Winning the rights to host the World Expo 2020 would have a relatively mild impact on Dubai’s real estate market, as significant ‘hope-value’ has already been factored into prices, in the belief the emirate will get the decision, according to a report by the US consultancy CBRE.

A winning bid would create a huge number of jobs and kick-start work on many large construction and infrastructure projects, the report said. With regard to the real estate market, Dubai’s bid has already had a ‘resoundingly positive’ impact over the past year, as anticipation builds towards the award.  

“That said, there is a feeling in the marketplace that some of the potential upside of a positive award may have already been priced into recent growth as investors have effectively gambled on the outcome of the result,” the report said.

“However, a negative result could cause a short-term dip in sentiment levels, specifically impacting the residential and land sectors, which have both seen strong growth in prices over the past year, as expectation levels have built up towards the announcement,” the report added.

At the same time, improved market sentiment is raising the cost of living, compounding a situation where residential rents have already grown by an average of 23 per cent during the past year.

CBRE also warned that while the last edition of the expo held in Shanghai attracted about 73 million visitors, only about 6 per cent of them were foreign tourists. “Whilst this is still a significant number of visitors, it does suggest a need for caution in respect of Dubai’s future development plans, which must remain anchored to actual supply and demand dynamics, rather than building just for a single event,” CBRE said.

The company’s report contradicts the opinion of real estate services group Jones Lang LaSalle. Alan Robertson, chief executive officer (CEO) of Jones Lang LaSalle for the Middle East and North Africa (Mena), said the “success of this bid will act as the single most important influence on the real estate sector across the UAE in 2014”.