By PNC Menon
Not since 2012 when the world went into a tizzy over the Mayan civilization's doomsday predictions has another year had to carry the weight of world's expectations
The Goldman Sachs Global Economic Outlook 2020 is befittingly titled ‘A Break in the Clouds’ capturing the cautious optimism that has pervaded most progressive markets. According to the report, the global slowdown that began in early 2018 is nearing an end, with GDP growth forecast at 3.4 percent in 2020. The modest increase from 2019’s expected growth of 3.1 percent will be driven by easier financial conditions, a US-China trade harmonization, and reduced Brexit uncertainty.
Closer to home, in the UAE, 2020 has gained almost mythic proportions that began on a euphoric evening at the end of November 2013, when we won the bid to host the World Expo 2020 and has since snowballed to becoming a harbinger of, what most anticipate, will be the end of a not-so-good streak.
Not since 2012 when the world went into a tizzy over the Mayan civilization’s doomsday predictions has another year had to carry the weight of world’s expectations as has 2020.
It is no crystal ball gazing, but rather reading the writing on the wall that’s been etched by numerous factors, that allow us to conclude the fate of 2020 as a year in which hopeful optimism will give way to buoyant reality.
The UAE’s unique geopolitical position allows it access to two-thirds of the world’s population within an eight-hour flight and has the Middle East, Africa and South Asia and their billions of inhabitants at its doorstep. The country is also distinctively placed to facilitate additional global trade, particularly given its world-class infrastructure. It comes as no surprise then that calculated estimates show the creation of more than 900,000 full-time equivalent jobs as a result of Expo 2020, with the event forecast to contribute an additional 1.5 percent to the UAE’s GDP.
Dubai’s barometer has historically reacted strongly to emotions, both positive and negative. Expo 2020 is on the immediate horizon and the surge in population, even though transient, will add significantly to the GDP, further fueling the feel-good factor, along with the announcement of the real estate planning committee, which too helped raise the sentiment levels up a couple of notches.
Numerous independent studies in the recent months have indicated that business confidence in the UAE is on the rise. The most recent HSBC ‘Navigator: Now, next and how’ survey of over 9,100 companies in 35 countries and territories, reveals that over 80 percent of the UAE’s businesses anticipate sales growth over the next 12 months, with at least 35 percent looking to grow by 15 percent or more.
In the run-up to biggest event in the Arab world, UAE’s built environment, particularly in Dubai, has undergone speedy transformation. Demand for real estate is likely to be reinforced by the various soft infrastructure changes, which were announced over the course of 2019. Changes include the introduction of long-term visas related to real estate investment and 100 percent onshore business ownership for 122 activities across 13 sectors.
Among global cities, Dubai arguably offers the best value for quality real estate investments. Supported by strong investor and end-user protection policies and a generally conducive socio-economic environment, Dubai will feature in any real estate portfolio – whether you are a veteran or looking for your first acquisition.
Another significant factor for Dubai’s success, remains the global perception of Dubai and the UAE as a safe and preferred investment destination and an international business hub that encourages enterprises to set up base here. The ease of doing business coupled with Dubai’s flawless infrastructure makes it an ideal choice for buyers.
Today, real estate is at record levels of affordability, primarily because there are currently more homes being sold than at any other point during the last five years. And in all truthfulness, there are sustainable reasons for first-time buyers and investors to continue buying at similar levels, with the demand for property only likely to continue, if not grow. If demand continues to grow, so too will the expectations of sellers, and whether you agree or not, property will increase in value at some point, I believe we will witness the start of it sometime in 2020.
The conversation needs to move from a myopic view of supply to focusing on creating the right kind of supply that is aligned with what investors and buyers are looking for. For developers, it is vital to align their strategies to the long-term aspirations of the nation. We need to build for the future, and that takes a deep understanding of what buyers and home-owners are seeking.
But like any market, the UAE doesn’t exist in isolation, next year the GCC region will play host to several global events – notable among them being the G20 summit in Riyadh. These events will serve to showcase the region’s developmental potential and feed into the ongoing efforts to attract investors and diversify economies.
For now, one thing is sure. With Expo 2020, Dubai will long be in the mind of the global population, and this will have a far-reaching effect on the idea of moving to and settling in Dubai, which in turn will attract a new population into the Emirate, incentivise more people to invest, and ultimately give the real estate market in Dubai and the UAE some stability in the foreseeable future.