Dubai: From January, drivers in Dubai will start scheduling their trips around peak and off-peak hours if their trips take them past the 10 Salik gates in the city.
But when it comes to Salik shareholders, they are already belted up for a ride that has seen the toll-gate operator’s stock price soar 50% just in the last 3 months. And over 80% since January.
In the first 20 minutes of DFM trading today, Salik is up 1.79% and Parkin - another major beneficiary from the Dubai variable pricing strategy - is burning the charts with a 13.5% gain.
And just over 30 minute mark from the day's opening, Parkin's stock hit the 15% gain.
Another Dh60m-Dh110m revenue boost for Salik
Salik in a new statement said today that the new pricing model can generate an 'additional revenue between Dh60 million to Dh110 million on annual basis'. (These are early forecasts.)
There was already heavy speculation about Salik introducing a variable fee structure for vehicles using its toll-gates, two of which opened November 24. Some of that could be seen in the 50% surge the stock has been feeling on DFM since September. (Salik even issued a statement on DFM saying that there were no plans to revise its usage fees at that particular time.)
Will Salik stock break Dh6?
Salik is currently at Dh5.6, just a shade lower than the 52-week peak of Dh5.89. Its IPO price was Dh2.
'Received instructions'
In a statement Ibrahim Sultan Al Haddad, CEO of Salik, said: “Road and Transport Authority (RTA) studies have clearly indicated the need for the implementation of variable pricing across Dubai’s toll road network. The instruction Salik has received today, is expected to improve the travel experience of road users in Dubai.”
Now, investors and market watchers are waiting to see whether Salik stock can indeed push past Dh6 after investors digest all the revenue gain possibilities starting late January.
Already, so far this year, ‘Salik and sister-company Parkin are the best performing stocks in the UAE’, said Sameer Lakhani, Managing Director of Global Capital Partners. “Salik is up 80% year-to-date, but if you include the H1-24 dividend payout, the share price is actually 110% up.”
Pakin stock is riding high too
Parkin is next with 103%, including dividend, while third and fourth spots are held by Orascom Construction (up 97%) and ADX-listed Al Khaleej Investment (96%).
Orascom Construction is the Egyptian company and one of the biggest names in the Middle East within its field.
In fifth place is Emaar Development, with an 80% upswing in share price.
Parkin's stock is at Dh4.14 against a 52-week high of Dh4.49. Market analysts say the same push and pull that Salik's stock could benefit from once the new variable usage fees come in will apply to Parkin too. (Parkin's IPO price was Dh2.1.)
In the July to end September 2024 period, Parkin oversaw parking transactions of 33.8 million, which was 16% up from a year before. From end March next, when variable fees come in for peak and off-peak usage, even simple forecasts suggest Parkin is up for a sizeable top-line boost. Plus, there should be more cars on the road given the trends in the resident base.
“Salik and Parkin’s share gains drive home the point that investors are attracted to the dividend payouts - as well as their business model being a near perfect hedge against inflation,” said Lakhani. “It further highlights the benefits of being drawn to attractive valuations (at the time of the IPO), something that investors will continue to look at in upcoming offerings.”
What are the new Salik rates?
Late yesterday (November 28), the RTA confirmed the changes in the Salik usage fee structure. Rather than the flat Dh4 each time a vehicle passes a toll-gate in Dubai, the new tariffs would be linked to peak and off-peak hour use.
So, on weekdays, any drive through the toll-gates between 6am-10am and 4pm-8pm will cost Dh6. It will remain Dh4 for the off-peak hours of 10am-4pm and 8pm-1am.
When it comes to Sundays - excluding public holidays, special occasions or major events – the Salik fee remains Dh4 throughout the day and free from 1am-6am.
Changes for parking fees too
The revised RTA rates apply to parking spots in Dubai as well. These take effect late March 2025, with fees at Dh6 an hour for premium spots and Dh4 an hour for other public paid parking areas in the morning hours of 8am-10am and evening hours of 4pm-8pm.
The tariffs remain unchanged during off-peak parking, from 10am-54pm and 8pm-10pm.
Parking remains free for the nights, from 10pm-8am, and all-day on Sundays.
Where are Dubai's 'premium' parking areas?
"The locations for premium parking spaces were selected based on three criteria: ease of access to the area using public transport, such as areas within 500 meters of a metro station," said Mohamed Abdulla Al Ali, CEO of Parkin. "Second, areas with high parking occupancy during peak periods, and third, density and congestion, such as markets and commercial activity zones.
The premium parking spaces include commercial areas in parts of Deira and Bur Dubai, Downtown Dubai, Business Bay, Jumeirah and Al Wasl Road and other locations.
Clearly defined parking
"Premium parking spaces will be strategically designated to provide drivers with convenient access to high-demand areas, including public transportation hubs, such as metro and bus stations, as well as central business districts and major shopping destinations," said a Parkin statement.
"These zones will be clearly marked with dedicated signage and tariff details on display, with additional information readily available on the Parkin website, via the Parkin mobile app and social media channels."
New fees for high-usage parking needs
The other big change that drivers in Dubai will have to factor from end March 2025 is the parking charges when major events or exhibitions are held in the city.
From March, Dubai parking regulations will consider 'increased traffic volumes during major events', including conferences, exhibitions and concerts.
"Specific operating parameters applying to 'grand events' will also be determined by the RTA to accommodate temporary surges in parking demand," said the Parkin statement.
During major events, a specific 'event hours' tariff will be implemented in the surrounding areas to 'effectively manage the temporary surge in parking demand'.
Parkin says: "Special event parking zones with adjusted rates will be activated to accommodate higher vehicle volumes. These zones will be clearly marked during the event, with tariff information clearly displayed and accessible on the Parkin website, via the Parkin mobile app and social media channels."
Optimising revenues
"Both Salik and Parkin could benefit long-term from modernized pricing systems and improved revenue optimization," said Hani Abuagla Senior Market Analyst at XTB MENA. "Salik appears better positioned for immediate gains due to its guaranteed toll revenue structure. Parkin's success will rely heavily on consumer behavior adaptation.
"Given Salik's strong financial foundation, this new revenue stream should enhance shareholder value, though some initial market volatility may occur during implementation."
