Dubai is set to reap a Dh158 billion infrastructure spending boom as the emirate gears up to host the World Expo 2020.
The retail, tourism and aviation sectors are likely to benefit from similar windfalls as millions of visitors flood to the emirate, say analysts.
“Having won the right to host the World Expo 2020, Dubai’s economy looks set to benefit from higher investment and tourist arrivals,” said Jason Tuvey, an economist at Capital Economics, a London-based economics research company in a report.
Deutsche Bank yesterday estimated the emirate would require Dh158billion – nearly half of estimated GDP this year – to upgrade its infrastructure in preparation.
The ramp up in building activity ahead of the event is likely to start next year, with about Dh128.5bn of projects awarded, according to regional project tracker Meed Projects. That’s up from Dh110bn this year.
“We expect this number to increase significantly over the next few years as the market takes full advantage of Dubai’s successful bid,” said Julian Herbert, director of Meed Projects.
The Dubai Government has already announced its intention to press ahead with an expansion of the Dubai Metro Red Line – to link up the Expo site in Jebel Ali – as well as new concourses at the recently opened Al Maktoum International Airport, and new interchanges on the Sheikh Mohammed bin Zayed Road. It will also start work on the main Expo site close to Al Maktoum International.
But new megaprojects were also likely to be announced over the next few months by large scale developers such as Meraas, Emaar Properties, Nakheel, Dubai Properties and Damac, according to Meed.
In a release yesterday, Nakheel said it aimed to deliver a range of “innovative, sustainable destination developments in the run up to Expo 2020.”
Dubai’s economy has undergone a revival since a debt-fuelled crisis in 2009.
Property prices have risen more than 20 per cent in the past 12 months and the Dubai Financial Market General Index has gained 89.9 per cent in the year to date. The market was up as much as 4.2 per cent yesterday following Wednesday's Expo decision.
Investor sentiment has been lifted more recently by optimism about a successful Expo bid.
The rally has led the IMF and other experts to caution that future growth, particularly in property projects, are carefully managed to avoid the risk of another boom-bust-cycle.
Still, the economic gains from staging the event are significant.
Barclays, the bank, has estimated it will help Dubai’s economic growth more than double to 10.5 per cent between 2018 and 2021. GDP expansion reached 4.9 per cent in the first half of this year. Officials also forecast the creation of 277,000 extra jobs.
The benefits are likely to trickle down to tourism and retail.
Dubai has targeted attracting 20 million visitors by 2020. With as many as 71 per cent of those coming from outside the country, the inflow is expected to help stoke demand for flights and hotel rooms.
“Hosting Expo 2020 is a once-in-a-lifetime opportunity and one that will be maximised to accelerate the growth of the tourism industry in Dubai, the UAE and the wider GCC region,” said Helal Saeed Almarri, director general, Dubai’s Department of Tourism and Commerce Marketing.
HSBC estimates an extra 45,000 extra hotel rooms will be required by 2020 to accommodate visitors.
Most will be using the city's growing airport capacity, with many likely to fly with Emirates Airline.
“The city is the centre of the demographic world, three billion people are flying today per year, so we have the possibility to grow,” said Thierry Antinori, executive vice president chief commercial officer at Emirates. “We will continue to launch five-to-eight new destinations per year until 2020.”
The extra visitors could also buoy the emirate’s bid to supplant London as the world’s leading destination for retail brands, said Mat Green, head of research and consultancy in the UAE at CBRE Middle East, the property firm.
“With the recent Expo 2020 award the emirate is primed to mount a sustained challenge to London’s recent dominance,” he said.
tarnold@thenational.ae
