Potential Economic Effects of Dubai Hosting 2020 World Expo

DubaiAccording to Reuters, now that Dubai has won the bid to host the 2020 World Expo, the result will be billions of dollars of investment in the emirate, although there is a risk of repeating the boom-and-bust cycle responsible for its financial collapse during the last decade. The emirate nearly defaulted on its debt four years ago after the burst of the real estate bubble that caused property prices to crash over 50 percent between 2008 and 2010.

How will hosting the World Expo affect Dubai’s economy?  Senior Insight Business Development Director Nizar Kasaballi explains, “Dubai has identified itself as a business hub but will never be able to retain this image. Think about it that way, Dubai is a desert, with 90 percent of its residents being expats. What do you really expect to happen in the next 10 years? Think about where your investment should go. After living and working with very high-level decision makers, I have built a solid perception of the real estate sector.”

What is the real estate situation in Dubai? “The real estate projects in the UAE over all are not stable,” says Kasabelli. “There are more opportunities for short term gambling, where you might pick up some revenue, but there is no guarantee that you will not lose everything. The price for 2 or 3 bedrooms is equal to prices in the UK, where real estate is also booming. and rental income is guaranteed. Why should anyone go to Dubai to invest and risk more than their investment? The purpose of the Expo coming to the UAE is not for investment in the UAE but for exploring Middle East opportunities and bringing the developers to meet investors at convenient location- so don’t expect a lot of media talk conversion.”

Gustavo Leal, CEO of both Flow Project and bimTEC is also a real estate consultant. He sees the news about the 2020 World Expo as positive for Dubai and all of the UAE. “However, in order to have long-lasting results Dubai will have to show the hard lessons learned from the past,” says Leal. “World Expos cannot be regarded as one single moment in time. These impacts of these events should extend to the future as they are an opportunity to manage bigger amounts of external investment. So, the real challenge, which is more than organizing a good World Expo, is using the event for future benefits- such as developing the weaknesses in infrastructures, getting better environmental and law emigration practice, developing sustainable business options away from oil dependency, etc.”

Arab News reports that property prices in Dubai property prices are currently up around 50 percent since the 3rd quarter 2011 but still 45 percent below the peak of 2008 and close to the average price of the last 8 years.

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