Dubai Expo 2020 Plan B

World Expo 2020 – What Will Happen If Dubai Loses the Bid

The host of Expo 2020 will be revealed in approximately a month from now. The winner of the bid will be announced on November 27. Hopes for Dubai are currently high. The emirate is enjoying the support of a number of countries and experts. In fact, the city seems to be the favourite among the bidders.

If Dubai becomes the host of Expo 2020, the benefits will be plenty. First, the city is predicted to attract about 25 million tourists. This will defiantly boost the region’s hospitality and tourism sector. Many other economy sectors will also be affected positively by the win. It is expected that, if World Expo 2020 takes place in Dubai, many new jobs will be created in the city. Only for the period 2013 – 2021, the new job openings are predicted to hit 277,000. In addition, the global exposition is said to bring around AED 139 billion into the country.

It is more than clear that Dubai has a lot to gain if it wins the bid. The media is currently focusing namely on this aspect of Expo 2020. However, a little is said about the other scenario. Namely, what will happen if Dubai loses the bid for the Expo 2020? Actually, we should not really talk about what will happen if Dubai does not win. Instead, we should focus on what will not happen.

Dubai’s plans for the global event are big and ambitious. The emirate wants to invest the massive AED 22.4 billion. Along with that, the city will also rely on various private sector initiatives. If Dubai loses the bid, these money will not be invested in the city. Or some portion of the investments will still be available for development?

The emirate’s bid includes many projects which will further develop the infrastructure of the city. Among them is a fast track construction of a metro extension to Dubai’s new airport. If Dubai is not announced as the host of Expo 2020, this project will still be completed. However, that will happen at a much gradual pace. Without this event, the new airport will not be fully ready for years to come. The final phase of the construction of the airport will be significantly delayed. This means that Dubai cannot expect to see a bigger increase in the passenger traffic any time soon.

Also, the many thousands new jobs will not be created. The employment rate will practically remain unchanged, more or less. Even if it grows, it is not likely to happen very fast. Salary increases also remain a question mark.

Now you would probably say that Dubai and Dubai residents are not enjoying these benefits today and, therefore, they will not feel the loss. That may be true to some limited extend. However, the emirate will be greatly affected by today’s rising hopes of investors, buyers, companies and developers who are also preparing for the event. The positive outcome is already largely discounted by the Dubai Financial Market and the property market, for example. The Dubai bourse is up over 70% since the beginning or the year, an unprecedented event on the global scale. Real estate prices keep rising despite that a large number of ready-to-move-in units remain unoccupied, in addition to the prospects of about 45,000 more scheduled to be released until 2015.

As a start, if Dubai loses the bid, shares in the real estate sector will fall. Still, that may not continue for a very long period. In fact, for some this may be the perfect opportunity to buy into a bluechips on lower prices. Apart from that, there will be a big pressure for selling. New property is being constructed all over the city in an attempt to meet the expected demand around Expo 2020. If the event does not take place in Dubai, companies and investors will be forced to sell while their investments can still bring them some good profits.

Although Dubai may have not spend a big part of the billions it plans to invest in Expo 2020, it will experience some financial loses. The bid of the emirate is strongly advertised on international level. In addition, the plans for development drafted specially for the event are also costly and that investment will not generate returns. In addition, a large number of PR and marketing jobs and contracts will be scrapped.

Expo 2020 can really offer many benefits for Dubai and allow the city to grow and develop even more. However, we should not forget that there is another, more negative scenario here. Even though it will not cause much harm to the emirate’s economy, it will lead to a temporary market shock. Maybe the big preparations and investments for Expo 2020 should take place after the winner of the bid is announced, which will happen in just a few weeks.