Ronny Froehlich's voice echoed across the empty rooms as he walked through his company's new office in Riyadh.
The German entrepreneur had just set up the internet, but he was already imagining the space as the bustling future headquarters of Golden Scent, a Dubai-based e-commerce firm he co-founded with a Saudi friend five years ago. The next step is to move employees from Dubai and hire more in the Saudi capital.
"If you want to be big in the Middle East, you need to be in Saudi-full stop," he said. "Maybe in six months we'll stand here and it's full."
The growing number of startups in Riyadh reflects an undeclared competition between two Gulf allies that's set to intensify this year, realigning the economics of a region striving to reduce its reliance on oil.
Dubai has staked its economic recovery on World Expo 2020, a six-month showcase of global innovation expected to attract some 25 million visitors, while investing billions of dollars in infrastructure. It's also a big year for Saudi Arabia, which takes on the chairmanship of the Group of 20 major economies and plans a series of events to promote its own breakneck transformation.
The Economic Chill Gripping DubaiDubai, United Arab Emirates. Photographer: Christopher Pike/Bloomberg
Until recently, Dubai was the place to be for Middle Eastern start-ups like Golden Scent, which sells perfume and beauty products. The glitzy city in the United Arab Emirates built its reputation as a freewheeling business hub in a region clogged with bureaucracy.
Even companies focused on the much larger Saudi market would base themselves in Dubai, deterred by restrictive investment rules or the religious police that roamed the streets badgering women to cover up.
But as Crown Prince Mohammed bin Salman reshapes Saudi Arabia, that's beginning to change. In just a few years, the Islamic kingdom has opened up to tourists for the first time, dramatically eased restrictions on women, allowed cinemas and wooed visitors with a parade of world-class chefs, concerts and sporting spectacles.
Rumors are even circulating that a long-standing alcohol ban may be relaxed as Saudi Arabia vies to win back business it's lost to other Gulf countries over the years.
Five years ago, Abdullah Altamami, a Saudi venture capitalist and chairman of online payments system HyperPay, struggled to establish a business in his home country. Today, he sees a sleeping giant that's waking up.
Abdullah Altamami at his office in Riyadh on Feb. 11. Photographer: Maya Anwar Siddiqui/Bloomberg
"I don't invest in a company now regionally that doesn't focus on Saudi Arabia," said the 34-year-old.
Nobody denies there's a long way to go. Saudi Arabia's transformation has coincided with a crackdown on political dissent - also little tolerated in the U.A.E. It was tainted in the eyes of some investors by a foreign policy that has been more aggressive and unpredictable under Prince Mohammed. The 2018 murder of Washington Post columnist Jamal Khashoggi dealt a reputational blow that Saudi Arabia has yet to overcome.
And day-to-day difficulties still remain. Foreign workers in Saudi Arabia must request "exit visas" from employers to leave the country, even for a weekend away. While restrictions on having fun have loosened up, there's no comparison with Dubai, and the modest dress code still puts off many women. As a result, it takes generous packages to attract talent.
But people are coming, and it's not just Saudi entrepreneurs moving home.
Last year, a Norwegian company planning to set up a $90 million salmon farm in the U.A.E. decided to base it in Saudi Arabia instead. Residents of the Emirates consume way more salmon now, but Saudi Arabia offers future growth as the government is pushing fish as a healthy choice.