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Dubai’s business-hub status depends on two very different princes

September 18, 2022, 6:06 PM UTC
Dubai ruler Sheikh Mohammed bin Rashid Al Maktoum (center) with sons Crown Prince Sheikh Hamdan (left) and Sheikh Maktoum in Dubai earlier this year.
Government of Dubai—Media Office/Handout/Anadolu Agency via Getty Images

Guests jostle to snap selfies with the beaming ruler-in-waiting flanked by dozens of local officials. The royal works the room with the ease of an Instagram celebrity who’s used to mixing with superstars like footballer Cristiano Ronaldo.

A few meters behind him, blending into the crowd at an event in the Dubai Expo earlier this year, stood another man who may be less conspicuous in the city’s social scene yet whose impact is winning praise from foreign investors while keeping executives at government-run companies on their toes.

As their 73-year-old father, the ruler of Dubai, hands them more responsibility, Sheikh Hamdan bin Mohammed Al Maktoum, 39, and brother Sheikh Maktoum, 38, have each carved out a niche. They face the task of safeguarding Dubai’s status as the Middle East’s pre-eminent business hub amid competition from regional rivals and international scrutiny following Russia’s war on Ukraine.

“Think of it as a company,” said Nasser Al-Shaikh, Dubai’s former finance chief, who helped steer the emirate through the 2009 debt crisis. “Hamdan is the chairman and Maktoum is the CEO. Hamdan is the face of Dubai and the crown prince, but decisions on all issues are made after consultation between the two brothers.” 

Sheikh Hamdan, the charismatic crown prince and heir, is marketer-in-chief in a city built on glitz and its ability to attract capital and millions of tourists. Sheikh Maktoum is proving key to Dubai as a financial market this year as he calls the shots across the emirate’s sprawling state-run enterprises. He’s part of a push to sell stakes to investors — most recently, road toll operator Salik this month — and has occasionally summoned corporate chiefs to talk through their numbers.

Beyond financial markets, Dubai is under pressure to clamp down on illegal money flows, while the energy crisis may have provided a boost to oil revenue in the United Arab Emirates but in the longer term will accelerate the global move away from fossil fuels.

The brothers — who were born a year apart to the same mother —  also need to maintain the delicate balance of power within the UAE. That comes after Dubai’s leadership persuaded Abu Dhabi to refocus on business and the economy and less on foreign policy that led to military engagements in conflicts stretching from Yemen to Libya and Turkey. Saudi Arabia, meanwhile, poses another challenge with its desire to emulate Dubai as a magnet for foreign talent and investment.

The two men rarely speak to the media. The Dubai Media Office said it was not possible to arrange interviews within the timeframe given and declined further comment.

Sheikh Hamdan is nicknamed Fazza, Arabic for one who rushes to the aid of others. He was appointed crown prince in 2008, bypassing an older brother Sheikh Rashid, who passed away in 2015 at the age of 33.

While his  social media accounts are peppered with more formal pictures of government business, Sheikh Hamdan has also been featured skydiving, mountain climbing, horse riding or standing on top of the world’s tallest tower. He has 14.6 million Instagram followers — equivalent to more than the population of the UAE — and mingles with people in Dubai’s malls and restaurants, continuing the image of the approachable leader his father cultivated as he prepares for his future role. 

Hamdan accompanies his father to most meetings with other rulers in the UAE’s sheikhdoms and chairs Dubai’s 22-member Executive Council, which includes his brother. The Council’s website says Hamdan “is characterized by his young and dynamic personality” that has helped him build connections with the Dubai population. He’s also chairman of the emirate’s sovereign wealth fund, the Investment Corporation of Dubai. 

Maktoum, meanwhile, is described by the council as having “the traits of an ambitious young leader.” He shot into the spotlight when he was appointed finance minister for the UAE in September 2021 after the death of his uncle. Spearheading share sales of long prized state-owned firms brought him to the attention of investors. For years they had called for the listing of state-run companies to boost Dubai’s stock market. 

“Sheikh Maktoum is currently playing the role that’s set out for him, which is defined and technical,” said Sheikha Najla Al Qassimi, a senior researcher at Dubai Public Policy Research Centre, B’huth, who has also served as a UAE ambassador. “Sheikh Hamdan’s role as the crown prince is more political. He’s well liked by locals and tribes while also able to connect and appeal to Dubai’s large expatriate community.”

This year’s public listings are the start of a flurry that’s set to see a total of 10 state-owned firms offer shares to investors. Sheikh Maktoum has helped push through the sale of stakes in the main utility, Dubai Electricity and Water Authority, along with business park operator Tecom Group, raising more than $6 billion in total.

Investors in September snapped up all the shares on offer in road toll operator Salik, and Dubai increased the sale’s size. The transaction, coordinated by Goldman Sachs Group Inc. and Merrill Lynch among others, is designed to raise $1 billion.  

“As the financial hub of the region, Dubai’s markets are not fully reflecting that status,” said Mohamed Abu Basha, head of macroeconomic research at Egyptian investment bank EFG Hermes. “If you want to further boost the Dubai story, you need to continue this IPO push which I think is long overdue.”

Sheikh Maktoum has also zeroed in on corporate governance. As the head of the government’s auditing department, he keeps a hawkish gaze on the finances of Dubai’s state-controlled entities, some of which were at the root of Dubai’s financial troubles over a decade ago. The focus makes sense — he’s one of the main officials tasked with keeping tabs on the city’s finances.  

Since taking the helm at the Financial Audit Authority, the royal has ordered financial probes into several state firms when suspecting possible corruption, people familiar with the matter say, declining to speak on the record about confidential discussions. He keeps official meetings short, serious and to the point, they said, in a region where extended chit-chat over tea often precedes getting down to business.

An executive at a Dubai-owned enterprise said he was surprised when he received a call from Sheikh Maktoum’s office summoning him. As he arrived at the offices, he was ushered in only for Sheikh Maktoum to walk in few moments later with a bottle of water in his hand. He immediately started going over some transactions, asking for details and reasons.

Unsettled by the meeting, the executive nervously started reaching for his files before being put at ease by the sheikh, he said, declining to be identified by name when talking about a private meeting. When he left, Sheikh Maktoum passed on his direct number.  

Sheikh Maktoum, who also holds the roles of a deputy prime minister and deputy ruler of Dubai, is known to request updates on specific projects some times late at night or on weekends, one banker said.

“There’s been positive change in UAE stock exchanges since Sheikh Maktoum took over,” said Tarek Fadlallah, head of Nomura Asset Management’s Middle East business. “It definitely helps that he’s the son of Dubai’s ruler and that he’s from a generation that’s comfortable with rapid change.”

Sheikh Maktoum’s aim is to ensure Dubai’s meltdown of 2009, when it required a $20 billion bailout from Abu Dhabi, isn’t repeated. When Sheikh Maktoum was in his early 20s and Dubai teetered on the brink of default, he turned to Al-Shaikh, the finance chief at the time, for a detailed walk-through of the financial situation.

“He asked me to sit with him and run him through the numbers,” Al-Shaikh said. “He wanted to know where exactly the stress points were and what caused them.” 

Dubai now faces fresh hurdles. Earlier this year, the UAE was added to the Paris-based watchdog Financial Action Task Force’s so-called ‘gray list’, indicating the Gulf nation’s shortcomings in tackling illicit funds. Since then, the UAE has said it would ramp up extradition pacts. 

Since Russia’s invasion of Ukraine, international scrutiny over how Dubai tackles illicit finance has increased. Politically, the UAE has maintained ties with Russia. UAE officials have said privately the country will abide by international sanctions.

Saudi Arabia’s opening up under millennial de facto leader Crown Prince Mohammed bin Salman, is also beginning to lure foreign talent that might normally have ended up in Dubai.

The UAE has responded with efforts to make the country more attractive to foreign firms and encourage incomers to put down deeper roots. It decriminalized cohabitation of unmarried couples, allowed expatriates to marry, divorce and use inheritance laws of their home countries, and removed a requirement to have a license to consume alcohol. It’s also abolished the need for local partners to start a business. It has initiated long-term visa schemes and selectively opened the door to granting UAE citizenship, a rare move in the Gulf region. 

How Dubai navigates the next chapter will come down to the dynamic between the two brothers as Sheikh Hamdan eventually succeeds his father as the face of the city, while Sheikh Maktoum cements his role as the numbers man.

When Sheikh Maktoum was first appointed, “there were pretty low expectations,” said Jim Krane, author of the 2009 book City of Gold: Dubai and the Dream of Capitalism. “He was kind of an unknown quantity. But he’s emerging so prominently by the force of his personality and his willingness to get involved.”

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