Dana Salbak says ‘sentiment driven’ real estate sector could see positive impact from upcoming megaevent
Dubai’s real estate sector is likely to see a boost from Expo 2020 Dubai due to the positive impact on sentiment the event will have on the sector, which could translate into increased sales activity, a leading expert has told ME Construction News.
In an interview, Dana Salbak, director of Research at JLL MENA, said while that the Expo is unlikely to have a major impact on pricing in 2020, it has had an impact on real estate supply as it has been a major factor in the current oversupply in some sectors of the market as developers have brought projects forward to complete ahead of the event.
“While unlikely to have a major impact on pricing in 2020, Expo is likely to have a positive impact on sentiment and may result in increased sales activity. Dubai’s ‘sentiment driven’ real estate sector and the improved sentiment (and sales activity) resulting from Expo, are likely to stabilise the market in 2020 and represent the bottom of the current cycle,” she told MECN.com.
“More specifically the hospitality market is expected to be the greatest beneficiary from the event. The total number of hotel and serviced apartment keys in Dubai stood at 124,000 as of Q3 2019. An additional 16,000 keys are expected to hand over in 2020, in anticipation of the arrival of 20 million visitors by 2020.
“While one could argue that the hotel market in Dubai is already oversupplied, the majority of stock under construction and geared towards Expo is filling a gap in the 3-4 star hotel segment, which in turn is expected to be successfully absorbed by the market,” Salbak said.
Furthermore, she added that neighbouring emirates such as Abu Dhabi would see a ‘spill-over’ effect from the Expo, particularly with regards to the tourism and hospitality/hotel sectors in Abu Dhabi.
Salbak also pointed out that in 2019, Abu Dhabi saw strong activity and performance in the hotel sector, with average daily room rates and revenues per available room increasing 8% and 9% respectively in the YT August 2019, versus the same period last year.
She explained that the government initiatives to promote tourism through hosting various events such as the Abu Dhabi Showdown week, have reflected positively on the hotel sector, and that with the Expo on the horizon, she expects to see further increases in performance levels.
Finally, she added that the real estate sector could expect to see several changes off the back of the Expo, with technology likely to make a major impact on how developers operate and build projects, with the expo site likely to set a new benchmark for a technologically-driven city.
“One of the major drivers behind Dubai’s Expo bid was to boost the city’s technology credentials as part of its plans to transition to a knowledge-based economy by 2021.The city will roll-out 5G services for the event, making it the first nation in the Middle East, Africa and South Asia to do so.
“The organisers say the 5G network will be the ‘backbone of the smart site’, otherwise known as District 2020 — a new suburb that embraces sustainability as well as innovation. It will house the main exhibition centre as well as residential developments, global retail brands and modern office space along with social and cultural amenities and public green spaces,” she concluded.