By Staff Writer www.business24-7.ae
The price of property near Dubai Metro stations could command a premium of up to 10 per cent as the mass transit system draws more people off the roads.
People looking for homes will consider its proximity and access to public transport as the city shifts away from its reliance on private cars.
Rents have already witnessed a marginal rise, but the possible impact of the Metro is still speculative, industry analysts told Emirates Business.
However, any rent rise could be tempered by the Real Estate Regulatory Agency watchdog, which currently does not factor in Metro stations in its rental price index.
Jesse Downs, Director of Research and Advisory Services at Landmark, told Emirates Business: “The impact on prices so far has been marginal. This is because the market is still unclear about the anticipated Metro usage patterns at the outset and how usage patterns will evolve over time.
“On an average, I could imagine a five to 10 per cent average premium developing over the initial one or two years of operation. Of course, the actual premium will depend on the residential location and specifics of the development and individual buildings.
“For the [Metro] commuters, the office location will be a critical factor. Some popular commercial and residential areas are becoming increasingly congested with limited parking available. The Metro will be most advantageous to residents living and/or working in such areas.
“Actual Metro use and impact on realty prices will also depend on unknown factors like Salik. For example, if Salik fees increase, this could trigger more widespread Metro use and then prices would adjust accordingly.”
The Metro is expected to have an eventual impact on commercial prices and rents. On increased use of the Metro, offices with easy access to stations will gain a premium.
Offices on Sheikh Zayed Road often only come with a very limited number of parking spaces. Usually, companies or the employees have to pay for additional parking. “Once companies can see how proximity to a Metro station can help save them and their employees both money and hassle, preferences will emerge, resulting in a premium,” Downs added.
However, as the Real Estate Regulatory Agency keeps an eye on rents, no matter where a property is located, the rent still has to stay within the range defined by the calculator. Properties near the Metro may be priced towards the higher end of the range, but will not go above a limit.
Landlords in particular need to be extremely cautious before raising rental rates because that would be violating what has been set forth by the government.
All these factors need to be considered by landlords and industry specialists before any price hike happens, especially before the Metro is fully operational, say analysts.