Expo 2020 Dubai is set to showcase the UAE, and particularly Dubai, as the world’s gateway country and city. The six-month event, which starts in October 2020, will celebrate and highlight to the world the progress the country has made over the past two decades, which has resulted in it becoming a leading business, investment and tourism destination. Over its 173-day duration, the expo is expected to attract more than 25 million visitors. Therefore, Expo 2020 is a once in a lifetime event to present the UAE, its values and its vision to the world.
The UAE is ideally located to connect eastern and western markets and as a result is known as the hub of the Belt and Road initiative (BRI). The BRI is an initiative launched by China in 2013, with an aim to revive the great Silk Road. Almost $1 trillion (Dh3.67 trillion) of investments are projected as part of the initiative. The UAE is ranked second out of 66 countries in terms of its likelihood to benefit the most from the BRI, based on its economic potential, demographic advantage, infrastructure development, institutional effectiveness, market accessibility and resilience to natural disasters.
The UAE can access two thirds of the world’s population within an eight-hour flight and has the Middle East, Africa and South Asia and their three billion inhabitants on its doorstep. Therefore, the UAE is uniquely placed to facilitate additional global trade, particularly given its world-class infrastructure.
It will come as a little surprise then that forecasts estimate the creation of more than 900,000 full-time jobs as a result of Expo 2020, with the event forecast to contribute an additional 1.5 per cent to the UAE’s GDP.
In the run-up to Expo 2020, the UAE’s built environment, particularly in Dubai, has undergone rapid transformation.
The speed of growth and expansion in the built environment has brought challenges; property market cycles have certainly been more volatile than in other more established cities. However, this has eventually resulted in a more mature investment environment. The long-run opportunities arising from this growth are immense.
In Dubai alone the task of accommodating a 109 per cent population growth over the past decade to 2018 opened huge investment prospects across residential, industrial, retail, offices and leisure. Investments in all these sectors has seen exponential growth over the last decade. Post Expo 2020, we are likely to see the level of investment into the UAE continue to trend higher, with real estate playing a key part in this.
With more than 190 countries set to participate in Expo 2020, including many start-ups and multinationals from each of these countries, Expo 2020 will act as a facilitator for global business. Businesses of all sizes will see the UAE’s capacity to facilitate this growth and look to use this advantage to grow their own regional operations.
In the long run this will lead to an increase in requirements from occupiers, both in Dubai as a whole and in District 2020 in particular, which is set to capture the legacy of Expo 2020. District 2020, located in close proximity to Al Maktoum International Airport and Jebel Ali Port, is anticipated to offer 135,000 square metres of commercial space initially, after which an additional gross floor area of 759,000 square metres will be made available for third-party developers as part of the master plan. In District 2020, office space will be integrated into a mixed-use environment and is likely to attract demand from global occupiers and smaller start-ups.
As demand from occupiers comes to fruition, we will see an increase in demand for residential units, both from owner-occupiers and tenants.
As demand from occupiers comes to fruition, we will see an increase in demand for residential units, both from owner-occupiers and tenants. This will likely occur in Dubai in the first instance and then the broader UAE as this trend matures. In the long-run this will help ease the pressure which the residential sector has come under in the run-up to Expo 2020. In the year to the third quarter of 2019, the surrounding area of Dubai South around the expo, which includes Dubai South, Emaar South and The Villages, has already witnessed a substantial upturn in demand compared to the same period a year earlier, with transactions increasing by 96 per cent over this period.
To support activity in these two core sectors, and the increase in population, there will also be a requirement for a broader range of real estate assets. Real estate sectors that are likely to witness increased demand include hotels, which will be required to support corporate and leisure tourism. Retail assets such as community malls and strip retail will be required, to cater to both the resident population and retail demand from tourists.
Finally, the sector that is likely to witness the greatest level of take-up is the industrial and logistics sector. This will be due to increased demand resulting from the higher levels of residents in the country, which in turn will lead to growth in the retail and e-commerce sector. More so, we expect that firms will use the UAE as a regional distribution hub given its modern infrastructure, ranked fifth globally and its central location. This location allows easy and quick access to some of the world’s fastest growing economies, which currently lack the modern infrastructure to which multinationals have adapted their supply chains.
Demand for real estate is likely to be underpinned by the array of soft infrastructure changes, which have been announced over the course of 2019. Changes include the introduction of long-term visas related to real estate investment and 100 per cent onshore business ownership for 122 activities across 13 sectors.
Clearly, Expo 2020 will have positive ramifications for Dubai and the broader UAE’s real estate sector in the long term, yet we do not expect the current pressures in the real estate market to be alleviated during this six-month period. By design, Expo 2020 is set to create a meaningful legacy that will benefit generations to come.