Wednesday, November 27, 2013

How will winning the World Expo 2020 bid affect Dubai's economy?

Although Dubai’s position as a world-class tourist destination has been cemented, the Expo will undoubtedly increase the city’s share of international tourism.

It has been called the largest trade show on earth. All over Dubai, we can see hopes of winning the bid to host the World Expo 2020 plastered across billboards and websites and with just a day left for the announcement, the mood across the city is upbeat. The question that needs asking however is, if Dubai does win, what impact will it have on the emirate’s economy?
Of course, there is no doubt that the country which will eventually win the coveted bid will gain significant economic, cultural, technical and promotional benefits. To understand the truth behind this statement, all we need to do is look at what the World Expo 2010 did for Shanghai. The event saw over 70 million visitors, boosted China’s tourism market and tourist spending significantly and augmented the city's GDP.

Even as Dubai waits to hear the final decision, industry experts are speculating about the ripple effects that winning the bid is likely to have on the economy, with so much being said and written about the potential boom in jobs, salaries, tourist influx and property prices. It has also been projected that the UAE economy will see overAED 100 billion in revenue and the creation of more than 200,000 jobs between 2013 and 2021.
What’s also apparent is the impact that the decision will have on the construction sector. To begin with, a 438-hectare site for hosting the World Expo 2020 will be constructed in Jebel Ali. The win will also accelerate the implementation of megaprojects such as Mohammed bin Rashid City and residential and business districts in and around Dubai World Central Airport and fast track the construction of infrastructure projects such as the Dubai Metro Purple Line.
Coming to property prices, we know that they are already on the rise. So, whilst winning the bid is sure to trigger fresh investment and spur construction given that some of the world’s landmarks such as the Eiffel Tower have been borne from international expositions, we should remember that at least with respect to real estate, the growth in Dubai’s property market started much before the Expo bid garnered widespread attention.
Hospitality will be a clear winner should the decision be made in Dubai’s favour. Although Dubai’s position as a world-class tourist destination has been cemented, the Expo will undoubtedly increase the city’s share of international tourism. Retail will also greatly benefit from the rise in resident and tourist spending, opening up the possibility of more tourism and leisure destinations in the emirate and in the UAE.
If Dubai succeeds in its bid, the impetus to the emirate’s economic growth will be enormous. However, failure to win will not prove devastating by any measure. Driven by strong fundamentals, Dubai’s economy is robust. The realty industry is growing in tandem with economic growth, improving demographics and government spending on infrastructure development. Key drivers such as trade, tourism, hospitality, logistics and retail sectors are buoyant and are in turn, driving property prices and investments. Hence, regardless of the decision tomorrow, Dubai will continue to look ahead.

Michael Lahyani is CEO and Founder of regional real estate and property website