By Daniel Shane
Report says that real estate investors have “gambled” on positive outcome to Wednesday’s vote
A negative outcome for Dubai in Wednesday night’s decision over the host city of the Expo 2020 event could temporarily halt growth in the emirate’s real estate market, which has shown strong signs of recovery this year following 2008-2009’s crash.
Dubai is competing with Sao Paolo, Turkey’s Izmir and Russia’s Ekaterinburg to host Expo, with the winner to be unveiled in Paris on Wednesday evening.
Dubai has pledged to spend around $8.1bn on new infrastructure if it is successful in securing the rights to host the event, with money likely to be spent on upgrading its metro system and on the Expo site itself in Jebel Ali. The six-month long showcase could also increase Dubai’s economic growth by 0.5 percentage points per year and 2 percentage points in 2020, as well as create 277,000 new jobs.
In a research note issued on Wednesday morning, real estate consultancy CBRE warned that the emirate’s property market could suffer in the short-term if Wednesday’s bidding does not go its way. In the year-to-date, real estate prices in Dubai have soared by more than 20 percent in some cases.
“A negative result could cause a short term dip in sentiment levels, specifically impacting the residential and land sectors which have both seen strong growth in prices over the last year as expectation levels have built up towards the announcement,” it read.
The CBRE research also questioned whether a successful bid would add any further momentum to the real estate market, noting that a “positive award may have already been priced into recent growth as investors have effectively gambled on the outcome of the result”.
In a separate report published on Tuesday, Jones Lang LaSalle stated that the Expo 2020 vote will act as the single most importance influence of the UAE's real estate sector in 2014.
It said that the short term impact (from 2014 to 2019) would need to be "managed carefully" to avoid any inevitable boost in sentiment translating into excessive price growth or over development.
I sincerely would like Dubai to win the Expo 2020. That would be a great sense of achievement to the leadership of this country who have done incredible things for their country, people and all of us working and visiting here. On the other hand, it saddens me to see that greedy property owners and businesses are capitalizing on this win by preparing to unnecessarily push real estate rentals and sale prices higher. The real celebration is being diverted from a great sense of accomplishment to how to manipulate the real estate market. RERA should step in to curb such malicious practices.