investors.
Dubai has nonetheless embraced new industries such as cryptocurrency, shunned by many regulators because of its volatility, secrecy and connections with illicit financing. Keen to project itself as an agile financial centre — and to attract freshly minted crypto millionaires — Dubai has introduced regulations to govern them.
Dubai wanting to be a cryptocurrency hub was “less about the asset class” than the emirate’s desire to establish itself as a centre for the “new economy”, said Deepa Raja Carbon of Dubai’s virtual assets regulator, Vara.
Among those it licenses is the world’s biggest cryptocurrency exchange Binance, which was fined $4.3bn by US authorities in 2023 for money-laundering failings and international sanctions violations — although Vara only regulates its UAE business.
Kristian Ulrichsen, an academic who has authored a book on the UAE, said wagers on the new economy were not without risk.
“The concentration of many of the new arrivals in sectors such as AI or tech may leave the emirate vulnerable to a slowdown should the bets that have been made on the economy of the future fail to pay off,” Ulrichsen said.
If Dubai does stumble, Abu Dhabi has the Gulf’s original finance capital in its sights. Some executives think the wealthier emirate could benefit from mobile foreigners currently in Dubai who want to live in a quieter city. Abu Dhabi is also trying to outcompete Dubai on regulatory ease.
“I think DIFC is done, apart from being a nice place to have dinner,” quipped one fund executive, arguing that Abu Dhabi Global Market has a lighter regulatory regime that is more appealing to traders and dealmakers.
As regional competition becomes more acute, bankers and regulators think the expanding city is looking over its shoulder.
Dubai was “well aware of what’s happening in other places and other markets and other financial centres”, said Johnston. “They wouldn’t be complacent.”
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