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It was nine past nine in the evening on the ninth day of the ninth month of 2009 when the Dubai Metro was inaugurated. The state-of the-art stations are serviced by fully automated, environment friendly, driverless trains with gold- and silver class carriages and dedicated zones for women and children. Last November, phase one of the Dubai Tram also began operation, covering 11 stations.
The Metro serves Dubai's most densely populated areas such as Deira and Bur Dubai, as well as the Shaikh Zayed Road artery from the Dubai World Trade Centre to Jebel Ali. Feeder buses are available to connect passengers who live further away from the stations.
But Dubai isn't the only beneficiary here; thousands of passengers from Sharjah use the Metro daily. Some park their cars at Rashidiya station and continue their journey on the Red Line, while others choose to cross to Dubai from behind Sahara Centre and ride double decker buses to Stadium station on the Green Line.
The Metro has proved hugely popular among residents and tourists and around half a million passengers use it daily. Many passengers commuting to work will tell you using the Metro has become a necessity. Not only are they saving money, but by not having to drive, which entails various costs of using a car, Salik fees and parking fees, they can reach their workplace on time with little or no stress.
Recent research in the UK has shown that homes close to London's underground stations command an extra £42,000 (Dh230,000) or more, which is a 10.5 per cent price premium. Manchester and Glasgow properties with proximity to train stations command lower premiums than London.
Could proximity to a Dubai Metro station have the same positive effect on house prices, rents and even hotel rates? ValuStrat's team believes so. To assess the impact on value, we took under consideration proximity to stations, the quality of the property, whether the unit is furnished or unfurnished, the availability of similar offerings, number of bedrooms and asking prices. In the case of hotels, we took under consideration the star rating and guest review scores.
Looking for a studio apartment in Jumeirah Lakes Towers within a short walking distance from a Metro station, we found only three apartments listed from Dh750,000-Dh900,000 to buy. However, a wider choice was found further away from the stations, most offered as fully furnished. More importantly, the prices were similar or even slightly discounted with the added benefit of furniture included.
The same is true for rental properties. Buildings closer to a Metro station had less apartments available, reflecting higher occupancy rates, with asking rents for studios averaging Dh75,000 per year. Buildings on the back, although offering scenic views, commanded lower asking rents averaging Dh68,000. That's a 10 per cent premium for properties close to the stations.
One-bedroom apartments seemed to be less impacted by location, commanding less than 5 per cent premium. However, we found limited supply with only three apartments available within five to ten minutes' walk to a station.
''Prices for studio apartments within five to ten minutes walking distance commanded a premium of up to 20 per cent,'' Haider Tuaima, ValuStrat Research Manager, explains. ''You can expect to pay an extra Dh150,000 for the privilege.''
Similar patterns are to be found in Dubai Marina and other non-freehold locations where it is very difficult to find an apartment for rent near a Metro station. In Al Qusais, for example, most apartments were more than 10 minutes walking distance from the five stations there. The best options were further afield that require feeder bus service, such as Al Nahda and Al Muhaisnah.
Tourists like using the Metro as it takes them to important Dubai landmarks, shopping malls, souqs, museums and hotels. Hotels also benefited from the Dubai Metro — assuming similar star rating and guest review scores, we found that hotels closer to a station had less vacancy and commanded higher room rates.
Transport links encourage new developments as demonstrated by the recent launch of the Al Andalus project, introducing midmarket apartments and town houses. This came shortly after the announcement of the Metro extension to the Expo 2020 site.
Dubai is still a relatively young city, and the Metro is just five and half years old. Nonetheless, it is evident that there already is a positive impact on property values, hotel rates, as well as boosting new developments. This is likely to continue as it has with more mature cities such London, Manchester and Glasgow.
Source: Declan King, Special to Property Weekly