Dubai: Being close the Dubai Metro’s Red Line is paying off for property owners.
Prices for apartments within a five-minute walk of a Metro station have grown by 51 per cent between the first quarter of 2010 and the first quarter of 2018, while those within a 10-minute walk have gained 58 per cent on average. And those within a 15-minute walk are up 33 per cent on average, according to a report from Knight Frank. Keep in mind that buildings near the Metro would have been sold at a higher premium at the time of their launch.
And even with the market passing through a correction since mid-2014, Metro-side properties have managed to hold up.
“As at Q1-18, the average price per square foot for buildings within a 5-minute walking distance was recorded at 4 per cent below Dubai’s average price per square foot,” the report notes.
Those within 10 minutes are at a 9 per cent premium and those for those situated in a 15-minute walk time, are at a “sizeable” 32 per cent premium over the Dubai average.
The population in the four main Metro areas on the Red Line — Jumeirah Lake Towers, Dubai Marina, Business Bay and Downtown — grew by 145 per cent on average in the five years to 2017. Dubai’s overall population growth over the same time period was recorded at 41 per cent.
Where they have the chance, developers are following the extension of the lines and profit from that outcome. According to Taimur Khan, research manager at Knight Frank, “It is not a surprise we are seeing increased appetite from developers to focus developments along existing and upcoming MRTS [mass rapid transport systems] routes such as the Expo 2020 route [Red Line extension], which is due to be operational by 2020.”
Apart from the Red Line extension, due to be operational by 2020, “there are initial discussions regarding a proposed line parallel to the current Red Line, towards Al Khail Road.”
There are other factors that developers and property owners need to consider.
“Dubai is currently the second most expensive city to live in the Middle East, according to Mercer’s cost of living survey,” the report adds. “As affordability in Dubai becomes more acute due to the introduction of value-added tax and expulsion of fuel subsidies, we expect that going forward there is likely to be greater demand from both owner-occupiers, investors and tenants for properties in close proximity to the Dubai Metro, be it along existing or upcoming lines.”
The Metro’s impact is muted on rents
Between the first quarter of 2014 and the first quarter of 18, rents in residential buildings within a five- to 15-minute walk of Metro stations gained 1.8 per cent on average. As such, Metro area rents have outperformed the wider market in which rents fell by 11 per cent over the same period, according to Knight Frank.