Dubai’s hosting of the 173-day Expo 2020 has functioned as both an economic stimulus and strategic focal point for years. Having spurred investment in the emirate since 2013, most observers agree that the commencement of the long-anticipated event will provide a useful fillip to several economic sectors. The larger question, however, is on the event’s long-term impact. This is also a concern of some of the world’s major rating agencies. “We expect to see a pick-up in growth during 2020 as a result of tourism and related spending linked to Expo 2020. But what happens in 2021 and beyond? After 2020 growth will likely be constrained due to lower government spending. In the absence of significantly higher oil prices, and given the high levels of government-related entity debt, there are fiscal frailties that will limit the government’s ability to increase spending and support the economy,” Trevor Cullinan, director and sovereign credit analyst at Standard & Poor’s Global Ratings, told OBG.
Mixed Record
The recent history of world expos, which began with the UK’s Great Exhibition of 1851, provides no conclusive answer to the question of longterm legacy. Some expos have over time been judged as beneficial to their respective economies. The Shanghai Expo 2010, for example, is widely deemed to have been a long-term success, attracting a record 73.1m visitors and bestowing on the city a raft of much-needed infrastructure. Others have resulted in more ambiguous outcomes. While tourists still flock to Seville’s ancient cathedral and the Real Alcázar palace, the buildings left behind after its Expo 1992 are generally ignored, having been incorporated into a science and education park. The legacy structures of Hanover’s Expo 2000 fared even worse, with many lying crumbling and abandoned a decade later. The financial outcome of Hanover is also troubling for the Expo 2020 planners: the German government and the state of Lower Saxony initially expected to break even, but lower-than-expected visitor numbers resulted in them sharing losses of €1.2bn.
Secured Gains
Some of Dubai Expo 2020’s legacy has already been secured. Global consulting firm EY estimates that the pre-expo phase, including site preparation, infrastructure development and investments brought forward as a result of the event, will total Dh37.7bn ($10.3bn) by October 2020. This economic momentum is expected to continue during the event year, concentrated in key sectors, such as construction, logistics, retail, hospitality and business services. Indirectly, Dubai-based companies are expected to benefit from increased demand from the large number of firms directly engaged. A more generalised economic bonus is anticipated in increased spending by employees from firms that directly and indirectly gain from Expo 2020, as well as visitor expenditure. At its peak level of activity, during the months after the official opening, EY anticipates a 1.5% boost to the UAE’s annual GDP.
Looking Ahead
The post-expo phase, during which the site will become the mixed-use development District 2020, is the current focus of debate. More than 80% of Expo 2020’s built environment is to be retained for the new project, forming the hub of a planned new city covering 4.38m sq metres of residential, commercial and cultural real estate. The area will have its own metro stop, retain Expo 2020’s conference and exhibition centre, and feature a range of academic institutions, museums and galleries. If completed as planned, District 2020 will be home to 90,000 people dispersed through residential areas, while more than 2.3m sq metres of floor space will be available to third parties for development. The scale of the project has generated optimism around the legacy period of Expo 2020, and EY anticipates Dh62.2bn ($16.9bn) in gross value added between May 2021 and December 2031. However, while some tenants such as Accenture and Siemens have already been confirmed, many more corporations and small and medium-sized enterprises will have to be captured by the new development if Expo 2020’s legacy is to fulfil the emirate’s ambitious vision.
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