GCC economies, which are enjoying the benefits of elevated hydrocarbon prices, are set to get a further boost from this month’s FIFA 2022 World Cup in Qatar, with Dubai being the main beneficiary, S&P Global said.
With more than 1.2 million fans expected to attend the event in Qatar, there is likely to be positive spillover effects for the rest of the region. While Qatar claims to have secured accommodation, including up to 130,000 rooms for the one-million-plus fans expected during the 28-day event, its GCC neighbours will also host large numbers of an expected spillover, benefiting their aviation and tourism sectors.
Accommodation prices in Qatar have soared, perhaps making it more economical for some fans to stay elsewhere and use the multiple shuttle flights to Doha from the wider GCC. “That said, accommodation prices have increased in the GCC more broadly to reflect the increased demand,” S&P said in the new report.
How does Dubai benefit
Dubai is expected to be the main beneficiary outside of Qatar, given its geographical proximity and its already well-established tourism offering, major attractions, airline connections with the region and the world, and multiple-entry tourist visas for World Cup ticket holders.
Dubai hotels are set be to be close to full capacity with room prices climbing further.
“This is despite the supply of rooms having increased recently amid new hotel openings; we expect a 10% increase by end-2022 from about 140,000 rooms at end-2021.”
The retail sector will also see a boost from higher tourist numbers, “but this may soften in 2023 if inflation accelerates and if the uncertain economic environment weighs on discretionary spending and makes consumers more cautious about essential spending.”
Mall operators will benefit from improved footfall, which to date remains below pre-pandemic levels on average, partly offset by higher spending per person.
However, S&P does not expect the World Cup to have a material knock-on effect on real estate transactions in Dubai. “Rental increases and reduced availability are the most likely short-term consequences, even though this could marginally fast track investment decisions for some wealthy investors.”