Beyond 2020: the future of real estate in Dubai after Expo 2020
Dubai Expo 2020 is centered on the theme, ‘Connecting Minds, Creating the Future’. Self-evident as it is, the event is expected to be impactful during its course and reverberate through time. The Expo 2020 marks a major milestone in Dubai’s transition from an oil-centric economy to a diversified, knowledge-based economy. The economic impact in the aftermath of the event will be even more consequential to Dubai, than the economic impact during the event and leading up to it. The event will kick off one year from now, and six months after it comes to a close, the legacy period will come into play. And unlike most venues that fall into disrepair after the event, Dubai South’s legacy will live on.
Even the most celebrated economists are skeptical about predicting the aftermath of an event as colossal as the Expo 2020. Despite the availability of vast empirical data, historic evidence and quantifying tools, there can be no definitive way to predict the legacy of such epochal events. Nevertheless, an attempt by Ernst & Young offers some degree of clarity. According to E&Y’s report, the economic impact of Dubai Expo 2020 will be in excess of $33 billion(1). It goes on to reiterate that one of the biggest beneficiaries of this growth will be the real estate sector.
The status quo
Spread across 4.38 square kilometer area, Dubai South is a sprawling venue equipped with best-in-class amenities and imposing structures, capable of hosting events of unprecedented scale and magnitude. Besides being in close proximity to the Al Maktoum International Airport, the venue is connected to the rest of Dubai through a new metro line, Route 2020. Dubai will power the event through a solar project – the largest of its kind – and reuse and repurpose 90% of the construction materials used after the event, adhering to its sustainable practices. Around 8,200 property units have been sanctioned for development in Dubai South after the event, including schools and malls, within a 700,000 sq. ft. area(2).
According to Prabhakar Rao, Managing Director of Gemini Property Developers, Dubai South will emerge as a microcosm of modern real estate and architecture, post Expo 2020. Being the first city to host a World Expo, or any event of this magnitude, within the MENASA (Middle East, North Africa and South Asia) region, Dubai is exemplifying ambition and industriousness, according to Prabhakar Rao. “We are witnessing history being made.”
Some expect around 59,800 properties to add to the market by 2019, although more conservative estimates speak of 33,800 units, as a more realistic figure which can be delivered by the stipulated time. The government’s easing of ownership and visa regulations, over recent months, should add to this impetus and create even more favourable conditions for real estate growth and development.
Expectations post Expo 2020
During the duration of the Expo, tourism is expected to be in full swing, with at least 14 million visitors coming to Dubai, resulting in the rise of hotel occupancy and boosting the short-term rental market as well. The government hopes to continue this momentum even after April, 2021, with the timely introduction of visa and ownership reforms, and more initiatives in the works. Concurrently, the property market continues to stabilize in Dubai, on the back of affordability in both sales and rentals. With an additional 46,000 units expected after June, 2020 -to coincide with the Expo – the prospect of striking a balance between supply and demand, to achieve market equilibrium, is looking good.
In addition, the Dubai Land Department (DLD) is contemplating tokenization of real estate units, which is expected to open up foreign investments and thereby induce price-stabilization. Droves of tourists, venture capitalists, real estate aficionados and potential expats will grace the event, giving Dubai the opportunity to showcase all the things it has to offer, on a world stage. Residential properties aside, commercial developments are also being planned in the allocated 1.5 million square feet area, with IKEA and Ace Hardware already setting up shop in Dubai South and Siemens expected to jump on the bandwagon soon.
Prabhakar Rao believes that government’s efforts to entice potential expats and real estate investors during the event will have a significant bearing on the future of Dubai real estate. “Staying abreast with emerging technologies, without compromising on sustainability goals, is a highly desirable outcome in the property market and Dubai epitomizes it”, Prabhakar Rao adds.
According to the E&Y report, the legacy period of Expo 2020—estimated from 2021–31—is expected to contribute AED62.2 billion in gross value added (GVA) to the UAE economy. It estimates that within the total AED122.6 billion GVA contribution of the Expo from 2013–31, a resounding AED27 billion can be attributed to the construction sector alone.
Economists believe that Abu Dhabi’s Economic Vision 2030 and the UAE Happiness Index objectives will experience the knock-on effect of Dubai Expo 2020 as well. Ultimately, in the wake of the Expo, much-needed market stability in Dubai real estate is very plausible, according to Prabhakar Rao. “Although the event is coming at an expense upwards of $8 billion, the ends will justify the means, in this case,” Prabhakar Rao concludes.