Experts say a successful bid would be a catalyst for huge growth for the city and its investors, with hotels and property set to be the biggest markets to benefit
With November just around the corner, Dubai is on the edge of its seat, waiting to hear the outcome of the World Expo 2020 bid. In just a few short weeks, 161 member nations of the Bureau International des Expositions will decide who will host the prestigious international exhibition that takes place every five years. Dubai is the hot favourite in the final line up, competing alongside three other candidate cities, São Paulo (Brazil), Izmir (Turkey) and Yekaterinburg (Russia). Should Dubai seal its place in World Expo history, property values and hotel occupancy and rates will undoubtedly rocket. As a result, experts are urging investors to act fast before property prices increase.
“There is no denying that winning the World Expo 2020 would have a massive effect on Dubai and in particular the city’s hotel market,” commented Danny Lubert, Joint Chairman and Co-founder of The First Group. “Over the last year, the property and hotel sectors have gone from strength to strength, and a win would serve to cement Dubai’s status as home to the world’s top performing real estate and hospitality markets. It is a tremendously exciting time for us and for our hotel property investors who are set to be the biggest winners should the emirate’s bid shine through.”
“Timing is everything. We are urging investors not to miss out on this amazing opportunity to be part of an industry that is poised for unprecedented growth,” agreed Gary Shepherd, also Joint Chairman and Co-founder of The First Group. “With more than 25 million people forecast to visit Dubai should it win the bid, we have no doubt that the emirate’s hotels will be counting the profits. There has never been a better time to invest.”
Dubai’s property market has already been putting in a positive performance over the last few months, with house prices up by between 14.6% and 20.2% in Q1 of 2013, according to a report by Cluttons UAE. The figures put Dubai well on target to becoming the world’s best performing property market by the end of the year. The hotel industry has also been outperforming other global cities, with average occupancy levels rising well above 80% during the first half of 2013, according to STR Global’s latest data. In addition, figures for the traditionally slow month of August show that three out of four hotel rooms were occupied, making it the best August on record to date.
“Dubai already embodies the essence and ethos of a World Expo,” said Steve Morgan, head of real estate specialist, Cluttons UAE. “A successful bid is likely to see the acceleration and rejuvenation of several more of Dubai’s iconic projects that are already starting to make a gradual comeback; some may even be accelerated to coincide with the proposed January 2020 kick-off date for the Dubai World Expo.”
A glance back at the impact the World Expo had on previous host countries proves just how lucrative a win could be for Dubai and its investors. After injecting $45 billion into infrastructure for the World Expo in 2010, Shanghai welcomed a record 73 million people during the event, providing a huge boost to the city’s real estate, retail and hospitality industries. The Bureau of International Exhibitions (BIE) also estimates that Milan, the host of the next World Expo in 2015, is expected to generate 70,000 more job opportunities. Plus, while direct investment in Milan’s World Expo currently stands at around 15 billion euros, the BIE forecasts the economic benefits will amount to upwards of 44 billion.
So what could this all mean for Dubai? Initial predictions say the World Expo 2020 could draw more than 25 million visitors to the city between October 2020 and April 2021. According to projections by Oxford Economics, this could account for a total economic output of AED 142 billion, as well as helping to create 277,000 employment opportunities between now and 2021. While Dubai’s property and hotel markets are already performing positively, the bid would also mean a further boost to market supply, demand and prices, in turn spelling major gains for investors and owners.
”The UAE is logistically ready to host a World Expo. Two thirds of the world’s population now lives within an eight-hour flight of Dubai,” reads the comment on Dubai’s World Expo 2020 bid website. “80,000-plus hotel rooms will keep visitors comfortable during their visit to the Expo. Unrivalled connectivity, superb logistics and world-class infrastructure are at the heart of our bid.”
Last year, Dubai welcomed more than 10 million international visitors for the first time during 2012, up 9% on the year before. Hotels in the emirate recorded revenues of a staggering $5.12 billion, representing a 17.9% year on year increase, according to the Dubai Department of Tourism and Commerce Marketing. Fast forward to the year 2020 and with the huge influx of visitors a winning World Expo bid would create, Dubai’s future and in particular that of the hotel market and its investors is looking extremely bright. To learn more about investing in hotels, download our Hotel Investment Guide To find out more about becoming part of the city’s vibrant hotel industry, contact us today on +971 4 455 0282 or check out www.thefirstgroup.com for our many exciting opportunities.