Dubai – Decypha: Since the official announcement of Dubai’s EXPO 2020, the local media has been filled with infrastructure expansions, growth plans, and a heavy flow of investments throughout different sectors.
While most projections of the potential impact of EXPO 2020 on the UAE economy positive in nature, few can pinpoint the real value of the six month long event on the country.
The event is considered to be the third-largest in the world in terms of both, economic and cultural impact, after Olympic Games and FIFA World Cup. It is expected to attract more than 25 million visitors beginning from October 2020 to April 2021.
The Emirate of Dubai plans to contract the largest ever EXPO site, spanning across 438-hectare and will be located in Jebel Ali Dubai World Central (DWC). The project is expected to cost up to $4 billion. Secondary investments are estimated to go up to $8 billion affecting sectors such as transportation, construction, hospitality, and commercial sectors, Cynthia Corby, Audit partner, construction industry leader told Deloitte.
Investment flow
EXPO 2020 is projected to funnel into the country foreign investments worth $150 billion. While the new investments will cover the entire economy, most of the flow is believed to be directed towards real estate, hospitality, retail, and education, according to Research Konnection.
Additionally, over the six months duration of the event, Dubai is expected to earn a total of AED 140 billion ($38.1 billion) from event related activities, according to Oxford Business Group.
Economic Growth
Basing forecasts on previous events, earnings from the Shanghai EXPO 2010 composed an average of 13% of the country’s Gross Domestic Production (GDP) in the five years leading up to the event, Anis Sadek, Dubai managing partner told Deloitte.
Shanghai received about 73 million visitors in total, with about 1.03 million in just one day which was 16 October, 2010, according to the BIE report, ‘Making an impact: The power of the World EXPO’.
EXPO 2020 is expected to contribute about 4%, according to Deliotte’s figures.
Three key benefits are projected by analysts: Firstly, the event is going to raise confidence in Dubai's housing sector as it will support a long-term demand dynamics and boost essentials as the main trigger of the property market rebound. Secondly, almost all of the infrastructure and related housing facilities will be built in the less populated southern part of the city, which will result in Dubai's expansion. Thirdly, on the hospitality issue, as it is expected that 25 million people are most probably visiting the Expo 70% of them are coming from outside the UAE. Consequently, the supply of hotels is going to be expanded, particularly in the neighborhood of the site. Hotel occupancy rates are expected to rise during the six months of the event.
Emergence of Small and medium business
As the event will host millions of tourists, it will not only result on spending money on travel to the country, but also, it will lead to dining, sojourning and shopping from the tourists, according to Teleport My Job. Consequently, new opportunities would be opened for businesses. Analysts expect that there would be tremendous growth in entrepreneurial businesses and the medium-sized businesses.
Impact on infrastructure development
Dubai EXPO 2020 had announced its commitment to build infrastructure within the 160,000 square meter site. In Dubai’s 2016 budget, announced in December, the city increased its outlook for infrastructure, transport and economics to AED 16.6 billion, which is an increase of AED 1.8billion from the previous year. , Edward Gallagher, the business development director of De Boer told The National.
The Roads and Transport Authority (RTA) launched plans for the Route 2020 project, which was awarded to a consortium of French, Spanish, and Turkish companies. The project is valued at AED 10.6 billion.
Similarly, an extention to Dubai metro's red line is planned to launch end of 2017. The project will link Nakheel Harbour and Tower Station to the EXPO 2020 site, and will be 15 kilometers in length, according to The National.
The Official operation of the service is scheduled to commence on May 20, 2020 which is five months prior the official opening of the EXPO 2020. As part of the project, 50 trains will be purchased as well as 15 for the EXPO service and 35 to update the metro system, according to Arabian Business.
The event in Dubai will award 47 construction contracts worth for AED 11 billion ($3 billion), according to the announcement of Expo 2020 Bureau that is in charge of delivery of the event. This is in addition to, 98 non-construction contracts with more than AED 360 million in value. Non construction projects include, legal advisory services to event management and merchandising, according Dubai EXPO press release.
The construction contracts for 2017, which are open to the international, regional, and local businesses, including the third and final infrastructure package for the areas that are supporting the event including car parking.
There are other awards for the year ahead including the construction of the three Thematic Districts that will host most of the pavilions. Add to the public areas and the design, development and delivery of all temporary architecture and infrastructure which are needed to display the event.
Impact on hospitality sector
By 2020 nearly around 35,000 rooms will be added to the currently existing 65,000 rooms. Meanwhile, construction work has already begun in 96 new hotel projects in Dubai. It is expected that by 2020,the number of hotel rooms in the emirate will cross 100,000 units, according to Research Konnection.
The new hotels are anticipated to open mostly in Dubai South and Dubai Land that is near to Expo site.
Impact on the job market
Dubai’s EXPO is forecasted to increase employment opportunities in Dubai by an additional 275,000, according to Research Konnection.
Similarly, another study by Standard Chartered expects that around 300,000 jobs will be offered.
It is projected that for every Expo employee, approximately 60 additional jobs will be strengthened in the wider economy, estimated to add up to nearly a million indirect jobs, according to the Middle East Economic Digest "MEED" report.
EXPO 2020 is seen to benefit five key industries which are: hospitality, transportation, retail, banking, and finance, according to the Federal Authority of Human Resources (FAHR) report.
Opportunities in specific sectors including customer service, engineering, architecture, urban planning, and infrastructure development, will be demanded strongly during the preparation for the event.
Additionally, 90% of jobs added are expected to be offered in the travel and tourism sector from 2018 to 2021. The event will also offer new careers in media and advertising sector, according to employment website, Teleport.
Projections
As previous EXPOs have proven, the successful event is going to have a significant impact on the economy of the host city. For instance, Shanghai EXPO 2010 brought about 73 million people and 246 participating governments, international organizations, and Non-Governmental Organizations (NGO), according to Deloitte.
Additionally, it displayed the potential to exhibit the nation’s strengths and talents on the global world. The event motivated new and long-lasting infrastructure projects that are still impacting China positively.
“Dubai Expo 2020 will be bigger and better than Milan Expo 2015, with more gained GDP,” Arqaam’s managing director for research, Jaap Meijer told the First Group News.
Milan Expo 2015 cost about EUR 2.6 billion whereas it received EUR 1.3 billion in public investment, EUR 0.3 billion in sponsorships and private investment, as well as EUR 1 billion gained from official participants, according to Euronews.
Although EXPO 2020 is expected to cost around $9.4 billion, it will most probably double the investment of Milan Expo 2015 as it is expected that government revenues in the UAE will be increased by $2.9 billion (0.6% of GDP), given the larger scale of Expo 2020 compared to Milan 2015.
With UAE’s government sparing no expense to ensure that it leads the EXPO seen with unprecedented standards, the state is expecting more that simple investment flow in benefit. The event is seen a further boost pushing the country beyond many emerging markets.
By Nourhan Elsebahy
