The property industry in the UAE notably in the Emirate of Dubai witnessed tremendous development and correction after 2008-09 global financial crises followed by a strong recovery in real estate cost since. Adding to that are the megaprojects and advance investments to the World Expo 2020 that may raise the risk of disruptive property rectification unless managed well.
UAE authoritarian bodies introduced some crucial financial and macro-prudential statistics to keep real estate costs from rising abnormally while strengthens fiscal stability. Expert economists further suggested that additional measures may be taken if there’s a conflict among real estate demand and price.
It’s much anticipated that Expo 2020 further promises considerable economic benefits to the economy backed by Dubai’s reputed status as a business, tourism hub and futuristic infrastructure. Only through careful macroeconomic management and proper strategic planning measures would be highly essential to minimise cost overrun, avoid too much competition and reduce the likelihood of real estate bubble.
The statistical models are developed in the light of forthcoming event and how Expo 2020 would affect the very face of property management.
A general outline
The UAE and especially the residential market in Dubai have recovered rather swiftly after the global fiscal catastrophe in 2008-09. While the residential market is benefitting, there’re also concerns of a potential real estate bubble. For the event, Dubai has already initiated megaprojects mostly pertinent to the real estate and hospitality sector. The emirate has invested billions in terms of US dollars and further spending is likely to follow over the next several years.
Real estate development & key policy measures
Property management industry in the UAE was hit hard during the years 2002-08 whereas other countries witnessed a tremendous surge; a total contradiction. It was the outcome of global economic crises whereas real estate in Abu Dhabi also dropped, especially the residential sector that came under pressure from the neighbouring city’s market; none other than Dubai. In addition, Dubai authorities would introduce new yet, simpler contract forms for property-based transactions alongside investor laws to safeguard the rights of both parties; buyers and sellers.
Major impact & key lessons of the World Expo 2020
- Hosting an event on a global scale may offer direct and indirect economic benefits where direct implications are pertinent to infrastructure maintenance. Some examples are improving the network of rail and roadways thereby subsiding transportation cost, traffic jams and increase productivity.
Yet another direct benefit comes from the increased profit inflow from participating tourists to the event. Indirect benefits include fortification of country’s image that would further generate more tourists and business opportunities within the country.
- Downside risk may also be there in terms of distortion to macroeconomic flexibility by likely cost overruns. Higher-than-anticipated costs and property surplus are considerable factors. Paying off debts might stabilise the financial sector while reducing the suppleness of entire economy over shocks.
The event(s) experience
Global international events such as World Cup tournaments, World Expos and Olympic Games are all tied together. Here, World Expos impact on growth was significant, however; cost overruns are far greater that can further disrupt the overall economy especially the real estate niche.
Expectations: Doing it the right way
Dubai has all it takes to host the big event, however, careful macroeconomic management and practising the right strategies are essential.
- The manner in which finances are spent and how makes an integral part of Dubai’s economic development strategy. Whether the economy would benefit or not depends on it as well.
- The government need to ensure investment projects are implemented following the projected demand that can be achieved by placing a mechanism for evaluating supply versus demand factors.
- A careful feasibility report has to be prepared that would cover all the pre and post-factors of the Expo 2020. The study would clearly define planning, construction and maintenance of projects as well as cash spending during operations.
The feasibility study should clearly emphasise all the aspects following the event as well as intended use of properties plus other infrastructure facilities. It’ll only help in mitigating the potential risk of surplus and easily accommodate tourists.
Expo 2020 is only four years away and there’s a lot of excitement! All we can do is wait for the real outcome following the event and its lasting impact on real estate sector.