Aviation and transport
In 2012, more than 51 million passengers travelled through Dubai International Airport (DIA), which is connected to 220 destinations via 150 carriers. Even so, the emirate’s main transport hub is undergoing extensive redevelopment and expansion to accommodate the influx of millions of international visitors that will come with hosting Expo 2020. According to the organiser’s forecasts, over 17.5 million people will flock from around the world to visit Expo 2020 in Dubai, or up to 300,000 every day. That’s not to mention exhibitors from more than 180 nations.
Preparations are already well underway for this through a series of expansions and upgrades. DIA is currently undergoing US$7.8bn [Dhs28.6bn] of renovation which will eventually allow the facility to cope with 90 million passengers per year. The includes the construction of Concourses 3 and 4 and expansions to Terminal 1 and 2.
Dubai is also putting together the finishing touches on the new Al Maktoum International Airport at Dubai World Central, just a short journey from the proposed Expo 2020 site in Jebel Ali. With an eventual capacity of 160 million passengers per year, the airport will easily surpass London Heathrow to become the largest in the world. Passenger operations began a little under a month ago, and Dubai’s Emirates Airline is expected to make its move to the hub sometime around 2015.
Analyst Ahmad says that rival host cities for Expo 2020 in Russia, Brazil and Turkey come nowhere near to matching Dubai not only in terms of their airports, but also their geographic location and flag carriers.
‘With Emirates in particular leveraging Dubai's unique geographic location to pull in and take traffic through Dubai, the other candidate cities do not even have a flagship airline capable of doing the same,’ he adds.
Dubai played host to more than 10 million international visitors for the first time during 2012, according to official estimates, representing an increase of more than nine percent compared to 2011. Dubai’s hotels also reaped a bumper Dhs18.82bn (US$5.12bn) in revenues, a 17.9 percent year-on-year hike.
This is just the start of the glitzy emirate’s tourism push, however, as by the time the Expo is held in 2020 Dubai means to have doubled its visitor figures to a whopping 20 million annually (yes, it’s going to get much busier here). Much of this ambition will depend on whether it is awarded the rights to host the event come November 27.
Given that the Expo would be held over six-month period between October and April, one analyst believes that the positive impact on the emirate’s hospitality sector will be enormous, and even surpass that of the World Cup 2022 in Qatar.
‘If Dubai wins the chance to host this event, I would expect the impact to be significantly greater for Dubai than hosting the FIFA World Cup would be for Qatar,’ says Guy Wilkinson, managing partner at Dubai-based hospitality consultancy Viability.
Figures from Dubai authorities estimate that winning the rights to host Expo 2020 will create a staggering 111,000 new jobs in the hotel and restaurant sectors.
Much of this work will be created by the new hospitality projects due to open their doors between now and 2020, including the more than 100 properties planned as part of the Mohammed Bin Rashid City megaproject.
Research by PKF (an international network of accounting and business advisory firms) based on data from previous Expo events shows that an additional 20 percent of annual international guest arrivals would come to Dubai over the six month period attracted by World Expo 2020.
PKF also predicts that hotels during the period will operate at more than 90 percent capacity, putting pressure on room inventory. However, a spill-over effect would benefit hospitality sectors in neighbouring emirates such as Abu Dhabi, PKF said.
A key pillar in Dubai’s Expo 2020 bid is the site in Jebel Ali itself, which will be spread over 438 hectares and developed with a raft of new hospitality and tourism facilities. One question that the emirate must address is what this infrastructure will be used for once the event has closed. Analyst Wilkinson says that this is one area that Dubai has a track record of success in.
‘Whatever is built for Expo 2020 must have a purpose beyond the event, and Dubai has proven itself well able to create new projects and districts that prove sustainable — just look at Al Barsha, which has grown up around the Mall of the Emirates since 2005, and is now a buoyant and thriving community,’ he notes.
Following the emirate’s property market crash of 2008-2009, which saw prices fall by up to 60 percent, Dubai’s real estate market has rallied in 2013 on the back of a strong economy and rising population.
According to a recent report by Standard Chartered, average property prices in Dubai have risen by more than 30 percent in the past 12 months, which the lender attributed partly to anticipation over the possible hosting of Expo 2020.
‘Expo 2020 [will] be a meaningful contributor to the sustainability of the housing market, in the event of a positive bid result in November 2013,’ the report read.
Of the 300,000 or so jobs that are expected to be created by a successful Expo bid, Standard Chartered forecast that approximately 90 percent will come between 2018 and 2021. The lender predicted that many of these are anticipated to be turned into permanent positions, creating further demand on the emirate’s housing supply and pushing up prices even more.
This perspective was backed by a research note issued by Fitch in September, the ratings agency said the final decision about the venue of the World Expo 2020 will have an impact on the medium and long-term supply and demand balance in Dubai.
Soaring property prices in the wake of a successful Expo bid is not without precedent. In the 12 months prior to hosting the 2010 event, Shanghai saw its real estate values rocket by as much as 68 percent, leading the city’s mayor to introduce new tax and regulations in order to cool the market.
The awarding of the event in Dubai could also help spur a new construction boom in the emirate, which saw numerous projects scrapped or stalled during the last downturn.
The Expo site itself, to be located in Jebel Ali, will sprawl across 1.2 million sqm and house around 180 purpose-built pavilions. The masterplan for the site will not receive approval until the end of 2015, with work expected to commence shortly afterwards and completion set for 2019.
According to a research note from Bank of America Merrill Lynch, it is anticipated that the Dubai government will spend about US$6.8bn [Dhs25bn] on improving infrastructure in the run-up to 2020. Overall, about 80,000 new jobs in the construction sector will be created, it is estimated. To learn more, visit www.expo2020dubai.ae
What is Expo 2020?
The first Universal Exposition was staged in London in 1851 and since then the events have served to showcase technology, architecture and culture, while attracting millions of visitors to host cities and generating business. Held every five years in cities around the world, each Expo is used as a platform to share successful innovations and make progress in international issues such as sustainable development, quality of life around the world and the global economy. Shanghai held the last Expo in 2010, while Milan is set to host the next World Expo in 2015. Like Dubai, its three rival cities for 2020 have never hosted the event before and are aiming to boost their global recognition by winning the right to host the six-month event. Those in the running are Izmir in Turkey, Ekaterinburg in Russia and Säo Paulo in Brazil.
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