Horizon 2020: Why it’s time to come to Dubai Article by Victor Garcia Bragado

  

November 27^th, 2013, was a day of celebration in Dubai: after an extensive and widely-backed bid, the city won the rights to host the World Expo in 2020, beating Sao Paulo in Brazil, Izmir in Turkey, and Ekaterinburg in Russia. The Burj Khalifa, the highest man-made building in the world at 828.8 meters, lit up with fireworks as soon as the announcement was made, reflecting the enthusiasm of public authorities, residents and workers in a city that has become a hub for trade, transportation and tourism.

 

World Expositions, held every 5 years at locations decided by the Bureau International des Expositions in Paris, allow countries, cities, companies and civil society showcase their cultures, activities and heritage in pavilions. Most of all, however, Expos give hosting cities a chance to attract droves of tourists, promote their urban development, and earn a place on the world map.

There are risks to organising such a big event, however. Examples of this could be the Hannover Expo in 2000, which had far fewer visitors than expected, the Athens Olympic Games of 2004, which financially crippled the city, or the massive cost overruns of the Sochi Winter Olympics that took place this year. On the other hand, if run well, an international event such as an Expo can have long-lasting and widespread impact: the Beijing Olympic Games of 2008, coupled with the Expo in Shanghai of 2010, have widely been considered a success in cementing China’s position as a rising world power. As for the Expo 2020, optimism abounds in the UAE, and there are good reasons for this.

Why Dubai got the Expo.

To understand why the country is so optimistic we must look at where Dubai comes from and how it got to where it is today. Dubai is one of the seven emirates that form the United Arab Emirates, a federation formed in 1971. The Emirates, part of a British protectorate since 1820 known as the Trucial States, had a low profile internationally and economically until oil was discovered in the mid-sixties, an event that changed the country completely. The most remarkable aspect of the UAE’s development, however, is that, starting in the 80s and 90s, and even more starkly in the 21^st century, the country has worked hard at diversifying its economy and moving away from depending on oil when it comes to economic growth. Thus, oil and gas represent only about 25% of the UAE’s GDP, and make up approximately 2% of the Emirate of Dubai’s GDP. Dubai has been the emirate at the forefront of this trend, quickly developing sectors such as real estate, transport, finance, trade, and tourism.

Three main drivers have transformed Dubai into the modern urban hub it is today. The first is a politically stable climate in an agitated region, controlled by a political leadership that has kept its view focused in the long term and that has stayed away from religion. From a social perspective, Dubai has managed to keep religious extremism at bay, allowing expats to lead a life that is very similar to the one back home in a region that has historically been very hostile to Western ideas (as Saudi Arabia or Iran, for example).  Economically, the successive Sheikhs have created an emirate that is open for business, with low tax rates, very well connected by sea and by plane, and very attractive to investors. No other country in the region combines social and economic elements as Dubai does, and this undeniably occurred thanks to Dubai’s political leadership.

The second factor has been world-class infrastructure. Dubai’s ports, airports, roads, telecom, and energy infrastructure will be upgraded and developed further over the coming years to cope not only with Expo 2020, but more importantly, with the expected growth of Dubai along the lines of its development plans, namely Dubai’s Vision 2020. Even today, Dubai has one of the biggest and busiest ports in the world (Jebel Ali). It also has an airport bound to surpass London Heathrow in 2015 in terms of passengers (DXB), and a new one about to become the international hub for Emirates Airlines (Al Maktoum Airport). Its communications infrastructure is outstanding by regional standards, and its public transport is undergoing a dramatic expansion.

The third factor, of great importance in these globalised times, is Dubai’s geographical position. Straddling between Asia and Europe, two thirds of the world’s population live within an eight-hour flight of the city; one-third within a four-hour flight. This fact is significant not only in terms of economics and trade, but also because it explains the Expo’s chosen theme: “Connecting minds, creating the future”.

Dubai has the entire infrastructure needed to make the Expo successful, it has the political leadership to lead the process and ensure its outcomes, and it serves as a nexus between East and West. All these factors were surely critical in granting Dubai the Expo, and they are also the reason why so many companies, investors, and workers are drawn to the city from Europe, Asia, Africa and the rest of the Middle East.

What the Expo will bring.

Expo 2020 has had widespread institutional, public, and private support in Dubai and in the rest of the UAE, not least because of the expected benefits the city will reap in the run-up to the Expo, during the Expo itself, and after it has taken place.

From an economic perspective, the sectors that will benefit most will be trade, tourism and retail, and transportation. As new developments are projected and built (such as the Expo site, Dubai World Central), and as new infrastructure – such as the metro extension – is put in place, the economy of Dubai will continue to grow: for instance, some reports set the number of new jobs to be created around 250,000, 50,000 of which will be permanent. After the 2007-2009 crisis Dubai is in a stable financial position, and it seems therefore that it will be able to adequately cover the USD 18,3 billion budgeted for the Expo. Tourism is set to increase significantly, and the construction of new hotels is already under way to host them. Dubai expects 25 million people to visit the Expo, 70% of which will be non-residents, the highest proportion ever.

However, the most relevant return for hosting the Expo will most likely be intangible: international recognition, a higher profile, and becoming (even more of) a reference internationally for tourism, trade, and business. Much like the Olympic games of Barcelona in 1992 were deemed a huge success and contributed in no short measure to the city’s popularity today, Dubai’s Expo 2020 will most likely consolidate the city’s image. Dubai is already a magnet for tourism, with a high season ranging from October to April and with assets such as good weather (when it is the worst in Europe), sports, shopping and a growing cultural offer, mainly in neighbouring Abu Dhabi (a branch of the Louvre museum will open in 2015). In terms of trade, the Jebel Ali port and the Free Zone that surrounds it is one of the most active in the world, and serves as a base for shipping to and from Asia. Business is attracted by the low tax rates, to the relative ease of doing business, and to its geographical position, which makes it an ideal gateway to expand not only to other countries in the Middle East, but also to India or Africa.

All this leads to one clear conclusion: the coming 6 years leading to Expo 2020 will likely see growth in Dubai similar to the one experienced in the beginning of the 21^st century, with new record-breakers, new areas of business and new dynamism.

What Senat can do for you

Bearing the above in mind, it seems clear to us that now is an ideal time to come to Dubai. Here you will find great opportunities in an economy that will be dynamic for years to come, low start-up costs, and easy access to markets not only in the UAE, but also in the rest of the Middle East, Asia, and Africa. Senat can make it easy for you to get the most out of your investment, we can help you grow and establish your presence in the region, and we can show you the way to make the most out of Expo 2020.