The long-awaited Expo 2020 is finally here and has been the talk of the town for over a decade, yet despite only being 2 months into the event, it has already made a big impact, so will real estate in Dubai witness a boom after EXPO 2020?
The event is major in that it will be the first global mega-event to be held since the onset of the Coronavirus pandemic, allowing physical entry of visitors. Dubai has one of the highest vaccination rates globally, with more than 78% of the total population being completely vaccinated. The government’s swift and decisive action throughout this period, as well as the extremely efficient rollout of the vaccine, has allowed the country to regain some semblance of normality. The country has therefore been able to recover quickly and be able to welcome tourists into the country with open arms (albeit socially distanced). The event is expected to bring in over 25 million visitors and bring over AED 122 billion dirhams into the UAE economy. Already we are already starting to see the effect of the Expo on the local real estate market, with October, the first month of the world event, seeing the best October in recent history with a record AED13.2 billion worth of sales transactions.
Rapid commercial expansion
In terms of commercial real estate, there has already been a huge injection of stock into the market, with the development of new shopping centres, hotels and over 400 restaurants, both in and around the Expo 2020 site, something that is only expected to grow as the event is expected to drive international demand. As such, it is expected to open the doors to hundreds of new businesses and investors into the city.
There has been a big growth in terms of the industrial and logistics sector. The location of Expo 2020 has field demand for warehouses and other industrial facilities in and around the area, including Dubai Investment Park and Dubai South. With new businesses expected to enter into this area, the demand and value of these areas is anticipated to grow even further.
With these new businesses expected to expand to Dubai, they will need to find commercial spaces in which to operate. Demand for commercial real estate right now is focused on high-end, well-built units that are also environmentally friendly. Developers would be wise to keep this in mind, whilst also offering spaces that are flexible and allow for tenants and buyers alike to adapt their spaces to their individual needs. Sustainability has been a core value of Expo 2020. It is therefore only natural that there will be a renewed focus on promoting and developing environmentally friendly developments, something which property developers should prioritize.
The future of real estate is green
The site of Expo 2020 is already home to 121 LEED buildings, 12 of which have been certified platinum, the highest grade denoted in terms of environmental sustainability. These buildings have been certified as such due to the fact they have been constructed using environmentally sensitive materials, have low carbon impact, have better air quality, and have vastly reduced energy and water consumption. This move towards creating a sustainable urban environment is a trend that will most definitely continue on into the near future, especially with more companies developing a CSR ethos and aiming to be environmentally sustainable. However, this trend is not just limited to commercial property. Multiple countries have showcased in their pavilions the ability to bring environmentally sustainable practices into homes, especially in regards to construction, including Austria, Spain, and the Netherlands. These new technologies will prove fundamental in modern urban planning. UAE based developers should therefore be further encouraged to adopt these more environmentally friendly practices when looking at the bigger picture of the future of Dubai.
The surge in demand for residential investments
With such a large number of tourists visiting Dubai due to the expo, it is anticipated that there will be a large influx of investors in the residential real estate market. Investing in Dubai has become increasingly attractive over the past few years due to the thawing of diplomatic relations with several countries, including Israel and Qatar; government incentives, including the introduction of new visas; the reduction of ‘Loan-to-value’ for first time buyers; as well as the relaxation of many of the country’s more conservative, cultural laws. Not only has this promoted investment into the country but has also made the city an attractive place to live. It should also be pointed out that as businesses expand into Dubai, families will come with them, necessitating new housing developments. Overall, government officials have expressed their hopes that one in 20 visitors to the expo would decide to reside in Dubai permanently.
These new investors have had, and are expected to continue having a primary focus on high-end luxury properties, with properties worth over $10 million accounting for over 7% of all real estate transactions. This interest in high value, luxury properties was witnessed by Betterhomes, the sister company of CRC, whose agent Hannah Pratap, secured the biggest leasing deal in the history of Dubai. Developers had clearly anticipated this demand, with new luxury developments being built within close proximity to Expo 2020.
New up-and-coming neighbourhoods
Upgraded and new infrastructure has allowed investment into the areas surrounding the Expo 2020 site, which has meant residing in the outer parts of Dubai a more viable option.
There has been massive development of new residential areas, as well as the extension of the metro, and plans for further infrastructure including malls and other leisure facilities.
The Dubai Expo site and surrounding areas have been incorporated into Dubai 2040 Urban Master Plan, which will see large-scale changes to the city’s developed areas.
So, what will happen next? Will the real estate in Dubai witness a boom after EXPO 2020? Well, in a nutshell, Expo 2020 is just the beginning of Dubai’s new future. This global event is expected to kickstart business development and encourage foreign investment into the country, which will allow the country to further diversify its economy and create a thriving, attractive place to both live and work.