Check out our CEO and Founder, Michael Lahyani’s column in Yahoo! about what the next 6 years have in store for Dubai’s economic landscape.
Wednesday, November 27, was a turning point in the UAE’s history. Finally, the verdict everyone was waiting for was out. Beating Brazil, Russia and Turkey, Dubai became the first city in the Middle East and North Africa region to host the Expo, the world’s third largest non-commercial event after the Olympic Games and FIFA World Cup, in just the 42nd year of the UAE’s history.
Having been in Dubai since 2004 and heading an online business in the city, I am confident of the numerous positives likely to come out of hosting the largest trade show on earth. The Dutch pavilion at Expo 2000 in Hanover, Germany, for instance generated close to USD 468 million in indirect long-term economic benefits for the Netherlands, more than 10 times the nation’s investment.
For one, hosting Expo 2020 will enhance investor confidence and contribute to a rise in sale prices for villas, apartments and other property types especially in developments around the proposed 438-hectare Expo site in Jebel Ali. Residential neighbourhoods and business districts in and around the airport such as Jebel Ali, Arabian Ranches and the sprawling Mohammed Bin Rashid City megaproject will also benefit from increased investor interest. The new airport itself will undergo rapid expansion and drive the construction of related infrastructure projects such as the Dubai Metro Purple Line.
Additionally, the new properties hitting the market will be taken in by new ‘actual’ demand fuelled by a further opening up of the market to international investors and people coming to live in Dubai with the creation of more jobs. Whilst hikes in rents are also likely, the checks that have been built into the system over the course of this year will ensure that growth is sustainable and indicative of a mature market. The controls introduced into the sales market such as the doubling of land registration fees from 2% to 4% will curb flipping, relax price increases and prevent a re-run of the bubble that popped in 2008, making any boom that we’re likely to witness a planned and successful one.
Further, it is possible that the much anticipated boost in property values due to the Expo win has already been priced into the market – for instance, we’ve already seen a significant 20% price rally this year – so property owners should be cautious of hiking prices without reason. Similarly, if you’re a buyer, keep your cash and don’t cave into ridiculous price demands of owners. They’ll soon come to realise that the market is not willing to pay that price and be forced to readjust the numbers.
What we can expect, however, is a rise in demand for short-stay properties, such as serviced apartments, even as the country aims to attract nearly 25 million visitors between April and October 2020 and tourists and business travellers in the years leading to the event. It has been projected that the country’s economy will see over AED 100 billion in revenue and the creation of more than 200,000 jobs between 2013 and 2021. More jobs mean more expats, more diversity of skills, spending and the injection of new demand into the economy.
The UAE is one of the fastest-growing economies in the world. So, it is really important that Dubai continues to be driven by strong fundamentals such as trade, economic growth, tourism and an increase in jobs and population so that prices, supply and demand are driven organically. We have to remember that the Expo is still over 6 years away and none of us can see into the future, so we need to see how things play out over the next couple of years before arriving at predictions of market behaviour.
His Highness Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice President, Prime Minister and Ruler of Dubai promised that the event would “astonish” the world. I believe that Dubai will indeed astonish the world with what will be built for Expo 2020 due to the sheer strength of its leadership and collaborative spirit.
Of course, Dubai 2020 will be very different from Dubai 2013, which is in itself starkly different from the scenario in 2007. We’ve seen great days and made mistakes. And this time round, we’ve learnt valuable lessons along the way.
