An insight on new growth corridors in Dubai

An insight on new growth corridors in DubaiImage Credit: Supplied

It's hard to imagine that there used to be a time when the Dubai Metro was hard to fill. Now millions of passengers use the railway every year. According to the Roads and Transport Authority, the average number of daily passengers who travelled on the five year-old system skyrocketed from 60,000 in 2009 to nearly 500,000 last year, helping ease road traffic in many areas of the emirate. The total headcount last year reached 164 million, up by about 30 million from the previous year and 55 million in 2013.

Impact on property

Public transport has significant impact on property prices, particularly in nearby communities. The recently announced 15km southern extension of the Metro from Nakheel Harbour & Tower station to the Expo 2020 site in Dubai World Central is expected to have an effect on land prices close to the line.

Real estate strategist ValuStrat has estimated that the price of property within a 10-minute walking distance from any of the proposed seven stations will see an increase of 10-15 per cent once services commence.

Declan King, Director and Group Head of Real Estate at Valustrat, says there is likely to be some movement in property values based on the announcement alone. The extension is only due to be tendered in July and will open by 2020.

''It's too early to tell if the announcement has had any impact on values along the proposed route,'' says King. ''However, we would anticipate that compared to the general market, areas within walking distance of the planned stations may enjoy more resilient property values and single-digit premiums in the next year or two.''

He adds that such increases should be expected as many residents value easy access to public transport. ''The Metro is used by half a million commuters a day. This will only grow further as more residents are offered connectivity to a modern public transport system.''

Ease of access

Dubai resident and daily Metro user Kuriakose Sebastian understands the value of Metro access, having relied on the train service since he moved to Dubai from Kochi. He says a higher rent for property close to a Metro station is worth it. ''After relocating to the city in 2012, the Metro has been part of my life.'' The electrical engineer, who lives near Union station, says the Dubai Metro is nothing short of excellent, enabling him to avoid congested roads.

''I was amazed to see the cleanliness of Dubai Metro,'' says Sebastian. ''It passes through almost all the happening locations of the city, which is great. The staff is awesome and easy-to understand signboards are very helpful, even for first time users.''

However, Pouneh Goldooz, Managing Director of real estate agency Casabella, says it is impossible to predict growth rates. ''Anywhere around the world, when they extend a main railway or metro [line], the nearby properties will [obviously] gain value,'' she says. ''This is normal and Dubai is no exception.

''However, I cannot say [it will increase] by 10 or 15 per cent, I think it depends on future [Metro] extensions as well. The [government] is waiting to announce other extensions and the whole of Dubai will be connected by the Metro. It also depends on the increase in population and number of properties on the market.''

Nonetheless, King says all the signs suggest more and more commuters will make the switch to public transportation in the coming years, in line with continued upswing in population.

Social benefits

King says Dubai's public transport system including the Metro is enviable, especially in relation to the emirate's age and locality. Many countries in the Middle East notably lack public transportation, with cars being the only way to travel. This is a shame, King notes, given the vast social benefits of good public transport.

''A fully integrated public transport system enhances the social fabric of a city by improving the daily lives of the majority with more convenient access to schools, easier commutes to work and widened leisure and entertainment options,'' he says.

Impact on rent

Will the impact of the Metro rub off on rent? Evidence suggests this is likely. ''Analysis of residential towers in nearby Jumeirah Lakes Towers [JLT] indicates that apartments within walking distance of the Metro rent quicker and enjoy higher [occupancy] rates,'' says King. Rental premiums in the range of 7-20 per cent are commonplace for such properties, he adds.

Goldooz agrees: ''Rent will definitely increase. In JLT a building next to a Metro station has maybe Dh10,000 more annual rental income than one that is a 10-minute walk away. It's not a dramatic difference, but there is a difference.'' As the system becomes even more connected, Goldooz expects greater difference in rental prices based on proximity to public transport.

The premium is well worth it for some. Access to public transport translates into better quality of life for many residents of these communities — a reduction in commuting time, improved economic activity and developments in the neighbourhood as well as better connectivity and widened accessibility to all that a city has to offer, King says.

Economic boost

New links typically mean new economic opportunities. ''Development traditionally follows transport corridors, as builders recognise the attraction that infrastructural links provide to purchasers and tenants,'' says King. ''However, in the case of the Metro extension, that is unlikely to happen to any great degree as there's simply not enough room left to develop.

''Most of the stretch is already developed or under construction with neighbourhoods such as Discovery Gardens, Al Furjan, Jumeirah Golf Estates and Dubai Investments Park.''

However, existing developers will definitely reap benefits from the extension and one of them is Nakheel. It says more than 110,000 people who live in six of its communities will benefit. The expansion will directly serve The Gardens, Discovery Gardens and Al Furjan communities, while also providing access to residents of Jumeirah Park, Jumeirah Islands and Jumeirah Village Triangle. In a statement, a Nakheel spokesperson said the extension was a major boost for the communities and New Dubai.

Meanwhile, King says there are other planned public transport extensions and developments that are likely to have a similar impact on property prices. ''The under construction phase two of International City and Nakheel's Deira Islands will capitalise on an extension of Dubai Metro's Green Line. Downtown Jebel Ali by Limitless will [also] enjoy ease of access to the Red Line.''

Another major development is Etihad Rail, which will connect the entire country and integrate into a GCC wide network. It's slated to be fully operational by 2020. ''It will be interesting to see if developers start to plan residential schemes around planned Etihad Rail stations in other emirates, thus offering viable intercity or inter emirate commuting options,'' King says.

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Source: Amanda Fisher, Special to Property Weekly


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