DUBAI EXPO 2020 WOULD BOOST DEVELOPMENT ON ALL FRONTS
Property Times catches up with industry experts for their take on the impact of expo bid win on Dubai’s already growing real estate market. By Nicole Walter/freelance writer
With the vote only a couple of weeks away, Dubai’s chance to raise its global profile even further, the expo would be welcome news speeding up real estate development yet not out-pricing itself, real estate experts hope. “A successful bid would of course be a great accolade for the emirate, promoting Dubai’s status as a global city, and one with world-class infrastructure,” says Matthew Green, head of research & consultancy UAE at CBRE Middle East. “Importantly, the event would also allow the emirate to fast track a number of major infrastructure developments, as well as underpinning demand for recently announced real estate projects. The expo would effectively represent a window for the world to view Dubai and would inevitably helping to reach new and untapped markets giving greater access to Dubai’s commercial and residential property,” he adds.
However, Matthew alerts, it would be important for the market to remain grounded and continue developing real estate in line with the actual supply and demand dynamics rather development fuelled by speculation that emerged during the last cycle and ultimately played a role in the downtown. Mario Volpi, managing director of Prestige Real Estate Dubai, reckons, that a residential oversupply due to an Expo, as has occurred elsewhere after this type of events, was unlikely. “However, Dubai is still maturing. With all the money pouring into the region from countries and individual investors of geo political turmoil, it remains to be seen if Dubai follows the normal past trodden path or makes a new road for itself that will entice others to follow,” he adds.
Opportunities galore After all one of the expo’s sub-themes is about opportunity, finding news paths to economic development. The event itself could open up opportunities for investment into its creation. Chris Scott, director investment & development management at Dubai World Trade Centre, recently speaking at the Cityscape Global Conference, highlighted that although the expo was a federal bid and funded as such, there were elements of the project where partnering with the private sector would be considered. “For example we’re also building 2,000 residential apartments on site, there may be potential interest in partnering on that, or our retail operations, the number of opportunities on that will become clear over the next few years,” he revealed.
Mario believes that accommodations built for the expo in particular would, once the exhibition ends, be made available on the open market. But the expo site itself taking up around 150 hectares of the 438 hectares Dubai Trade Centre site at Dubai World Central(DWC) is only a small piece of the development puzzle for what is in store for Dubai, and indeed the UAE. In terms of the DWC district in general, Mario lists the airport, business park, aviation district, logistics district and two residential districts, one with low lying towers of apartments and one villa community with its own golf course. Surrounding areas would also stand to benefit, such as Dubai Investment Park, Al Furjan and Jumeirah Golf Estates. “Once the final expo decision is known and the result is positive, then these DWC parts of the master plan will move ahead quickly. The pricing of these properties will be the last part of the jigsaw as no doubt developers are waiting for the outcome,” he adds. Mario points out that an increase in the population due to all that is going on and the return of major residential projects such as Mohammed Bin Rashid City and other developments close to Arabian Ranches, would potentially keep the equilibrium in favour of supplyover demand. However, he alerted there was a great fear that Dubai could price itself out of the market. “Prices in Dubai, in general, have increased on the wave of enthusiasm from the bid itself, as sellers and landlords for all property have already factored in these increases. How much more of these increases present buyers and tenants will take is anyone’s guess,” he comments.
He therefore predicts a correction, when buyers and tenants would have had enough of increases. “Double digit property price inflation is not healthy for the market as people need time to get used to changes. If the rises are too rapid they become not real in the minds of buyers who will simply stop buying if they feel they are not getting value for money. I believe we may be heading this way, perhaps towards the end of Spring next year,” Mario says. “In fact, with all the measures in place to reduce the ‘bubble’ forming, we may already be at the beginning of this correction cycle, only we do not know it yet as it takes a few months (approx. 3-4) before the sellers realise the buyers have gone away,” he adds.
What though certainly won’t go away, and residential being affected by what Dubai can create to attract more residents, is the general drive to expand the emirate’s economy, the expo, however, would clearly spur what already lies in store in the existing vision. “It would also drive further expansion within the hospitality sector, creating a more solid leisure and tourism infrastructure for which to build upon in the future,” says Matthew, reasoning that this is exactly what happened to Shanghai holding the expo 2010.
The Dubai expo theme and plans While Shanghai’s Expo theme was about creating better cities, addressing the increase in global urbanisation, and Milan’s 2015 expo will run under the theme ‘Feeding the Planet Energy for Life’, Dubai’s expo theme ‘Connecting Minds Creating The Future’ runs in keeping with the UAE’s philosophy for development. “Each theme and its sub-themes must have a relevance to the country that is bidding. We thought long and hard about Dubai’s theme,” said Chris, listing globalisation, its pace interconnecting the world gathering momentum and the UAE’s geographic location as keys behind the theme.
“What we do on this side of the planet has a big impact on what happens elsewhere. Expos are also about cultural exploration; they are a chance for every nation to either dispel misconceptions about their heritage and tradition, or reinforce that image no more so when it comes to the UAE’s bid,” he added. With this in mind the opening date of Dubai Expo - 20th October 2020 - was selected deliberately to coincide with the year of the UAE’s golden jubilee celebrations, Chris underlined. In addition, Dubai already has a lot to show for its sub-themes ‘mobility’, creating a smart city, including transportation and logistics, ‘sustainability’, addressing water and energy use, as well as ‘opportunity’, exploring new paths for economic development.
In terms of mobility, Matthew points out that Dubai International Airport was already the second largest facility in the world in terms of passenger traffic. “With the on-going development at DWC and other projects such as Kizad and Etihad Rail it is clear that the UAE has a firm eye on raising its profile in the global logistics market,” he says. The expo itself would sit right in the heart of Dubai’s logistics hub at DWC, which Chris points out, is equidistant between Dubai and Abu Dhabi and close to Jebel Ali port, meeting the requirements of a logistics corridor for participants. “A lot of construction on the site is expected up to three years prior to the opening of the event. The Abu Dhabi-Dubai route of Etihad Rail is due to be in operation by 2017 in time for the expo to benefit from it,” he adds. The expo would also help to drive expansion of the Al Maktoum International Airport itself, accelerating the use of the airport as a passenger hub and acting as a further catalyst to development of the air transport infrastructure - a keydriver for the sustained economic growth of the emirate, says Matthew.
“Furthermore, the importance of Jebel Ali port will increase tremendously in the result of a Dubai win. With Jebel Ali Port’s strategic proximity to the new airport, the port will act as a key corridor for transfer of goods from the port to the expo site, ultimately enhancing Dubai’s competitiveness as a global trade hub,” he adds. The RTA is also planning to speed up the expansion of its metro for the purple line to reach DWC in case of a ‘yes’ vote benefiting residential development. “Infrastructure and transport have a very positive effect on property pricing as connectivity within the city gets even better. New and additional metro lines coupled with the arrival in the future of Etihad rail from Saudi Arabia through to Oman will be revolutionary and will ensure the smooth transition of the populous around Dubai and beyond,” comments Mario. Matthew would also see commercial real estate thriving. “The expo would generate demand for existing office spaces and available industrial lands, following the footsteps of existing industrial occupiers such as DHL and Aramex who have already established distribution centres in the area,” he adds.
Most prominently, the expo would also signal the start of the Dubai International Exhibition & Convention Centre’s move to DWC. In line with the ‘sustainability’ sub-theme, although the majority of the pavilions would be temporary structures, the expo would leave behind one of the three arenas, the Expo Centre, envisaged, as well as the shaded photovoltaic structure covering the pavilions organized in the traditional souk format, and to provide 50% of the energy needs to operate the event, as well as the retail component, behind.
The shading structure and the Al Wasl (connection in Arabic) plaza, would become the focal point of the expo and the main entrance point of the future exhibition centre with a metro station, says Chris.“This will be a major arrival experience, as well as generating power for the community in the long term. The event would kick start the rest of the development of that plot, as we intend to complete the rest of the exhibition centre once the event would be over,” he enthuses. “We’re already bursting out of the seams at our current exhibition site at DWTC and will move our entire operations, you only need to look around the impact we will have on the surrounding areas, whether commercial or residential to see that this would create a lasting legacy,” adds Chris.
Expo to boost various sectors While Matthew believes that the expo would work as a catalyst to, for example, raise the issue of sustainability higher on the global agenda as the country seeks to position itself as a leader in this field through projects such as Abu Dhabi’s Masdar, Dubai’s ‘green’ project Enpark also stands to benefit. “The expo would be really fantastic for Enpark, the theme putting a lot of focus on sustainability, going hand in hand with our strategy to foster growth in sustainable solutions, encouraging multi-national companies to set up here,” says Marwan Abdulaziz, executive director for TECOM Sciences Cluster – Enpark and Dubiotech. “We also support entrepreneurialism and innovation, which also is another focus of the expo. We believe that promoting research into finding unique solutions to the MiddleEast is very important and events like the expo offer this kind of discussion,” he adds.
The expo bid alone is already having an impact in this respect. Already 100 million Euros have been set aside to encourage discussions to be presented at Expo Live in the aptly named Innovation Pavilion. “It is a brand new concept for world expos, challenges in the three sub-themes will be identified and solutions developed over the next seven years,” says Chris. “We’re drawing in educational and creative institutions, as well as the general public the discussion needs to be inclusive; a great example of the concept of innovation through collaboration,” he adds.
This is a concept Enpark lives by as well, says Marwan. “We put a lot of work into bridging the gap between the government and the private sector, including international players, as it is the authorities, such as Dewa and so on, which take decisions in terms of energy solutions.” He sees all industries in Dubai receiving a boost thanks to the Expo. “Dubiotech will benefit as well, our population is growing, so we need more infrastructure, such as hospitals and clinics to support the growth, so we need more pharmaceutical and medical supply companies here,” he remarks. Dubiotech is already home to one pharmaceutical custom-built factory and the expo could spur R&D and local manufacturing. “We have the mobility to reach different markets in terms of location, infrastructure and logistics. It’s best to start with the GCC, as we have not only have the culture and demographics, but similar economies, in common and then we would expand to Mena,” he says. “The expo could give our expansion plans, which would happen in any case, but a push to be realised sooner,” he adds.
Dubai, and indeed the UAE, is known as the land of opportunity, the expo’s other sub-theme. “Opportunity is reflective of the UAE’s growth with many businesses choosing to move to the country, over the last 42 years. First and foremost expos are about building relationships to create bilateral trade country to country, via private or private public partnerships, it isn’t just nations which participate but also private organisations,” says Chris.
With 247 participants from 182 different nations, including a number of multi-national organisations, and NGOs, and educational institutions, as well as 25 million visitors and 33 millions visits to the site, 70% of those from overseas, expected, chances are many minds would indeed connect nurturing business, and educational sectors as well. Add to that the billions of dollars expected to be spent on creating and operating the expo, equally generating billions of dollars for the UAE economy, and the creation of 277,000 jobs, of which a good percentage could be turned into permanent ones and the advantages of winning the bid are clear.
“The legacy of an expo would be determined not just from the more obvious macro economic benefits, such as new job creation and higher economic output, but also from Dubai’s prolonged period in the global spotlight which would give the emirate fantastic exposure, and open up a host of new business and tourism avenues to exploit,” Matthew concludes.
source: Property Times magazine