Expo 2020: How will Dubai benefit?
Connecting Minds, Creating the Future
In 2020, the UAE will host the World Expo, which is held once every five years for the duration of 3-6 months. The history of expo dates back to 1851, when ‘The Great Exhibition’ was first held in London. Since then, different regions of the world have hosted it at regular intervals, but this would be the first time the event is being hosted in the MENA region.
Themes for the expos are usually broad, and cover issues related to humanity. For example, the theme for the Milan Expo that is to be held in 2015 is “Feeding the Planet, Energy for Life”, and the expo held in Shanghai in 2010 was based on the theme “Better City – Better Life”. Keeping in line with the tradition, the Expo 2020 has a universal theme of “Connecting Minds, Creating the Future”, which covers three subthemes: Sustainability, Mobility and Opportunity. ‘Sustainability’ encompasses solutions for lasting sources of energy and water, ‘Mobility’ augments smart systems of logistics and transportation, and ‘Opportunity’ explores new paths to economic development. As explained in the official website of the Expo 2020:
The focus will be on exploring their interdependencies, and identifying potential partnerships, ultimately resulting in a legacy of innovation.
Economic Impact: Jobs & Growth
The World Expo is a mega event, and is estimated to attract up to 25 million visitors over the course of the event, of which 70 per cent will be from outside the UAE . In economic terms, it is expected to generate Dh 90billion or 18billion euros , and create over 277,000 jobs, over the period 2013-21 , 90% of which would occur during 2018-21 . The expo, therefore, would increase the current workforce of 1.3million by 20 per cent , and have a direct impact on the growth of sectors such as construction, real estate, travel and tourism, hospitality, and retail, over the next seven years.
Travel and Tourism sector will generate the most job opportunities
Dubai is strategically located within four hours of a third of the world’s population, and with the estimated 25 million visitors coming to the Expo, it would set a record for the largest number of footfalls, in the history of the World Expo. The airlines industry will see heavy traffic, and additional arrangements will have to be made to handle the large number visitors. Once the visitors reach Dubai, there will be a wide range of tourism opportunities, such as world-class museums within the Saadiyat Island Cultural District, luxury resorts on Saadiyat Beach, and entertainment at Yas Island.
The Tour and Travel operators expect to have huge surge in sales, and are planning for road shows, more branches, and extended services. To add to this, there are preparations for creating various other attractions in the city, such as a crocodile park in Dubai’s outskirts, a zoo and safari park, spread over 119 hectares, and traditional souks in Deira. Other plans include a Dubai Wetland Centre, near the Ras Al Khor flamingo sanctuary, a miniature park containing local icons, such as Burj Khalifa and Burj Al Arab, and a palm park with 5,000 species of palms as an educational botanical area . The Travel and Tourism sector is estimated to generate 40 per cent of the total projected jobs during 2013-21, and 59 per cent of the newly created jobs during the ramp up to Expo 2020, in the final 3 years.
Hospitality receives a major boost
Hotel occupancies in Dubai are regularly above 80 per cent, and to accommodate the large number of Expo visitors, it is estimated that 50,000 more rooms, from budget to luxury, would be required . According to Euromonitor International, the hotel inventory is expected to double, from over 82,000 in 2013 to around 164,000 rooms by 2020, and tourism receipts are projected to increase by 67 per cent, by 2018, with the MICE (Meetings, incentives, conferencing, exhibitions) industry contributing most to this increase. However, there is a risk of oversupply of hotel rooms, if the forecasted visitor footfalls do not materialize, or also if the tourist arrivals drops down after the end of Expo.
Infrastructure projects worth USD 6.9bn earmarked for the Expo 2020
The venue for the Expo is spread over 438 hectares on the southwestern edge of Dubai, and to ensure connectivity, the government has planned to fast-track the Dh 5billion Dubai Metro Red line expansion , from the existing terminus at Jebel Ali to Al Maktoum International Airport. According to Mattar Al Tayer, Chairman of the Road and Transport Authority, the expansion will be the only major investment for transport planned for the expo, and will take three to four years.
GCC banks and financial institutions will play a key role in financing the projects, and Shariah compliant financing is expected to receive a major boost in the run-up to the event. Free zones, like the one at Jebel Ali near the Expo 2020 venue, offer foreign investors benefits such as 100 per cent foreign ownership, guaranteed tax free status, hassle free support services, such as licensing and visa sponsorship procedures, and updated tech facilities . This would serve both to attract foreign investment, and to promote the Expo worldwide, and would have wide ranging effects for the Dubai economy.
Retail sector set to expand
With large number of visitors inbound for the duration of six months, the retail industry will see surge in consumer traffic and sales. Dubai Department of Tourism and Commerce Marketing (DTCM) expects the number of tourist arrivals to double the 10million tourist arrivals in 2012 , which would enhance sales in the retail sector. In 2013, the number of tourist arrivals to Dubai went up to over 11million. According to David Macadam, CEO and Vice Chairman of the Middle East Council of Shopping Centers, mall space in Dubai needs to be doubled to accommodate the increased tourism. He also believes that the expo will help them reach new heights in retail sector, and with addition of new retail space, Dubai will have more international brands than any other location in the world.
The World Expo 2020 will attract many global players, and will raise service standards through competition and adoption of best practices, across various sectors. A survey conducted by ‘Insight Discovery’ has reported that the general outlook of the UAE residents towards the expo is positive , with close to 60 per cent expressing strong interest. 88 per cent of the respondents believed that the event will impact their lives positively; however, 91 per cent strongly believe that the expo will cause the general cost of living to rise.
The Expo is a wonderful platform for the UAE and the GCC countries to showcase their potential, and fast track the development in the region. However, there must be some amount of caution exercised in investments and expansion, so as to avoid redundancy and creating bubble-like situation, which may put the economy again on back foot.