A decision on whether Dubai will be chosen to host the 2020 World Expo will act as "a major catalyst" for future growth in the emirate, real estate consultants CBRE has said in a new report.
It said Dubai's real estate sector is expected to maintain positive momentum over the remainder of the year as a strong economic outlook and ongoing regional issues fuel agreeable growth conditions.
While a Expo 2020 win would be a big boost, the report added that failure to host the event would like cause a "short term dip" in sentiment levels, with significant hope value having already been placed on the outcome of the decision.
"A successful bid would of course be a great accolade for the emirate, opening a new window to the world to promote Dubai’s status as a global city, and one with world-class infrastructure. Importantly, it would also help to drive demand in the emirate's property sector, helping to reach new and untapped markets and ultimately increasing Dubai’s global reach," CBRE said.
The emirate’s property market is largely dependent on the expatriate population, with a further influx of workforce expected should Dubai be successful in its bid.
This influx would primarily impact the residential property which has already seen a jump of rental rates by 23 percent year-on-year, CBRE added.
CBRE's Dubai MarketView report for Q3 also said the residential market remained firmly set on an upward track.
It said sales activity remains robust, with a total of 5,175 residential property transactions during the quarter with a total value of AED11.15bn.
This figure is marginally lower than the previous quarter, but is significantly higher in both numeric and value terms over the same period last year.
The leasing market also continues to show positive momentum with rising activity across all Dubai locations. The average quarterly rise in residential rents (covering both villas and apartments) has been 3.5 percent, similar to the second quarter.
CBRE said the highest increase has been noted in the apartment sector with a 4.5 percent growth quarter-on-quarter and 28 percent year-on-year.
Smaller sized units covering studios and one bedrooms have seen the biggest jump during the quarter as demand for more affordable properties continues to influence relocation decisions, CBRE added.
"A number of regulations have now been implemented to try and discourage speculator activities, and whilst they may dampen demand, it is thought unlikely that these steps alone will be sufficient to fully curb such activities in the short term," the report said.
"This is highlighted by the continued interest in off-plan properties, with the majority of recent launches achieving high absorption of units. As has been the trend over the last 24 months, most new projects have been launched by developers with a proven track record in the local market, highlighting a slight deviation from the previous cycle where there was greater involvement from smaller scale private developers," it added.
Dubai is currently ranked among the favourites to host the six month-long event, with other candidate cities including Yekaterinburg in Russia, Izmir in Turkey and Sao Paulo in Brazil. Thailand’s Ayutthaya was disqualified in June.
The Bank of America Merrill Lynch report put the total cost of financing the Expo at $8.4bn, or 8.9 percent of GDP.
The event would also create more than 277,000 jobs in the Gulf emirate, 40 percent of which would be in the hospitality sector and 30 percent in construction.
Dubai anticipates that more than 25m would visit the event over six months, including 70 percent from outside the UAE.
The Bureau of International Expositions (BIE) will announce the winner after a vote by its 166 member states at its next general assembly in November.For all the latest real estate news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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