According to a recent survey compiled by Full Service Property Management Company, IP Global, 53% of all UAE residents choose property as their primary investment interest, with gold featuring in 43% of investor’s portfolios.
Despite these statistics, only 12% of property owned is based in Dubai, largely due to the perceived inflated price points which are viewed to be based more on hope than expectation. UAE residents are constantly told that the Expo 2020 will make Dubai one of the world’s most in-demand destinations moving forward – a global hub, if you will, however the facts and figures fed through media channels come as quite a surprise to expat investors – the majority who had never even heard of the Expo event until relocating to the Middle East.
The Expo is widely regarded amongst the expat community as an unknown quantity, certainly not comparable to the hosting of a World Cup or Olympics, so the price increases based on the future hosting of the British-born event are not regarded as being viable in the long term.
Should the Expo not bring the Government-predicted numbers which have been banded around thus far, investors fear a property crash which could rival that of 2008. It seems that perhaps the lessons of last time around may not have been heeded as readily as once thought.
As a result, investors are sourcing property investment options in historically solid performing destinations such as London, New York and Melbourne. The survey suggests that 53% of the 1,000 polled, would consider Dubai as their next property investment, however most would probably sit tight and see how things transpire over the next couple of years.
The next Expo is scheduled for Milan in 2015, and the popularity of this event will offer a fantastic insight into the projections offered up by the Government of Dubai, having won the right to host the 2020 event last November.
NB* These are published projections from studies authorised by the Government of Dubai.
Cost for Infrastructure: $7 billion
Cost for required hotels: $7.2 billion
Income from Expo: $23 billion
Expected visitors: 25 million
New hotel rooms required: 81,000
Percentage of visitors travelling from overseas: 70% (17.5 million)
Number of participating countries and businesses: 182
Jobs created pre-Expo: 277,000
Dubai currently has many half-finished towers – residential, office and hotels – but many expats comment on the fact that so many existing buildings remain in some cases only half full, it could be a good idea to fill these first before building more. The concern is that perhaps the Emirate is building faster than it can reasonably expect to attract new residents, tourists and businesses.
Although infrastructure improvements could see traffic eased across the city, anybody who has travelled down the Sheikh Zayed Road at 6pm will be fearful of what kind of impact a further 25 million visitors could have on an already difficult traffic-flow system. The Emirate is currently home to just 2.2 million people, yet traffic in rush hour across certain districts is as difficult as areas in London, home to 8.3 million.
For now, it would seem that serious property investors are likely to keep an eye on how things develop over the next few years in Dubai, and instead focus on the huge redevelopment opportunities represented by areas of New York and London.