World exhibitions are known for promoting not only cultural understanding but also economic exchange and investment activity in the host country. This typically also has an impact on the demand for real estate in the host country and its price level.
In this article, we want to use historical and current data to outline the developments to be expected in Dubai’s real estate market in the coming years.
Sparse empirical evidence
Empirical evidence of the impact of previous World’s Fairs on property prices in host cities is scarce. However, the Belgian researcher De Groote conducted such a study (“A multidisciplinary analysis of world fairs and their effects”), in which he analyzed the fluctuations in real estate prices in world exhibition cities in the five years before the event and in an equally long period after the end of the event Events examined.
Real estate prices and their correlation with world fairs
| 5 years ago | 5 years after | |
| Seville, 1992 | +23% | +15% |
| Lisbon, 1998 | +18% | +60% |
| Hanover, 2000 | +12% | +40% |
| Zaragoza; 2008 | +50% | -65% |
Table 1: Fluctuations in property prices before and after World Fairs (De Groote)
It is clear that even markets that are known to have generally lower price volatility – e.g. Hanover compared to the Dubai market – saw a significant upward trend in prices over the periods examined.
Second, it may come as a surprise that the economic effect of a world exhibition is not a flash in the pan that goes out when the event ends. On the contrary: in two of the markets considered here, real estate prices rose significantly more sharply in the period after the Expo than in the period before.
Underestimated long-term economic stimulus
In fact, world fairs are a catalyst for investment and development in various industries and economic sectors in the host city. Many of these impulses only bear fruit in the medium to long term, which explains the above figures.
However, as the example of Zaragoza shows, this is not automatic. Since Spain was one of the southern European countries that were hardest hit by the financial market crisis from 2008, there was a total collapse of the real estate market in Zaragoza. Any positive impetus from the world exposition was temporarily superseded by the demand shock triggered by the crisis and, as a result, was completely nullified.
It is clear that World’s Fairs generally have a positive impact on demand and investment in the host metropolis, but do not necessarily offset any underlying opposing economic trends.
Conversely, this means that real estate price increases associated with a World’s Fair will be greater if the event is held at the beginning of a new economic and real estate cycle.
Dubai’s Real Estate Market: Post-Expo Outlook
First of all, it should be noted that the cyclical market low of the Dubai real estate market was passed in autumn 2020 – almost 12 months before the start of the world exhibition. The turning point was preceded by six years of continuously falling real estate prices in Dubai. A development that, remarkably, went against the global trend of rising valuations and has meanwhile led to the lowest square meter prices in Dubai of all major cities worldwide (see our article on Knight Frank’s analysis ).
The latest data available for Dubai suggests that the Expo-related economic recovery is gaining momentum. The hotel sector in Dubai recorded a 240% increase in sales in October 2021 compared to the previous year, while officials are already talking about further travel facilitation such as the end of the test requirement for entry.
On the macroeconomic side, significantly higher oil prices are stimulating investment sentiment in the entire Gulf region and – via second-round effects – demand for real estate in Dubai.
In the medium term, the partnership with China in particular can be expected to provide enormous impetus for Dubai’s economy and the real estate sector in particular. The Middle Kingdom is already by far the most important trading partner of the UAE and the bilateral agreements provide for a further significant expansion of this partnership. In our opinion, the supply of capital and know-how implied by this, especially for the Emirate of Dubai, and the resulting immigration of workers and investors will be a key driver for Dubai’s forthcoming real estate cycle.