Dubai Expo 2020 Win May Create Economic Bubble – Survey

Dubai’s successful bid to host Expo 2020 may lead to the creation of an economic bubble in the country, according to a new survey by CFA Society.

The survey, which spoke to 215 investment professionals in the UAE, found that 95 per cent of the respondents support Dubai’s bid and 97 per cent believe the UAE is likely or very likely to win the bid.

However, over half of the respondents (55 per cent) are concerned that a successful bid for Expo 2020 will create another economic bubble.

Only a quarter of the respondents believe the UAE has done enough to make its economy immune since 2008.

The UAE – particularly Dubai, was hit hard during the financial crisis in 2008, with the property market in specific witnessing a steep decline in prices.

The market has recovered since then, thanks to renewed government efforts and improvement in sectors such as tourism.

Most respondents to the CFA survey also stated that greater regulations will increase the economy’s immunity to another bubble, with 87 per cent favouring real estate regulations and 75 per cent supporting bank regulations.

More than half of respondents (56 per cent) also opined that easier procedures for starting businesses would help protect the UAE from another bubble.

Amer Khansaheb, president of CFA Society Emirates, said: “The stock market, real estate and foreign direct investment sectors are all expected to be beneficiaries if Dubai wins but many are concerned that a successful bid will create another economic bubble.

“CFA charterholders believe more government regulation and easier procedures for starting new businesses in the UAE would potentially help protect the economy from excessive speculation.”

The survey also found that while 56 per cent of respondents expect a positive impact on stock market prices if Dubai wins, they believe that a lot of speculation activity has already happened in anticipation of the win.

Respondents were more positive about the impact of a win on Dubai’s real estate market with 76 per cent expecting a positive or significant impact on the sector.

The survey also stated that only four per cent of the respondents believe the costs associated with hosting Expo 2020 will create a debt burden on the UAE economy.

Dubai is competing against Sao Paolo (Brazil), Izmir (Turkey) and Ekaterinburg (Russia) to host the mega event. The Expo 2020 bid winner will be announced by the Bureau International des Expositions (BIE) on November 27.