Dubai’s investment in a metro system could add between $4.6-7.6bn to the emirate’s national output, the chief economist of the Dubai International Financial Centre (DIFC) said on Tuesday.
DIFC said empirical analysis shows that for emerging economies, a 1 percent increase in the stock of core infrastructure is associated with an increase in the level of national output of between 0.15 to 0.25 percent.
A country’s stock core infrastructure includes transportation, water supply, wastewater treatment, and power facilities.
“Since national output is about 4 times the value of core infrastructure, then an AED100 infrastructure investment can generate an increase in output of between AED60 to AED100 within a year,” chief economist Nasser Saidi and director of macroeconomics Fabio Scacciavillani said in an e-mailed statement.
“In the case of the Dubai Metro the capital investment of AED28bn ($7.6bn) through 2014 will likely lead to an increase in national output of between AED17bn ($4.6bn) and AED28bn.”
The Dubai Metro is expected to generate revenues of more than AED17 billion ($4.6bn) over the next 10 years, the chairman of Dubai’s Roads and Transport Authority (RTA) said on Tuesday.
Sources of income would include fares, advertising, stores and AED1.8bn ($490m) worth of station naming rights, he said.