How will Dubai fit 20-25 million people coming to Expo 2020?
Expo 2020 is happening in about two years, opening on October 20, 2020.
The Expo expects to welcome 25 million visitors between October 20, 2020 and April 10, 2021, 70% of which will come from outside Dubai.
Where will they all stay?
Currently, there has been an oversupply in the property market, and prices have been going down; and according to Propertyfinder, there will be an approximate 180,000 properties available in the coming years, up until 2020.
So is that where they will stay? No way.
Construction on the rise
According to data from Propertyfinder, a little more than 21,000 units were handed over in Dubai in 2017, and more than 10,400 units have been handed over so far this year.
“There are 40,000 units scheduled to be completed by the end of 2018. However, the materialization rate (the number that will actually occupy them) will be much less, probably around 15% to 20%, which has been the consistent rate over the last few years.
“There are more than 70,000 units scheduled to be completed in 2019 and 35,000 units scheduled to be completed in 2020,” Lynnette Abad, Director of Research and Data at Propertyfinder, told Khaleej Times.
Airbnb vs. hotels
A report by Hoteliers said “Airbnb is planning to capitalize on Expo2020.”
That is big time news, knowing that, for six months (i.e. during Expo 2020), Dubai will be home to some 20 million visitors who would consider staying in Dubai for business, event purposes, tourism and/or employment reasons.
When Dubai residents open up their doors to this traffic, there will be plenty more room available than what is being built now.
The hospitality sector has been booming and will also capitalize on the new event. Dubai’s hotel inventory stood at 107,431 rooms at the end of 2017, according to local reports.
Finally, according to Colliers International’s forecast, there will be a five-year compound annual growth rate (CAGR) for hotel supply, which is expected to increase by 10% in the UAE, i.e. approximately 150,000 rooms in 2020.
There’s room for everyone… or will there be?
Problem: The bulk of the upcoming property projects are not up to the mark to be handed over by 2020.
In previous quarters, people were concerned and asked how demand will be generated to fill up the entire upcoming inventory. However, the real question should be about the completion of the 180,000 forthcoming properties.
“The analyst community had over-blown the fears of an oversupply by speculating that in 2017 and 2018, close to 100,000 units would have entered the market. From 2017 to date, a total of 39,197 units have been realized, which is only 40% of the expected supply. We expect that a similar realization rate of supply is going ahead,” says Hussain Alladin, Head of IR and Research, Global Capital Partners.
This is something to look at.