Until recently, when people talked about startups in the Gulf region, they often mentioned Dubai, Abu Dhabi, or Riyadh. These big cities have long been the center of business, technology, and innovation. But today, a quiet revolution is happening. Second-tier cities across the Gulf are making a name for themselves in the startup world.
Places like Sharjah, Ajman, Fujairah, Sohar, Jazan, Al Khobar, and Salalah are now becoming home to bold entrepreneurs, creative minds, and growing startup ecosystems. They offer lower costs, strong local support, and a fresh lifestyle — all helping to fuel this unexpected rise.
Let’s take a closer look at what’s driving this trend and why these cities might just be the next big thing for startups.
What Makes a City “Second-Tier”?
Second-tier cities are not national capitals or major economic hubs, but they are still important urban centers. These places often have strong infrastructure, growing populations, universities, and a decent talent pool. Unlike top-tier cities, they also offer lower rent, less traffic, and often more room to grow — quite literally and financially.
In the Gulf region, second-tier cities have long been overshadowed by their flashier neighbors. But with rising costs and tough competition in the main cities, entrepreneurs are starting to look elsewhere.
Lower Costs, Higher Potential
For startups, cost is everything. In second-tier cities, the cost of doing business is much lower. Office space, salaries, housing, and even marketing expenses are all more affordable compared to big cities like Dubai or Doha.
Take Sharjah for example. It’s just 30 minutes from Dubai but offers far lower rents. As a result, many UAE startups are choosing Sharjah as a launchpad. Sharjah Research Technology and Innovation Park (SRTIP) has helped over 100 startups scale in just the past two years.
Similarly, Sohar in Oman is attracting logistics and tech startups due to its port access and supportive industrial zones. Al Khobar in Saudi Arabia, close to major oil infrastructure, is seeing a rise in energy-tech and fintech businesses.
Strong Local Support and Government Initiatives
Governments across the Gulf are realizing the power of entrepreneurship. Many are now investing in their smaller cities to create new business opportunities and reduce pressure on capital cities.
In Ajman, the Ajman Free Zone offers fast business setup, 100% foreign ownership, and various startup packages. In Jazan, Saudi Arabia’s Vision 2030 plan includes massive investment into local education, infrastructure, and innovation. This has led to the launch of several youth-focused startup programs in the city.
Meanwhile, Salalah in Oman is offering incentives to startups in tourism and eco-businesses, tapping into its rich natural beauty and growing visitor interest.
Quality of Life and Work-Life Balance
One big reason entrepreneurs are shifting to second-tier cities is the better quality of life. These cities often offer a slower pace, cleaner environments, and a stronger sense of community — all of which are important for mental well-being.
For example, Fujairah in the UAE provides mountain views, beaches, and a relaxed vibe. Startups based here say their teams are more productive and creative. It’s no surprise that remote-friendly businesses, wellness startups, and eco-conscious brands are thriving in such locations.
Education and Talent Are Growing
Top universities and training centers are no longer just in capital cities. Institutions in Sharjah, Sohar, and Al Khobar are producing graduates with skills in business, engineering, design, and tech. Many of these young professionals prefer to work close to home, and now they don’t have to move away to find exciting job opportunities.
At the same time, cities are also attracting digital nomads and global talent. Thanks to better internet access and co-working spaces, working from places like Salalah or Fujairah is easier than ever.
Success Stories You Should Know About
Several startups launched in second-tier cities have made headlines in recent years.
- The Healthy Home — Started in Sharjah, it offers eco-friendly cleaning services and has expanded across the UAE and beyond.
- Waqoodi — A food delivery and grocery platform launched in Sohar during the pandemic, it quickly gained traction due to its focus on small towns and rural logistics.
- Zariqa — A fashion e-commerce platform based in Jazan, targeting women in underserved regions with unique traditional-meets-modern clothing lines.
These examples prove that great ideas can succeed anywhere — not just in the biggest cities.
Challenges Still Remain
Of course, it’s not all smooth sailing. Startups in second-tier cities face unique challenges.
- Access to funding is still a major issue. Most venture capital firms and angel investors are based in capital cities.
- Fewer networking events and startup meetups make it harder to find partners or mentors.
- Some regions still lack proper startup-focused infrastructure like incubators or accelerator programs.
But this is changing. Online mentorship, regional investment programs, and national innovation funds are slowly making their way to these smaller cities.
The Future Looks Bright
The Gulf region is evolving quickly. Governments are diversifying their economies, people are embracing entrepreneurship, and technology is leveling the playing field. In this fast-changing landscape, second-tier cities are gaining serious momentum.
With the right mix of cost savings, lifestyle benefits, local support, and youthful talent, these cities could become major startup hubs in the next five to ten years.
If you’re an entrepreneur looking for the next big opportunity, don’t overlook these rising cities. The best time to start may be now — and the best place might not be where you expected.
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