Dubai from now on will have her hands full in preparation as the city was chosen to host the 2020 World Expo and finally put the nightmare that was the 2008 financial crash behind. In a decision announced by the Paris-based Bureau International des Expositions (BIE), the city won over other aspiring cities like Sao Paolo of Brazil, Izmir of Turkey and Ekaterinburg of Russia. It was the voting in Paris in round three where Dubai garnered 116 votes from total possible votes of 168 and to finally snag the victory.
Sheikh Mohammed Bin Rashid al-Maktoum, the present ruler of Dubai, said that the emirate will surprise the world come 2020. He added that this is just returning to the former role of the Middle East where in ancient times the region was considered the melting pot of cultures and creativity. To celebrate the selection, the Burj Khalifa, the world’s tallest building located in Dubai was enveloped in colourful fireworks.
From the very beginning, Dubai was already in strong contention garnering support from the UK, Italy, the Netherlands and Canada. “Connecting Minds, Creating the Future” was the emirate’s theme for the expo with three sub-themes: Mobility, Sustainability and Opportunity.
The win is a big push for the emirate’s economy where an estimated 25 million people are expected to visit Dubai over the six-month long expo. In terms of dollar figures the Expo 2020 will allow the flow of an estimated $23 billion. To reach this bottom line, the government will need to spend $6.5 billion on infrastructure projects. The preparation will also call for generating 277,000 jobs for the region thereby accelerating the development of the tourism, real estate and hospitality industries.
The new infrastructure projects will include: the Al Maktoum airport, construction of an exhibition center to be built on a 438-hectare Expo site, thousands of new hotel rooms, a larger Jebel Ali port and a new Etihad Rail system which is an extension of the emirate’s metro line. These new structures will be added to the earlier planned constructions like the replica of the Taj Mahal and a giant pyramid in a residential area.
With all these various activities in the pipeline, it will definitely have a multiplier effect on the emirate’s $90 billion economy. Dubai will somehow put the nightmare of the 2008 financial crash behind. London-based Capital Economies observed that the main reason why Dubai was badly affected in the 2008 financial crash was due to the heavy borrowings done by many government-related entities (GREs) where at that time the worth of these debts were 90 percent of the emirate’s gross domestic products (GDP).
Now, Dubai authorities have learned and are taking steps to limit the risks and prevent another crash from happening. One such step is doubling the interest rates on fees charged for land transactions to 4 percent. This will prevent property speculators from overwhelming the market. Also, the central bank of UAE has restricted mortgage lending as well as limiting the bank’s loan portfolio to large state corporations.
According to Ali Adou, portfolio manager of The National Investor based in Abu Dhabi, even with these stop-gap measures in place, a surge in the stock index is expected to occur because of the feel-good factor brought by this latest victory for Dubai. However, the economic benefit will not be felt until 2015, he added.
The World Expo is held every five years where it is a venue for international players to share developments and innovations, discuss global issues like the economy, sustainable development and the overall improvement of the quality of life of the people around the world. The first Expo was celebrated in London in 1851.
As the new host of the 2020 World Expo and if ever this is indeed successful as announced, Dubai will finally put to rest the stigma that was the 2008 financial crash finally behind.
By Roberto I. Belda