After being postponed by a year due to the coronavirus pandemic, the Dubai Expo 2020 is scheduled to start on October 1st and conclude on March 31st, 2022. It is estimated that nearly 25 million visitors will attend the Expo this year. Held every five years, the Dubai Expo allows countries to showcase their latest developments in fields such as architecture and technology. Around 200 participants are expected to be part of the Expo which includes nations, multilateral organisations, local and foreign businesses as well as educational institutions from across the globe.
Reem Al Hashimy, director-general of the Dubai Expo 2020 said that despite travel restrictions due to Covid-19, Dubai Expo 2020 is expected to be a success and hit pre-pandemic numbers. He said that the world has gone through these galactical shifts over the last year but now with vaccines being rollout. He believes that the situation will settle by October and be far more positive by then.
The pandemic proved to be disastrous for the UAE economy as well, as it shrank 6.1 percent in 2020 as a result of the coronavirus pandemic and the dip in demand for crude, according to the Federal Competitiveness and Statistics Centre. It was further revealed that the non-oil economy in the UAE also shrank by 6.2 percent during the period. However, economic growth is expected to return in 2021 as economic activities are resumed across the globe.
Even though the event was postponed by a year, the government decided to still call it Dubai Expo 2020. According to the UAE government, it will be the largest event ever to have happened in the Middle East. It brings in foreign investment opportunities worth $100 to $150 billion, economic diversification, provides a timely boost to tourism and hospitality and also boosts the real estate sector in the region.
Dubai Expo 2020 a key economic driver
With borders sealed and people advised to stay indoors, the UAE economy took a beating in 2020. The oil price war and the slump in demand for crude added to UAE’s miseries. The postponement of Expo 2020 did not help either. However, Expo 2020 is finally happening and it is expected to be a major economic driver. The event is arguably the biggest to be held in the Arab world and it comes at a time when the whole world is battling a global recession.
According to the Dubai Statistic Centre, its economy declined by 10.8 percent in the first half of 2020, however, the economy is forecast to grow by 4 percent in 2021. Along with stimulus packages, the government did announce reforms to attract investment and help businesses in the region grow. This resulted in the International Monetary Fund upgrading the growth outlook for the UAE to 3.1 percent for the current year.
The government is also hoping that the World Expo will help revive the economy. Dubai is gearing to welcome nearly 25 million new visitors to the emirates despite the pandemic. This highlights the massive potential of the expo and what it could mean for the economy. Besides attracting millions of visitors, the mega event will also provide a stimulus for development which will lead to an increase in economic activities in the region.
Dubai won the rights to host the prestigious event in 2013 and since then, considerable investments have been made throughout the emirate. We have already seen big infrastructure projects undertaken as a result of the expo. It is to note that the event offers historical significance to the UAE as it is the first large-scale international event to be hosted in the Middle East and North Africa (MENA) region.
The expo has already resulted in many developers fast-tracking their redevelopment and expansion projects. To accommodate the huge influx of tourists, new hotels were built. The hospitality and real estate industries are expected to benefit from the expo which will ultimately lead to job creation.
Expo 2020 Dubai expected to drive real estate demand
Another sector that is expected to see a big impetus is the real estate sector. Dubai’s real estate has been depressed for quite some time due to an oversupply in the market. However, as a result of Expo 2020, Dubai has made significant investments in real estate projects. One of the major benefits of hosting such a mega event is investments in real estate. Expos in the past have drastically changed the host nations, and the same is being predicted for Dubai. According to an E&Y report, Expo will create nearly 49,700 full-time jobs this year and contribute around Dh122.6 billion to the Dubai economy.
Tourists flying in for the expo are sure to be attracted to what the real estate sector in Dubai has to offer. The overall socio-political stability offered by the UAE combined with the world class modern infrastructure along with socio-political stability makes Dubai a great place to invest in.
In 2020, rents and property prices in Dubai declined which resulted in record transactions in the market property market in Dubai. In the fourth quarter of 2020, we saw a massive decline in the off-plan segment, however, the secondary market moved in an upward trajectory. As a result, many projects slowed down. Now, developers in Dubai and the UAE are hoping for positive growth as a result of Expo 2020.
According to a report by Dubai Chambers, business conditions in Dubai are forecasted to see a positive change in the third quarter of 2021 as confidence in companies and investors return once again. Also, according to an analysis by S&P, offices are reopening and the staff are returning to their workplaces in Dubai quicker compared to the financial hubs across the globe. Due to the pandemic, rentals and sale of office spaces took a severe hit as companies adopted work from home policies, however, as things return to normal, that is expected to change.
As a result of the pandemic, the e-commerce and logistics enterprises have boomed not only in the UAE but in most markets across the globe. This has resulted in an increase in warehouses and storage demand. The pandemic has also forced many businesses to go online, and obtaining an e-trade licence in the emirate is not a difficult task. Also, Expo 2020 is likely to create a large number of job openings for residents across a few sectors including hospitality, architecture, service sectors and infrastructure development.
It is without a doubt that the much-anticipated Expo 2020 is going to give Dubai’s real estate sector a significant boost. A lot of investors are willing to have their base in the UAE, as the rules and infrastructure are as promising as any other major city in the world. The Dubai Expo 2020 and other factors such as flexibility in loan repayment, visa terms for investors will lead to the rise of Dubai’s real estate market. The policy reforms undertaken to create a business-friendly environment in the region by the government will also play an important role to drag investors back to the emirate. The World Expo 2020 is expected to have a positive and far-reaching impact on Dubai’s real estate market.
Over the last couple of months, we have witnessed that real estate prices have gradually started to pick up once again. Experts are hoping this will result in real estate developers in the UAE undertaking construction activities. A lot has been done by the government over the years to make expats feel welcome in the emirate and build confidence, which will lead to them investing their money in the emirate.
Dubai Expo 2020 will boost UAE’s economy by $33.4 bn
According to the EY report ‘The economic impact of Expo 2020 Dubai’, Dubai Expo 2020 will boost UAE’s economy by $33.4 billion and support 905,200 job-years between 2013 and 2031, which is equal to nearly 49,700 FTE jobs per annum. During October 2021 and March 2022, when the Expo is scheduled to take place; it is forecasted to add the equivalent of 1.5 percent to the UAE’s GDP.
Matthew Benson, Partner, Strategy and Transactions, MENA, EY said in the report that Expo 2020 is an exciting long-term investment for the UAE, and is expected to have a significant impact on the economy and how jobs are created directly and indirectly. As the host, Dubai aims to use the event to further enhance its international profile and reputation. The event will celebrate innovation, promote progress and foster cooperation, and entertain and educate global audiences.
The major benefiter will be the construction sector as projects are undertaken to build hotels, building the site and supporting infrastructures such as roads and bridges. Also, the construction of the Dubai Metro Route 2020 line was announced. The small and medium enterprises (SMEs) in UAE will receive around Dh4.7 billion in investment during the pre-Expo phase. The sector is forecasted to support 12,600 job-years which are in line with Expo 2020’s goals.
Further, during the period of October and March, tourists will spend significantly on hospitality, tickets, food and beverage, merchandise, accommodation and transportation and communication which will propel economic activities in the region. Nearly 70 percent of visitors to the Expo 2020 are expected to come from outside the UAE. This provides the hospitality industry in Dubai a massive impetus to capitalise which will again contribute to economic gains. Dubai Expo 2020 is also in line with UAE vision 2030 and intends to contribute to new business generation, GDP growth and job creation across the region to support a sustainable, resilient and diversified economy.
What will the UAE economy look like in the next few years?
The UAE’s open economy, which is the Arab world’s second-biggest economy, heavily relies on crude oil and tourism. It confronted a double whammy shock with a dip in both price and demand of oil. Even though the economy is trying to diversify, it has a long way to go. The Covid-19 pandemic attacked the UAE economy on the two fronts it heavily relies on. Oil demand dipped as a result of the pandemic. Borders were sealed and flights were grounded, which led to severe losses of the aviation as well as the tourism and hospitality sector.
As a result of the pandemic, the UAE economy contracted by 6.1 percent in 2020, according to the Federal Competitiveness and Statistics Centre. It was the first time that the UAE economy contracted since the financial crisis of 2008. Economic recovery depends on factors such as vaccine rollouts, exposure to tourism and stimulus packages to support businesses and households in the emirate. This is why the Dubai Expo 2020 is going to play an important role not only in an economic recovery but to drive growth in the coming years.
According to the Central Bank of UAE, the value of the country’s goods and services assessed with regard to inflation is expected to rise by 3.5 percent in 2022. This was revealed in the central bank’s annual report. Dubai’s economy is forecasted to maintain 3.8 percent to 4.6 growth over the next 5 years, according to a paper published by the London based Capital Economics organisations. Moody’s also reaffirmed a positive rating for UAE and praised the economy for the government’s rapid and sufficient support to cope with the shock. The agency estimates the country’s GDP to return to pre-pandemic levels in three years.
As the third-largest oil exporter from the Gulf, the hydrocarbon sector is still a major contributor to the emirate’s economy. According to the Organisation of Petroleum Exporting Countries (OPEC), global oil demand is forecasted to grow by 6 million barrels per day (bpd) this year as economic activities are resumed in every part of the world.