Dubai’s booming real estate sector continues to underpin the emirate’s GDP growth, driven by the rampant development of mega projects ahead of World Expo 2020
Large-scale projects worth more than AED300 billion (US$81.67bn) will be completed across Dubai over the next four years as the emirate gears up to host the World Expo in 2020.
From new leisure attractions such as the three theme parks at Dubai Parks and Resorts, which are expected to attract 6.7 million visitors during their first full year of operation (Q3, 2016 to Q3, 2017), to the World Expo 2020 site itself at Jebel Ali – which when completed in 2019, will have the capacity for 300,000 visitors daily – the size, scale and value of Dubai’s mega-developments is driving economic prosperity and boosting investor confidence.
As new large-scale projects break ground, real estate’s total share of GDP is forecast to skyrocket, according to a Q3, 2015 report by Unitas Consultancy, a Global Partners Group Company.
Real estate has historically contributed around one quarter (25 percent) of Dubai’s GDP and is essential to job creation and economic growth across the emirate, according to the report.
In 2000, before Dubai’s freehold legislation was introduced, the construction sector accounted for around 26 percent of Dubai’s workforce.
Unitas Consultancy has forecast a huge spike in job creation between Q4, 2015 and 2020 given the real estate market’s strong status, driven by the boom in housing, entertainment, infrastructure and hospitality projects pre-World Expo.
Its report stresses that between 2015 and 2020, an estimated AED301bn ($81.95bn) worth of contracts will be completed, which will effectively double the current output of the construction sector.
These large-scale projects will drive immediate demand in the workforce, generating an estimated 60 percent-plus hike in the number of jobs created in the construction sector between now and 2020.
The industry will therefore account for at least 25 percent of total GDP over the next four years, the Unitas report reveals.
The jump will also bring the construction industry’s economic impact a percentage point closer to that of the emirate’s aviation sector, which in 2013, contributed $26.7bn to the Dubai economy, or almost 27 percent of GDP, according to a recent Oxford Economics report.
The aviation industry supported 416,500 jobs, accounting for 21 percent of the emirate’s total workforce in 2013.
However, between 2014 and 2020, the contribution of the aviation sector is expected to grow at a faster rate than the economy as a whole, driven by strong growth in international passenger traffic and cargo.
Using industry growth forecasts and modelling projections and based on current expansion plans for Dubai International and the new mega hub, Al Maktoum International – Dubai World Central (DWC), it is estimated that the overall economic impact of both aviation and tourism-related activities will rise to $53bn in 2020.
This will be the equivalent of 37.5 percent of Dubai’s GDP, supporting more than 754,500 Dubai-based jobs.
The growth of the aviation sector will have a positive impact on Dubai tourism and will fuel real estate industry growth.
With Dubai’s Department of Tourism and Commerce Marketing (DTCM) targeting 20 million visitors by 2020, which is double the 10 million it received in 2010, the planned infrastructure developments are integral to the government’s strategy to generate more tourism receipts.
The mega projects planned to support the World Expo 2020 are essential to the DTCM achieving its goal of attracting 25 million visitors during the six-month-long event.
Aside from the 438-hectare World Expo 2020 site, Dubai Trade Centre – Jebel Ali, set out in the Dubai Expo 2020 Master Plan, high-profile projects currently under construction include the standalone metropolis, Mohammed Bin Rashid City; the offshore tourism destination, Bluewaters Island, which is home to the 210-metre Dubai Eye Ferris wheel; the Dubai Opera House, part of a new arts and culture precinct in Downtown Dubai; and the $6.8bn Mall of the World, which will anchor the world’s first temperature-controlled city and is the largest mall ever conceived.
But this list only scratches the surface in terms of Dubai’s impressive construction pipeline, and this week’s Cityscape Global exhibition, which takes place at the Dubai World Trade Centre (DWTC) from September 8 to 10, will also reveal a bevy of additional sizeable developments planned for the city.
Together they cement Dubai’s status as one of the world’s fastest growing – and most lucrative – real estate markets.