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In Focus: Dubai Expo 2020

In Focus: Dubai Expo 2020

In November 2013, the Bureau International des Expositions (BIE) announced that Dubai would be the next city to host the Expo 2020, effectively making it the first city in the Middle East and North Africa to host a World Expo. The World Expo is an event that takes place every five years and is said to be the world’s third-largest noncommercial event in terms of economic and cultural impact. Set over a six month period, World Expos attract millions of visitors and generate considerable new business contracts and investments. However, debates are plentiful in relation to whether the benefits really outweigh the costs.

So what does the Expo really mean for Dubai?

With two-thirds of the world living less than eight hours away from Dubai, it is estimated that the Expo will attract some 25 million tourists over the course of the six months. In order to accommodate this increase in visitors, new hotel complexes and tourist infrastructures must be developed. JLL estimates that an additional 45,000 rooms (roughly equivalent to 230 new hotels) will be needed to accommodate these visitors.

Positive spillovers are also likely to be felt across other sectors of the economy, particularly retail, F&B and construction. According to official Expo sources, Dubai is determined to spread the opportunities as far as possible. SMEs, both local and international, are anticipated to benefit from more than AED 5 billion in Expo-related contracts. Such steps are also likely to further increase engagement with the private sector and help the government in its aim to diversify its economic base in a post-oil era, in line with the UAE Vision 2021.

Although estimates vary, Dubai is anticipated to earn total revenues of USD 38.1 billion from activities relating to the Expo. Furthermore, the six month event is forecasted to create between 270,000 to 300,000 jobs. Considering that a 2011 government survey estimated the workforce at 1.32 million, this would result in a significant increase in the workforce.

Whilst the benefits to Dubai (as well as positive spillovers to neighboring Emirates and countries) are anticipated to be plentiful, hosting an event of such magnitude is not without its risks. Looking to previous World Expos, unofficial estimates claim that Expo Milan 2015 may have lost EUR 32 million whilst Hanover Expo 2000 is estimated to have reported EUR 1.1 billion in losses.

If Expos are inherently loss making, then why do cities continue to bid for them? The answer is that when managed well, Expos have the potential to create a spillover effect on the overall economy, generating new business in sectors as varied as construction, hospitality, tourism, transportation, F&B, etc. This was especially evident in Shanghai Expo 2010, which recorded an estimated EUR 120 million in profit.

The key to curating a lasting, positive legacy of such events lies in sustainability (incidentally, one of Expo 2020’s key themes). Efforts must be made to avoid the so-called Brazil Syndrome, where Olympic and World Cup facilities lay in disuse following the event. Dubai has already addressed such criticism, indicating that assets such as buildings and infrastructure will remain in use following the conclusion of the event, albeit for different purposes. For instance, looking more specifically at the 438 hectare Expo site, it has been announced that 80% of the plot will be redeveloped for future use, serving as office spaces and an exhibition center.

Although it is still early stages, it is reassuring to see the government already focusing not only on the Expo but on its legacy as well. Expo 2020 represents a unique platform to fuel the UAE’s diversification strategies and the event is likely to herald considerable non-oil opportunities in the short, medium and long run.