Ample parking a shot in the arm for sagging economy

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By Matt Green  www.business24-7.ae

The expression “parking is a nightmare!” continues to dog the growth patterns of many major cities.

Concise inner city robotic parking solutions, better planned commercial buildings with increased multi-storey parking and greater provision of parking options linked to public transport are, of course, constituents of the answer. Yet statistically speaking Dubai enjoys, perhaps not quite the most appropriate verb, car ownership per capita thousand in excess of 540 units. That figure outstrips New York at 444, London at 364 and Singapore at a mere 111. 

Although traffic in the city has eased as the expatriate population has slimmed down and greater public transport options – including the recent opening of Dubai Metro – have emerged, there are still far more vehicles on the road in relation to available public and private parking spaces. 

A large proportion of the current car park allocation is linked to shopping malls as opposed to street-side and while commercial buildings in central business districts provide spaces for the occupiers, the needs of travelling guests tend to remain under-addressed. The spread of valet parking is now extensive but increasingly expensive and therefore not an economic option for frequent visitors.  

Also, as the Metro expands its scope in terms of the number of stations in operation, mall management groups have already installed paid parking invoking three-hour time limits and significant excess tariffs to deter regular employed Metro users from making use of their parking amenities to the detriment of retail consumer footfall. 

Although, this practice is not uncommon in other cities and parking fees are significantly higher in, for example, London, than they currently are in the UAE. However, taking Dubai Metro as an independent case, in order for passenger volumes to rise, additional “park and ride” facilities will almost certainly need to be added at line locations other than the two stations already assigned with volume parking.

In 2008, the prevailing estimate was that should car ownership continue to rise at the current rate, then the number of cars registered in Dubai would rise to 5.3 million by 2020. One hopes that this figure is considerably off the mark in the interests of urban sustainability.  

Yes, penalties for illegal parking have risen dramatically to at least establish some degree of order in existing parking schemes yet availability has to increase in tandem, as even a significant reduction on the predicted 2020 total would create untenable congestion. The ability to pay to park via a mobile phone launched by Roads and Transport Authority (RTA) is an interesting use of technology but it does not create more space. 

Nevertheless, is there the physical capability to expand parking space in some relatively built up areas and will the costs become prohibitive to businesses that need to accommodate a high turnover of visitors and therefore offer free parking? While many senior executives may be prepared to board the Metro, the thought of waiting for a feeder bus to make it to their final building destination may well dissuade them from completely abandoning their cars.  

Even in new primarily residential and hospitality districts such as Dubai Marina the parking problems are becoming more acute on a weekly basis as more buildings are handed over and more tenants move in, with most family units having at least two cars. Dubai Marina Mall already has its multilingual yellow payment machines primed ready for action. 

The Marina presents a definitive case for major “park and ride” facilities on the fringes with an efficient transport interconnect, but where might those fringes be? Ultimately, Business Bay as a commercial district is likely to present a similarly deserving case. Meanwhile the further flung inland business and technology parks tend to be in a better position to accommodate adequate facilities, with Dubai Silicon Oasis being a good example. 

Taking a more extreme position, Sheikh Zayed Road has represented a worst case scenario in the past few years, with high rental buildings and severely limited car parking. As half of the commercial office inventory now resides on the opposite side of the highway to the Metro, with a service road constantly subjected to heavy traffic from delivery vehicles, taxis etcetra, then what were prime office status rental rates under pressure are likely to reduce further.  

Good parking facilities undoubtedly add value to the “prime” status rating. 

Commercial property with fluent traffic flow, including vehicle and pedestrian traffic, will always command a higher rental and as a result achieve greater capital value. Commercial property should either have more than adequate car parking within the building or have access to a car park building within 50 metres from where car parks can be leased. If the car parking is not adequate, there should be easy access to a public transportation system.

These features are indispensable, as well as straightforward access both in and out where trucks can manoeuvre or deliver goods with ease, to any class of investment property.  

There is also tangential trend manifesting itself in the United Kingdom, which could add to the problem should it work its way into the UAE. As the commercial property rental market takes a dip, innovative landlords are turning to a niche sector that registers demand despite the downturn. 

Park Let, the UK’s largest parking space letting agent has witnessed an 85 per cent rise in exploratory enquiries from developers and investors wishing to discuss letting out in-house parking spaces in isolation from mainstream commercial premises. Is this another form of brokerage devoted solely to the frustrated motorists? The average annual rental of a dedicated car parking space in London is now fetching up to Dh12,000 per annum.  

While a proliferation of private car parking companies has yet to appear in Dubai, an occasional plot of vacant ground on Deira-side is on offer to drivers at roughly Dh10 an hour, the time could be imminently ripe legislation permitting. Especially as the new public transport network will need a lengthy settling in period before it makes a serious dent in vehicle usage. However, in economic terms a policy shift of this nature creates an unwelcome source of inflation. 

 A reduction in road users depends very much on location, there are many communities spread across Dubai who work at some distance from their residential location and indeed need to travel around the city to different districts. These often incur lengthy multiple journeys, which are neither feasible nor productive using public transport. Therefore, the demand for parking will not diminish in dramatic fashion and will probably rise in many areas. Even those who do decide to leave the car at home completely need to park somewhere which potentially implies great pressure on residential parking.  

Taking another view, the only way to reduce the need for increased parking is to limit the number of cars on the road. This implies raising the cost of ownership to such an extent that those who are conveniently placed within striking distance of public transport and make a regular point-to-point journey as opposed to a mixed bag are likely to resort to using it. Meanwhile, with inner city parking in such short supply as it stands, the wheels of commerce could be impeded by congestion once more as hand over of the office supply pipeline and human resource occupancy levels rise. 

There are obvious initiatives afoot for public and private sectors to work jointly on behalf of the economy, perhaps car parking resides among the infrastructure projects to which this style of bilateral approach is ideally applied.  

– The writer is Associate Director for Research and Consultancy at CB Richard Ellis Middle East