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Traffic snarls have been the bane of motorists, residents and property owners in many areas affected by the Dubai Tram construction, particularly in Dubai Marina. The opening of the first phase of the tramway on November 11 will, therefore, be a big relief to many people, while it could also be a major windfall for many residential, office and retail property owners.
According to property consultancy Chestertons, research has shown that proximity to high-capacity transit halts significantly increases property rates. Transit premiums in the past have been anything from a few per cent to as much as a 150 per cent.
With stations located in Dubai Marina, Jumeirah Beach Residence (JBR), Knowledge Village, Dubai Media City, Dubai Internet City and Al Sufouh, the tramway will also be an obvious tourist attraction that will bring more people and business activity to these areas.
However, experts say actual growth figures will only be known when tram operations start.
"By how much the values will increase, we'll see once the network is open," says Robin Teh, Country Manager - UAE of Chestertons Middle East and North Africa.
Moreover, while new community infrastructure will motivate increases in property prices, these values need to be seen in the context of the current market dynamics, which means benefits are likely to be felt in the mid or long term.
Nicholas Robinson, Associate Director of realty firm Fine and Country, says: "Dubai Marina and JBR have both benefited from substantial capital appreciation from 2011 to the first quarter of this year, but have both seen these upward trends come to a shuddering halt more recently.
"These markets are now going through a price softening, which could go on for the majority of next year."
The reason is that while there are plenty of properties for sale, there are very few secondary market buyers.
"Buyers are demanding exceptional value to part with their cash or are purchasing off-plan options instead," says Robinson. "Once prices level off, I am sure the upside to the opening of the tramway will start to be felt by all the owners and residents of communities situated close by."
The first phase of the Dubai Tram will cover 10.6km and 11 stations—JBR 1, JBR 2, Jumeirah Lakes Towers (JLT), Dubai Marina Mall, Dubai Marina, Marina Towers, Mina Al Seyahi, Media City, Palm Jumeirah, Knowledge Village and Al Sufouh.
Running daily from 5.30am to midnight, the Dubai Tram will have 11 tram trains, each with a capacity of 405 passengers across seven carriages.
The JLT and Dubai Marina stations are connected to the Dubai Metro, while the Palm Jumeirah station is linked to the Palm Monorail.
The tram is expected to help ease Dubai Marina’s infamous traffic congestion. Recent data suggest that JBR actually suffered a drop in rental values due to road traffic, exacerbated by the construction of the tramway.
“The core objective of the Dubai Tram is to reduce traffic in the residential area and establish a hassle-free commuting experience for both residents and visitors, reducing the reliance on taxis,” says Teh. “Many property-related studies show that improvement in connectivity and infrastructure do result in an increase in rental values.”
However, car owners using the tram to go to Dubai Marina will have to park their cars somewhere, which could create a new problem if there are not enough parking spaces for tram commuters. But Teh says he is confident the authorities are looking at this aspect to streamline traffic issues.
Mario Volpi, Managing Director of Prestige Real Estate Dubai, says the tram will highlight the many tourist attractions in the area further, including JBR’s The Beach, which has a new underground car park, and new spots along the tram route.
“I believe that rents will remain at a relative high rate due to this,” says Volpi.
Meanwhile, although property owners in Dubai Marina are not expected to enjoy the immediate benefit of the tramway in terms of rent increases, rental values have actually increased between 50 and 60 per cent over the past three years.
“We should put all things into perspective,” says Robinson. “Any current price reduction or softening should be seen as positive alternative to a repeat of the market crash of 2008.
“Most property investors I work with view their investment as a long-term project, appreciating the ebb and flow of a seven-to-ten year investment.”
Across the road, JLT also stands to benefit, although to a lesser extent, as the Dubai Tram will bring property in the community into the spotlight.
“Since JLT is already connected with the Metro network, Dubai Tram will not affect the values in this community significantly,” says Teh. “The new tram connection will just add value to the existing network and the area would be a much sought-after destination as the tram network becomes part of the daily mode of transport.”
A different view
Robinson, meanwhile, is more optimistic of the tram’s future impact on property prices in JLT.
“It would be motivated because JLT is an overspill from Dubai Marina,” he says.
“If a client does not have the budget, then JLT is normally the next best choice.”
Meanwhile, Volpi points out that the tram brings commuters to destinations that are usually difficult to access through public or private transport, which will encourage JLT residents to cross the road and use it.
“The tram probably best serves those who work in Knowledge Village, Dubai Media City and Dubai Internet City, as these areas are a nightmare to park in,” says Volpi. “So by keeping commuter cars off the road for these people, it would possibly mean less traffic.”
Volpi reckons Palm Jumeirah could also get a boost in terms of connectivity, although with the Palm Monorail’s limited stops, residents may still prefer to use cars and taxis.
Dubai Tram (Phase one)
Distance: 10.6km (14.6km when all phases are completed
Number of stations 11
Number of trams 11
Number of carriages 7 (one gold class, two for women and children, four silver class)
Tram train capacity 405 passengers
Length of each tram 44m
Source: Nicole Walter, Special to Property Weekly