Abu Dhabi vs Dubai: best city for your start-up comes down to costs involved, industry focus, and investor access. Abu Dhabi offers dedicated government support, incentives, and a low cost of living, while Dubai offers connections and reach with local and regional markets that attracts investors. While both cities provide unique benefits, the choice depends on your business plan, business activities, industry, and growth plan. Let us look at the difference between Abu Dhabi and Dubai to help you decide which city is the right choice for your start-up.
What is the Importance of Abu Dhabi and Dubai?
UAE offers the fastest-growing start-up network to start-ups and businesses of all sizes. However, the UAE’s two most prominent cities, Abu Dhabi and Dubai, offer very different entrepreneurial journeys.
Dubai is the primary center for global trade, finance, and tourism, which attracts global entrepreneurs and investors. With more than 1000 active companies and a USD 23 billion start-up ecosystem, the city has about 87% of start-ups in the UAE. Abu Dhabi has a smaller ecosystem but is developing swiftly, with start-ups generating more than USD 224 million in the past few years.
Key Facts for Business Founders
Before looking at the comparison between Dubai and Abu Dhabi business setups, here are five key facts for business founders to consider.
- Start-up Procedure. Dubai’s licensing authorities issue trade licenses in a few days, whereas Abu Dhabi takes a little longer while offering lower license fees.
- Additional Costs. Abu Dhabi offers lower setup costs as compared to Dubai, if you include insurance, rent, and housing subsidies.
- Access to Investors. Dubai offers more start-up investment opportunities and angel networks. In comparison, Abu Dhabi relies on state-owned investment funds like ADIA, ADQ, and Mudabala.
- Sector Focus. Dubai’s sector focus is on e-commerce, Fintech, real estate, and logistics. In comparison, Abu Dhabi favours energy, AI, and healthcare.
- Lifestyle and Talent. Dubai offers a broad base of professionals, whereas Abu Dhabi is attractive for its affordability and family living.
Abu Dhabi Vs Dubai: Best City for Start-up – Setup Process & Timeline
Fast Setup Process
Dubai’s free zones are designed for a fast start-up process. A tech start-up company in Dubai Silicon Oasis and Dubai Internet City can get a license in less than a week with less paperwork. Even opening a bank account in Dubai is a smooth process thanks to the UAE’s good relationship with local and international banks. Due to the efficiency Dubai offers, it is an attractive choice for a quick business start-up.
Stable Start-up Process
In recent years, Abu Dhabi Business Centre and Abu Dhabi Global Market have made the business setup process more streamlined. Although the business setup procedure takes longer here, it is designed to be stable in the long run. Due to the thorough process, Abu Dhabi is an attractive choice for sectors like Fintech and energy. ADGM offers an English common law framework, attracting foreign investors and helping their companies be recognised internationally.
Business License and Activities
Tech, Media, and Professional Services
Dubai has different business licenses across its free zones. For instance, DIFC is ideal for the fintech industry that needs close access to banks and financial institutions. At the same time, Dubai Media City supports digital and creative businesses.
These regions are a hub of international corporations and start-ups like Google and Microsoft. For start-ups providing services, Dubai’s free zone offers a wide range of licenses according to their chosen activity.
Hardware and Regulated Activities
Abu Dhabi focuses on targeted sectors that support its goals of economic growth. For instance, Hub71 is located in ADGM, helping tech start-ups with 50% less housing and office subsidies. Masdar City accommodates clean energy and sustainability projects with research partnerships and exceptional facilities. Twofour54 Abu Dhabi free zone caters to media, gaming, design, and content creators to help with the growth of the economy.
These special environments not only provide a productive environment but also license experimental projects.
Costs and Future Planning
First-Year Costs Planning
The first year of business operations in Dubai is more expensive. For instance, the cost of a flexi desk in a co-working office is around AED 20,000 per year, while training the staff and housing can increase the costs significantly. Moreover, entrepreneurs need to consider insurance and visa process fees, too.
The costs are high because of Dubai’s large consumer base and access to investment and profit opportunities.
Affordable Business Expenses
Abu Dhabi offers more affordable subsidies and real estate, reducing the first-year business costs. For instance, Hub71 offers start-ups with two years of office spaces, health insurance, and housing. Workers’ salaries are also relatively lower, as the living costs are lower than in Dubai.
Due to the features mentioned above, Abu Dhabi is the top destination for start-ups that require longer development cycles before generating revenue.
Taxes and Other Incentives
VAT, Corporate Tax & Free Zone Incentives
The UAE’s 9% corporate tax rate applies to both Abu Dhabi and Dubai; however, many free zones offer exemptions for qualifying businesses. The VAT is also 5% and companies must register when the annual turnover exceeds the federal threshold.
Both cities offer online portals for VAT filing and registration, making compliance easy compared to other cities.
Grants and Credits
Abu Dhabi stands out because of the direct financial incentives it offers. The Abu Dhabi Investment Office (ADIO) launched innovation programs worth more than AED 1.84 billion, and the Khalifa Funds grants interest-free loans from AED 150K to AED 3 million. Additionally, Hub71 programs provide founders with subsidized housing and insurance, saving them hundreds of thousands of dirhams.
Dubai’s focus is more on access, offering exposure to businesses through events like GITEX and partnerships. These platforms are invaluable for start-ups looking for visibility and growth.
Funding Methods and Investments
More Capital Opportunities
Dubai has the most diverse investor network for start-up companies. Investment firms such as BECO, Wamda Capital, and Global Ventures have their main headquarters in Dubai, along with a thriving angel investor community.
Smart Investments in Abu Dhabi
Abu Dhabi offers government-linked funds and sovereign wealth. Mubadala funds invest in local start-ups and international brands, while ADQ’s DisruptAD platform is set to support 1,000 companies over the next few years. The start-ups in Hub71 have raised more than 1 billion, showing the growth of Abu Dhabi’s economy.
Aligned Sector and Opportunities
Consumer-Focused Ventures
Most Fintech, logistics, and e-commerce start-ups choose Dubai as it is a global trade hub due to its regional position. With more than 16 million tourists visiting annually, businesses get access to consumers from all over the world. The most common examples of successful ventures are Souq.com and Careem, leveraging Dubai’s infrastructure and consumer base to grow rapidly.
Research and Deep-Tech Projects
Abu Dhabi is a natural choice for long-term investment and deep-tech research collaborations. The Mohamed bin Zayed University of AI, advanced healthcare projects, and Masdar’s Clean energy offer a strong foundation for renewable energy, AI, and Biotech start-up companies. For instance, Agritech Pure Harvest is handling greenhouse farming in Abu Dhabi and is set to advance across the region.
Talent, Work, and Visas
Attracting Talent with Work Visas
Dubai’s multiracial atmosphere attracts talented professionals from all over the world, especially in marketing, software engineering, and design. Its global image and lifestyle make it easier to hire international talent with high salaries. Employees love to work in Dubai as it offers abundant facilities, aiding start-ups to hire a professional team, and provides work visas smoothly.
Visas and Residency
Both cities take advantage of the UAE’s long-term residency visas, which include the Golden visa for investors and entrepreneurs and the Green Visa for skilled professionals and freelancers.
Moreover, Dubai’s free zones company setup comes with work visas for employees, making it easy for owners to bring in a workforce. Abu Dhabi also offers easy visa services through Hub71 and ADGM, along with lower living costs, making relocation attractive for SMEs and their families.
Practical Guidelines
For Self-Funding Start-ups
Self-funding entrepreneurs can take advantage of Abu Dhabi’s programs, which cover office spaces, housing, and healthcare insurance for up to two years. With flexible offices, founders can reduce initial fees, and hiring when needed allows employers to bring professionals when required. Khalifa Funds offer interest-free loans and support at the initial stage of product development before revenue starts coming in. Moreover, Abu Dhabi offers more flexibility without giving up quality infrastructure.
For Venture-Backed Start-ups
Dubai’s venture-based start-ups are thriving due to access to investors and media exposure. Dubai Internet City and DIFC provide credibility, and events like GITEX offer platforms for funding and collaborations. VR-backed companies spend more on PR, branding, and a prime location to show their determination.
Although the operational costs are higher, your start-up gets more visibility to global brands and investors.
For Deep-Tech Start-ups
Entrepreneurs in AI, cleantech, and biotech benefit from Abu Dhabi’s research and pilot programs. By collaborating with institutions like Masdar City and MBZUAI, you get access to laboratories and testing facilities that are hard to find anywhere in the region. Government entities also co-invest in technologies that require a longer time to develop. The ADGM in Abu Dhabi offers a strong framework to protect intellectual properties and promote global research collaborations.
Which City is Best for Your Start-up? Abu Dhabi or Dubai?
Dubai is the best option for entrepreneurs looking to generate fast revenue, access to investors, and a large customer base. On the other hand, Abu Dhabi suits founders aiming for longer development programs and high-investment projects, requiring good partners and financial perks.
The best option depends on your funding model, business sector, and growth planning. Many entrepreneurs eventually end up setting up their companies in both cities and benefit from their extended strengths.
Final Thoughts
Finally, we hope this article helped you understand Abu Dhabi vs Dubai: the best city for your start-up in the UAE, and which city to choose. Both cities play an essential role in making the UAE a global start-up hub. Dubai is thriving because of its investor base, visibility, policies, and modern infrastructure. On the other hand, Abu Dhabi offers government support, financial efficiency, and long-term industry-specific depth. Entrepreneurs do not need to commit to one city permanently and can choose to expand their business to other cities, increasing visibility and chances of growth.
Contact Al Riyady to find out which city is best for your start-up. We can make a structured plan for your first year’s cost and help you get a trade license. Our other services are the UAE Golden Visa, Bank Account Opening, Business Setup, and more.
