Dubai property market seeks boost from ‘Expo 2020 factor’ to banish real estate gloom

Updated 25 March 2018

Dubai property market seeks boost from ‘Expo 2020 factor’ to banish real estate gloom

LONDON: It has been almost half a decade since Dubai was awash with exuberance following its Expo 2020 bid win. The property pundits of the day predicted vast transformative effects for the emirate such as vertiginous property value hikes, sold-out hotels and a booming jobs market.
But that was before the decline of oil prices, the introduction of VAT, and a regional diplomatic crisis.
With construction work well under way ahead of the opening of the event in 31 months’ time, the property market remains stubbornly in the doldrums.
The much-hyped “Expo effect” has yet to be realized.
Dubai residential property prices and rents declined by 5 to 10 percent overall in 2017, according to data from Standard & Poor’s (S&P), the credit ratings agency. It expects that a “three-year downturn” in Dubai’s property market is likely to continue until at least 2020.
Still, S&P notes that the property sector could still benefit from the potential increase in economic activity and positive business sentiment attached to the Expo event, as an expected 25 million visitors and new residents support the market. “We anticipate a speculative surge in prices, devoid of any demand and supply mismatch,” the report added.
According to Oxford Economics, Dubai GDP recorded a growth of 3 percent at the end of 2017, and is expected to grow at a lower average annual rate of three percent over the next three years. The OECD expects global growth of about 3.9 percent this year and next.
“I think one of the things we saw in the lead-up to the bidding process for the World Expo in summer 2013 was that there was a positive expectation in the market and this pushed up prices by about 20 percent,” said Faisal Durrani, partner and head of research at Cluttons.
“That growth spike was unsustainable, so we have seen a softening in value. This is not like the crash after the recession. It’s a gradual softening rather than a sharp correction. There is still an expectation that there will be a rise in demand before 2020.”
But for that to happen, buyers must first be found for a glut of new homes under construction, largely funded by developer stage payment plans.
Property broker JLL estimates that as many as 34,000 homes could be completed this year, with another 28,000 due in 2019. However, the real picture is difficult to discern as in previous years the actual completion of new homes has trailed what was expected. For example, JLL notes that while the proposed number of units last year numbered 31,300, the actual number was 14,700. In fact, for the past five years, the materialization rate for expected home handovers has never risen above 55 percent, according to JLL data.
Yet the stock of homes remains the biggest concern for many analysts trying to predict when the long-expected recovery will happen.
“There’s still time to see if the Expo will lift property values,” said James Lewis, partner and general manager at Knight Frank Middle East. “But there is just so much oversupply.”
JLL forecasts that prices will continue falling this year as the market absorbs additional supply. “New supply is expected to see prices and occupancy levels continue adjusting downwards,” the report said.
Residential stock in Dubai stood at 491,000 units at the end of 2017, made up of 403,000 apartments and 86,000 villas.
So could the Dubai Expo, due to be staged for six months from Oct. 20, 2020, be the fillip Dubai’s real estate industry needs?
The event is expected to attract up to 300,000 visitors a day when it opens. Standard Chartered has predicted it will also create around 300,000 new jobs and attract new residents in the emirate city, which currently has a population of three million.
Dubai is spending heavily on infrastructure in the run-up to the event and recently approved its biggest ever budget for 2018.
Infrastructure expenditure is expected to surge by almost 20 percent this year to more than 56 billion dirhams ($15.24 billion).
The Expo 2020 Dubai organization awarded 47 construction contracts last year worth 11 billion dirhams in preparation for the event.

“This aims to make the upcoming mega international event — Expo 2020 Dubai — one of the best in the history of Expo exhibitions,” said Abdulrahman Al-Saleh, director general of the Dubai Government’s Department of Finance, in a statement.
The infrastructure spending is at least expected to reap rewards for the broader economy.
“There is a considerable amount of infrastructure that has been completed or is under way, which could stimulate the economy but at this point the long-term returns on infrastructure are hard to see,” said Knight Frank’s Lewis.
He added that the industry would “welcome” the introduction of government incentives to buy property and broaden out the affordable housing sector.
That could help to address the mismatch in supply and demand as high-end and luxury apartments continue to be delivered into a market that desperately seeks more affordable units.
Cluttons’ Durrani sees most of the new jobs and housing demand around Expo 2020 coming from low to middle-income workers who will be seeking affordable housing.
“Similarly to London, Dubai has much more demand on the lower end of property than the luxury end. For example, the Burj Khalifa values are down 70 percent on 2008, whereas affordable communities such as Discovery Gardens or Motor City prices are virtually unchanged. Affordability is a major factor in the market and we are not seeing any more supply in that sector.”
Durrani also explained that expatriate workers, particularly lower income earners, are not in the market to buy housing.
“According to our research, the average worker in Dubai earns 200,000 dirhams annually. The properties you can get on that income are practically non-existent,” he said. “Also the tendency to purchase in the UAE depends on their tenure in UAE and their life plans. Many workers prefer to rent rather than buy what is often a second home. It’s about finding the right solution for affordability and we aren’t there yet.”
To establish a link between a one-off event such as Dubai Expo 2020 and broader property market sentiment, analysts look at historical events for clues.
“We looked at Olympics that have been held around the world,” said Durrani. “We saw no impact whatsoever on property prices in Beijing and Athens and London, for example. It’s up to each city to make the most of the opportunity. The direct impact on the real estate sector is hard to quantify unless the government incentivizes it.”
If the much-hyped Expo effect is indeed a reality, we should see its impact soon.
“We have already seen directly related Expo contracts issued, so in the next six to nine months, lawyers and construction companies will increase their presence, which may help to improve demand. We have seen that this visibility lags so we may see a stabilization in the market in the next nine months,” said Durrani. “The contracts were awarded so the jobs should be imminent, which should help stabilize demand — certainly at the lower end.”

INTERVIEW: CEO Maaz Sheikh sees business soar as Saudi viewers turn to streaming services

Updated 05 July 2020

INTERVIEW: CEO Maaz Sheikh sees business soar as Saudi viewers turn to streaming services

  • All eyes on Starzplay as lockdown reaps rewards

Maaz Sheikh has had a good lockdown.

The founder and CEO of Starzplay, the Middle East’s leading entertainment streaming channel, saw his business soar as curfews, social distancing and travel restrictions left people with little to do apart from slump in front of a TV and binge watch for hours on end.

“I think when the whole situation was unfolding, we were trying to think which way is up and which was down, both on a personal level and also as a company — what it means for our subscribers. It was nerve-wracking in the beginning,” Maaz Sheikh told Arab News.

In the region, it was Starzplay subscribers chose to watch, rather than Netflix or other streaming services, in English and in Arabic.

“What we benefited from, of course, was all the people staying home, but one of the things that worked in our favor was that we are an organization based and headquartered here, and we were able to adapt and localize our services much faster than anyone else,” he said.

“In Saudi Arabia, you can sign up for Starzplay via STC, Mobily or any of the other services. You can sign up with your mobile phone number. Netflix came to this region with a very US-centric mindset, thinking that everyone had a credit card and that having a credit card is a norm in the world. In fact, the reality is different, especially in Saudi. Not everyone has a credit card,” he added.

“So, through one bill where you pay your landline and your broadband, you can also have access to Starzplay on the same bill. You can just download onto your smart TV,” he added.

Starzplay has been in business for five years, and while it is probably not as well known as Netflix, it has been making big inroads into the region, especially Saudi Arabia.

The Kingdom accounts for 40 percent of total revenue, while almost half of all consumption in the Middle East and North Africa region comes from Saudi viewers.

And what have they been watching during the long weeks of lockdown? 

Lots of “Vikings,” “The Office” and Turkish-made romantic soap “Jusoor Wal Jamila.” 

Saudis on average watched more than 18 hours of Starzplay in May, compared with less than 12 a year before.


BORN: Islamabad 1970.


  • Schooling in Dubai, UAE.
  • Oklahoma State University, US.
  • University of Kansas, MBA.


  • Various executive roles in media and communications, US.
  • Chief sales and operations officer, OSN, Dubai.
  • CEO and founder, Starzplay.

“The beauty is that everyone has a mobile phone. We were there in the market with the right product, the right content, but also the right distribution so the masses can actually sign up for our service. It really benefited us.

“It was not just that we were a streaming service. The whole category benefited from the lockdown, but we were the only one in the market that had this kind of distribution and payment arrangements. We were the only one available to the masses,” Sheikh said.

It is not just the distribution platform that is different from Netflix. Starzplay takes a distinct stance on content, too, as Sheikh explained.

“Our industry is evolving in a simple and predictable way. What is happening is that the more Netflix has gone into its own originals, the more studios see them as a competitor. So studios have been pulling their content away from Netflix.

“Until now, with what comes out of Hollywood and the UK, 95 percent of English-language content was produced by seven or eight studios. In the UK it’s the likes of the BBC and ITV, while in the US it’s Warner, Disney, Sony, Showtime, CBS, all the major studios,” he said.

“So, the way the industry is evolving is that if you want Netflix originals, you go to Netflix, if you want anything else you go to Starzplay,” he said.

Sheikh reeled off an impressive list of top shows on his platform. “Big Bang Theory,” “Billions,” “Grey’s Anatomy” and “Britannia” are among them, while younger viewers soak up “The Flash,” “Supergirl” and other DC titles made by Warner Studios.

Starzplay has also made its first foray into original content, tailored for a Middle East audience, with the series “Baghdad Central.”

“Data is the new oil, they say, and ‘Baghdad Central’ was the result of our experience over five years of consumption history, with billions and billions of minutes consumed. So based on what people were consuming in our key markets and with those insights, we produced our first original,” Sheikh said.

“Baghdad Central” was launched in March with a big name Hollywood actor — Corey Stoll from the award-winning series “House of Cards” — as well as top British and Arab actors.

“We wanted to bring a show to the region that combined the best of the three. It was shot in Morocco in partnership with UK and US producers,” he explained.

That kind of content has pulled in the viewers during lockdown. The figures show Starzplay hit a peak of 6.5 million daily minutes of consumption in Saudi Arabia in the middle of April, compared with about 2 million before the pandemic lockdowns.

Existing viewers are also watching more. The average Saudi spent 28 minutes daily in front of a Starzplay show before the lockdown. That more than doubled to one hour as movement outside the home was restricted.

“To put that into perspective, it took us five years to go from zero to 2 million minutes a day, and it took us six weeks to go from 2 million to 6.5 million. We did more consumption growth in six weeks than we did in the first five years,” Sheikh said.

He is reluctant to forecast how many of these consumers will stay with Starzplay as the lockdowns are eased around the world and the region. 

“I’m expecting some churn, so it’s tough to predict what the base will look like later in the year. We saw tremendous growth, but as the lockdown eases I think we’ll see some churn on those subscribers,” he said.

But even as the lockdown are eased significantly in the region, consumers are not going back to pre-pandemic levels. There is likely to be a permanent shift in demand for Starzplay in the “new normal” environment.

“Unlike Netflix, one of the challenges we had in the region is that the brand awareness and content awareness of our service was comparatively low. One of the things that has happened is that because of increasing demand and awareness, people got to find out about Starzplay. People experienced that and connected the content to our brand.

“That is going to be an enduring and lasting benefit for our company. You cannot unlearn it. I’m expecting some churn in high sign-ups and reduced consumption volumes, but the lasting benefit we’re hoping for is the brand awareness and content awareness that was created,” he said.

That kind of growth is likely to accelerate Starzplay’s evolution from a privately funded startup to a listed public company. It has raised $125 million over its five years, from some pretty impressive investors, including US media giant Lionsgate, the big financial firm State Street Global Advisers, and Nordic investment firm SEQ, which backed Starzplay from the beginning.

With profitability just around the corner, Sheikh does not see the need for further funding, especially as investment sources have dried up during the uncertainty of the pandemic period.

“During COVID times, when consumption and new subscribers were going through the roof, the flip side was that we realized that capital markets were going to be out for 2020. Lucky for us, we are well capitalized, and we are not in a situation where we need to use funds. This is not a good time to be out there raising money,” he said.

“The goal is to serve our customers and also create shareholder value. There are multiple ways of doing that. One is that you generate cash and shareholders benefit from cash dividends. That’s the traditional model. The more high-growth model that is more applicable to companies like us is shareholders push for more growth and expansion to increase the enterprise value of the company,” he said.

Sheikh has set his medium-term sights on a public listing. “In the long run the goal is to continue to grow the business, and in the next three to five years to get into a position where we can list the company on the London Stock Exchange.

“We haven’t absolutely decided that, as it’s so far out. I’d say what we’re looking to do is list ourselves, and if not in London, then other markets, local or London. That’s the ambition, to look to IPO on London or other markets. We’re not there yet. We’re still two to three years away from a decision, but that’s our ambition,” he said.