Any well-orchestrated World Expo is basically meant to be a huge marketing event to create awareness, lure investments and broadly spur the economy. But the big question is, to what extent will the high expectations be met? Looking back, the last World Expos in Milan in 2015 and Shanghai in 2010 all had a noticeably positive effect on the real estate market. In Milan, the city’s land department reported that residential sales on a principally mature market still grew by 6.8 per cent ahead of the Expo, powered by new developments in the city’s inner districts. According to Italian property market survey firm Scenari Immobiliari, the “Expo effect” is seen to remain lingering at least five years after the exhibition, with prices expected to rise up to 14 per cent until 2020.
Shanghai, in turn, saw an even broader effect before and after the Expo on retail, residential and hospitality property, along with a general construction boom after the exhibition that took advantage of the highly improved infrastructure. An entire riverfront district where the Expo was staged opened for redevelopment over 5 sq. km, and high-end office buildings and residential properties were built and an entire new urban neighborhood materialized.
This leads to questions on the real estate impact of World Expo 2020 in Dubai, an event that has generated an estimated $50 billion (Dh183.62 billion) in direct and indirect investments, with $8 billion being allocated to transport and infrastructure projects alone.
Experience from previous hosts shows that the Expo’s impact is a three-stage process:
- Pre Expo:Infrastructure development ahead of the expo, such as new mass transit connections, is the main driver for an upswing in real estate before the event, encouraging property buyers and investors as the economy generally warms up as a direct effect of new and improved urban mobility networks, with significant anticipated appreciation once all infrastructure is up and running.
- During the Expo:An expected influx of more than 25 million visitors over the roughly six months of the Expo 2020 and more than 300,000 new jobs to be created, in addition to around 180 exhibiting countries and international organizations attending the event, means large opportunities for hotels, serviced apartments and other residential properties. Rental yields for premium apartments could even double from the current average of around 5 per cent in the city, brokers say, particularly in popular and sought-after locations in proximity to the Expo site, including Dubai Marina, Jumeirah Lakes Towers, Jumeirah Islands and Jumeirah Golf Estates.
- Post Expo:Real estate near the Expo site will continue to benefit from investments in infrastructure and from new urban developments close to the site, such as Dubai South, as well as from the proximity to Al Maktoum International Airport. Moreover, after the Expo, the pavilions will make way for the development of an entirely new suburb called District 2020, with 65,000 sq m of residential space and 135,000 sq m of commercial and office space.
The Expo 2020 will inevitably bring a wave of new potential buyers and investors to the market who might not have thought of investing in Dubai before, but would come to enjoy the cosmopolitan flair of the city and even decide to live here in the long term.
Another important factor underpinning the confidence in the property market is that despite the introduction of the value-added tax (VAT) in the UAE at the beginning of the year, there are still no taxes on capital gains, property appreciation, salaries or rental yields, and there are no plans to introduce such on the back of stabilizing oil prices.
Moreover, anyone who buys property worth at least Dh1 million is eligible for a renewable investor residency visa, along with immediate family members.
Source: Gulf News