(Bloomberg) -- The Middle East is increasingly emerging as one of the most desirable locations for foreign investors looking to deploy capital, according to a survey that ranks countries most likely to attract money over the next three years.

Efforts toward economic diversification and reforms to business policies have helped the United Arab Emirates and Saudi Arabia post the biggest jumps in Kearney’s 2024 Foreign Direct Investment Confidence Index. The countries climbed ten spots from 2023, to eighth for the UAE and 14th for Saudi Arabia.

Among emerging markets, the two largest Gulf economies ranked second and third, respectively, behind China. Oman also made the emerging market list for the first time, helped by the launch of the Future Fund that will mostly focus on drawing in foreign direct investment. 

Attracting FDI is a key priority for Saudi Arabia, which has a target of $100 billion in inflows annually by 2030 — roughly three times bigger than it has ever achieved. Between 2017-2022 annual FDI averaged just over $17 billion.

To be sure, the survey gauges participants’ interest in various jurisdictions and may not necessarily translate into actual investments.

It’s a “remarkable shift for the region,” said Terry Toland, a consultant at Kearney and co-author of the report. Economic performance and efforts to become new hubs for technology and artificial intelligence were also likely at play, he said. Both the UAE and Saudi Arabia are setting up firms to invest in those sectors as part of efforts to diversify their economies. 

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When it comes to considering where to plow money, investors said they most prioritize technology and innovation capabilities. Efficiency of legal and regulatory processes and ease of moving capital into and out of the country were the other leading factors.

Geopolitical tensions also remain top of mind. About 85% of investors said an increase would moderately or significantly impact investment decisions.

Still, investors were the most optimistic about the UAE and Saudi Arabia when looking across developing markets. 

The FDI index, conducted by Kearney’s Global Business Policy Council, is based on an annual survey of global business leaders that was conducted in January. Participating companies have annual revenue of at least $500 million.

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