Dubai, which is bidding to host the World Expo 2020, will need to invest close to 6 billion euros ($8.1 billion) into infrastructure should it win, the emirate’s top finance official said.
“We need to extend maybe the metro, the road infrastructure to the site and doing a lot on the site itself,” Sheikh Ahmed bin Saeed Al Maktoum, head of Dubai’s Supreme Fiscal Committee and chairman of Emirates airlines, said in an interview at the Dubai Air Show yesterday. Financing the expenditure wouldn’t be an issue because it “makes sense” and has a “business case,” he said, without elaborating on how the money would be raised.
Dubai is one of four cities competing for the World Expo bids and results will be announced in 10 days. Selection would be a milestone in Dubai’s recovery from a property crash in 2009 that wiped as much as 65 percent off home prices. It would boost economic growth by 0.5 of a percentage point per year and by about 2 percentage points in 2020, Bank of America Corp. said in a Sept. 26 report.
Bets that the city will win the decision on Nov. 27 have already helped push up the benchmark DFM General Index (DFMGI) more than 70 percent this year. Dubai’s economy, the second-biggest among the seven that make up the United Arab Emirates, is set to expand an average 4.6 percent a year between 2012 and 2015, more than twice the rate of the previous four years, according to government forecasts.
The recovery is also benefiting Dubai’s main airline. Emirates signed record deals at the Dubai Air Show yesterday with orders for 150 Boeing Co. (BA) 777X aircraft worth $76 billion at list prices with additional rights and another 50 Airbus SAS A380s valued at $23 billion.
The carrier will fund the massive order through a combination of leaseback, company resources and bond or sukuk issuance when the time is right, Sheikh Ahmed said.
Emirates continues to work on obtaining traffic rights to more destinations. “The aviation policy has got to change, we have to see a more liberal way of thinking about aviation policy,” he said. “That would be a very good thing for the passengers flying around the world because the world has become too small.”
Asked whether the emirate will operate from both Dubai International Airport and the newly opened Al Maktoum International Airport, he said: “Most likely we will see one airline is here and one is there,” without specifying which carrier will shift its home.
Capacity at the Al Maktoum International Airport will have to be increased first and this could be a matter of six to seven years, he said.
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