When Dubai won its bid to host to Expo 2020 in 2013 the world was very different place, and five years later the argument that it should have chosen to locate the event at Dubai Creek Harbour rather than on an out of town site in Jebel Ali has gained strength.
The price of Brent crude oil was $111.32 a-barrel when Dubai's bid was selected on 26 November 2013, and the region was buzzing with excitement as it enjoyed one of its best ever years for construction contract awards with schemes such as Riyadh metro moving into construction.
Perhaps more importantly for Dubai, after receiving a boost in visitors following the Arab Spring in 2011, real estate prices were rising again as the emirate moved to put the global financial crisis firmly in its rear view mirror. All the talk was of a sustained property boom leading up to 2020.
It was against this backdrop that Dubai decided to locate the Expo in an out of town location the Jebel Ali area between Dubai Investment Park and Al-Maktoum International airport. As momentum in the property market grew, the Expo positioned itself as a catalyst for development in the area, and the possibility of completing the $33bn expansion of the nearby airport in time for the event was even briefly considered.
Those halcyon days came to an abrupt end in mid-2014 when oil prices began to fall sharply. Today oil prices have recovered from the early 2016 lows of $26 a-barrel to about the $75 level, and although Dubai’s property developers have managed to keep moving forward with new projects, their ability to move ahead with major projects at pace has been stifled by reduced investor appetite and tightening liquidity.
The concern is that in 2018 Dubai has spread itself too thin as it tries to execute too many major projects at the same time. This applies on a number of levels. For construction, the worry is that there is not enough investment, funding or finance available to complete all planned projects, while for the economy as a whole the concern is that as property prices soften, the market now risks being greatly oversupplied across all main property classes including residential, retail and commercial space.
These concerns have even affected projects at the Expo site itself. In 2017, a joint venture of local developer Emaar and Dubai World Trade Centre scaled back their plans for the major new retail centre at the Expo site, and instead is now building a smaller less expensive shopping mall. According to sources working on the project the decision was a prudent one and made to make it a better development that was more flexible and responsive to uncertain market demand.
While the Expo mall progresses at a smaller scale, other major projects in Dubai are not moving forward as quickly as planned, and the biggest of them all is Dubai Creek Harbour. The development in Ras al-Khor includes the world’s tallest building, the world’s largest shopping mall and a wide range of residential properties and hotels.
While residential towers that were sold offplan are nearing completion, construction work on the mall and tall tower has been slow to progress beyond the foundations stage, and will no longer be completed in time for the Expo in 2020.
The problem for the tower is that it has been designed as a tall architectural statement and little else, and as a result will produce little revenue - unlike the Burj Khalifa it does not include residential units, a hotel and commercial space.
The mall is also a challenge. The retail industry is evolving rapidly as shoppers move online, and in response Emaar has had to rethink how shopping malls of the future will operate. Its solution is Dubai Square, which will be a futuristic interactive retail experience coupled with a wide array of entertainment.
This futuristic experience looks very similar to what visitors can look forward to at the Expo, and begs the question would Dubai have been better concentrating its efforts on the Dubai Creek Harbour site and locating the Expo there instead of Jebel Ali?
Dubai Square could have been designed to host the Expo, and the global centre for showcasing cutting edge technology could then have been converted into a futuristic mall once the event finishes in 2021.
That argument becomes stronger when the airport is considered. Dubai International will still be the city’s primary airport in 2020, and it is located 4 kilometres away from Dubai Creek Harbour but 38 kilometres from the Expo site.
Emaar says it is talking to the Roads and Transport Authority about a direct metro link to Dubai International airport for Dubai Square, and with such a short journey time it is aiming to attract some of the 75 million passengers that transit through Dubai each year.
To promote access to the Expo, Route 2020 is being built which is a 15 kilometre long metro link connecting the Expo site to the existing Red Line of the Dubai Metro at Nakheel Harbour and Tower Station. The journey time by metro from Nakheel Harbour and Tower to the Expo site has not been confirmed, but the time from Terminal 1 at Dubai International airport to Nakheel Harbour and Tower is 45 minutes, which means the Expo is about 1 hour away and will have a far tougher task attracting passengers transiting through Dubai.
The counter argument is that hosting the Expo at Dubai Creek Harbour would have just aided the development of that site. Instead, an Expo site in Jebel Ali helps drives long-term development in an area that is already home to the region’s busiest seaport, a wide range of industrial areas, a raft of new residential developments and a cluster of theme parks.
In the future when it is also home to the world’s busiest airport and development in the area has reached critical mass the decision to host the Expo there will be considered a forward thinking one.
The problem is that in 2018 the market is consumed dealing with the short term problems of today. While many of those challenges would be easier if the Expo was being built at Dubai Creek Harbour instead of Jebel Ali, the reality is it is too late to change those plans now, which means Dubai must remain committed to delivering those greater ambitions.
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