Expo set to boost Dubai projects sector

27 January 2014

The emirate has set aside $7bn to fund Expo-related projects

The impact of the Expo on Dubai’s construction sector will be far reaching. Companies will find work on the Expo site itself next to Al-Maktoum International airport, as well as across the rest of the emirate as developers build new infrastructure and facilities to support visitors to the event in 2020.

The first priority is developing the organisational structure. There are plans to establish a vehicle that will be responsible for delivering the Expo site along with the supporting infrastructure, and which will have its own chief executive.

Once the senior management structure is in place, the new body will appoint programme managers to assess what work needs to be done, and then oversee and coordinate the delivery of the planned infrastructure.

A variety of procurement techniques, including public-private partnerships, will also be explored. Once the method is determined, consultants will be appointed, followed by the award of construction contracts.

Spending plans

While the development of the Expo site will create opportunities for construction companies, it is unlikely to result in large volumes of work. The money required is dwarfed by spending in other markets, such as Qatar and Saudi Arabia, where the cost of major new infrastructure projects, including the Riyadh Metro, exceeds $20bn.

Dubai’s budget for capital projects directly related to delivering the Expo is about $7bn. That figure includes citywide infrastructure and everything at the Expo site, which will be constructed near to the Al-Maktoum International airport in the Jebel Ali area.

Developers are also building new retail space to support the influx of tourists and growing population

The Expo site involves developing a 4.38-square-kilometre (sq km) area, within which 1.68 sq km will be a ticketed zone. There will be both open and enclosed space, comprising a mixture of pavilions that will be built either by the exhibitors themselves or by the Expo delivery company. Three relatively large arenas are also planned, as well as apartments, malls, hotels and warehousing.

The masterplan for the site has been prepared by a team led by US-based architectural firm HOK. Other consultants working on the scheme include US-based Thinkwell and Populous, and the UK’s Arup.

There are three subthemes for Dubai’s Expo 2020: Sustainability – Intelligent Sources of Energy and Water; Mobility – New Systems of Logistics and Transportation; and Opportunity – New Paths to Economic Development. The country pavilions that will be built at the Expo site will reflect these themes. These structures will be temporary and are expected to be built in the months leading up to the event.

Opportunities for private sector developers will arise next to the Expo site. The first to announce plans was local developer Emaar Properties, which signed a deal to develop an integrated urban centre and golf destination spread over an area of 13.63 million square metres (sq m). The first phase of the development will include a golf-course villa community, several hotels, a high-end shopping mall, leisure attractions and a business hub that promotes youth entrepreneurship.

Other developers are expected to follow Emaar’s lead and develop new projects in the area to capitalise on the Expo and the increased use of Al-Maktoum International airport. These will be mostly residential and commercial properties.

Property market

For the rest of Dubai, the Expo is expected to have a positive effect on the emirate’s property sector. Along with Emaar, Nakheel has been an active developer with a series of new property launches. As confidence grows, more private sector firms will start launching real estate schemes.

In stark contrast to the oversupply concerns of 2009-10, developers now say further new launches are needed to soak up the excess demand, which is threatening to force rents to unsustainable levels.

Tourism is also expected to receive a major boost from the Expo. The event organisers say the predicted figure of 25 million visitors in 2020 is a conservative estimate, and the increase in tourism will mean more hotel rooms are needed. In 2012, there were just over 10 million visitors, the most ever received by the emirate.

Several major hotel projects are currently under construction, including the $515m Habtoor Palace complex, the expansion of the Madinat Jumierah and a range of new hotels on Palm Jumierah and in Business Bay.

New hotels are planned for all price ranges. For the luxury segment, Saudi Arabia’s Sharq Investments has told selected contractors that it is preparing to tender a contract to build a new W hotel on the Palm Jumeirah in early 2014. Also on the Palm, Investment Corporation of Dubai is planning to build a new 600-700-room hotel at the existing Atlantis resort development.

More three and four-star hotels are also expected to be built following the Dubai Department of Tourism & Commerce Marketing’s decision in September 2013 to introduce tax breaks for budget hotel operators over the next three years.

To further support the tourism industry, Dubai is planning to develop a series of theme parks that will become new attractions for visitors to the emirate. In the Jebel Ali area, five separate theme parks are being built by local developer Meraas Holding with foreign partners. The theme parks include Dubai Adventure Studios, a water and marine life park, a Bollywood park, a children’s theme park and a night safari park. The first component of the development is expected to be completed by 2014.

Meraas is also developing a small theme park in the Satwa area known as Hub Zero, as well as the Bluewaters Island scheme off the coast of the Dubai Marina/Jumeirah Beach Residence area, which will host the world’s largest Ferris wheel.

Shopping malls

Developers are also building new retail space to support the influx of tourists and Dubai’s growing population.

The largest project is Nakheel’s new shopping mall on the Palm Jumeirah. Known as Nakheel Mall, the scheme involves building a 418,000-sq m retail, dining and entertainment centre over five levels, with more than 100,000 sq m of shop space. Nakheel is currently tendering the construction work on the project.

Nakheel also plans to expand the Ibn Battuta mall and its project to double the size of Dragon Mart is due for completion in 2014.

Emaar, meanwhile, has received bids from firms for the contract to build an extension to its Dubai Mall. The work involves constructing a fashion avenue next to the existing mall that will add 75,000 sq m of retail space.

Combined, these projects will make Dubai a much busier market for construction companies in the run-up to the Expo in 2020. After five years of severe downturn, contractors will be looking forward to the opportunity to grow again.

Jeffrey Singer, CEO, Dubai International Financial Centre (DIFC) Authority

Expo views: Jeffrey Singer

CEO, Dubai International Financial Centre (DIFC) Authority

The Expo win will boost the local and regional economy and attract significant foreign investments into the UAE. The outcome is one that complements the vision of the country’s leaders, who are driving the diversification of the economy, attracting new business opportunities and empowering the youth population through job creation.

DIFC already has one of the best working atmospheres in the world, bringing together professionals from the East and West in a secure, cosmopolitan and professional working environment. Dubai’s growth as a hub for business, the accessibility it provides to emerging markets such as Africa and South Asia, liveability and cosmopolitan nature are the strengths that have helped us to establish DIFC over the past decade. The city has all the ingredients for diverse types of financial businesses to succeed and grow.

As a result of the Expo win, all eyes will be on the UAE and more people and businesses will be made aware of the fact that Dubai provides the most stable and secure platform to access the entire Middle East and Africa region. Undoubtedly, this will create a greater buzz about the wider region, and DIFC – and therefore Dubai – will attract further investments.

We have full faith that Expo 2020 will be a strong catalyst for the growth of the UAE economy and, as a result, a number of things will be a given, including job creation, appreciation in real estate assets, increases in business and leisure tourism, and tremendous opportunities for the entire region.

A MEED Subscription...

Subscribe or upgrade your current MEED.com package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.

Get Notifications