By Ramola Talwar Badam www.thenational.ae
DUBAI // Proximity to Metro stops is key for those shopping for a home in Dubai. However, a surge in demand for housing near open stations has not translated into higher prices.
Analysts had anticipated a boost in property prices, with sellers hoping to charge a premium for property around the stations when the Metro opened last year. That has not panned out as the impact of the global economic crisis and the continuing glut of available residences have combined to keep prices depressed.
“You can’t charge a premium anywhere,” said Salik Ashrafi, a property consultant with Dubai-based Tactical Reality. “Maybe in the future, in two or three years when the Metro reaches everywhere, it will have an impact on property prices.
“At the moment there is only one [line] and there is so much supply down the line of Sheik Zayed Road to Deira. When – like Singapore – you don’t need a car or taxi, then maybe the Metro will be a factor in the price.”
Most clients first want to know how close an apartment would be to the elevated tracks linking newer developments to the west with older downtown residential and commercial blocks. Still, the spike in enquiries for property near the Metro has not stemmed the slide in prices seen in the rest of Dubai, which has experienced as much as a 20 per cent decline this year since the same period of last year.
That has meant good fortune for bargain-hunting renters such as Vandana Nair, 33, who is thrilled with her recent cross-town move from an apartment block in Bur Dubai to a two-bedroom flat near the Internet City station.
“It’s great to have a station bang opposite my home,” said Ms Nair. “Last year when we wanted to move near the Metro the price hadn’t dropped significantly. Now it has, so we made the move.”
She and her husband paid Dh110,000 in rent for a two-bedroom home last year compared with Dh80,000 for their current, and much more conveniently located, flat.
“Our new apartment is equally spacious but we are paying so much less,” Ms Nair said. “It will be easier to visit malls and even get my shopping done with my son.”
The shadow of the global economic downturn is keeping the trend of falling valuations in place. The property consultancy CB Richard Ellis has said prices have dropped between 40 per cent and 70 per cent in Dubai since their peak in 2008. That is leading to international interest in strategically located residences as costs keep sliding.
“Investors coming from abroad – from India, Pakistan and the UK – are showing interest in property near Metro stations but prices are still going down,” Mr Ashrafi said. “The price is coming to realistic levels.”
A spacious two-bedroom apartment in the Dubai Marina now costs Dh90,000 (US$24,506), down 25 per cent from last year.
“Everything in Dubai continues to be in a downward trajectory,” said Jesse Downs, the head of research at Landmark Advisory, a division of the estate agency Landmark Properties. “We do see a higher demand on the commercial side for property with proximity to Metro stations. We tend to have people come in to our brokerage who will come and say, ‘We would like to see property near the Metro’.”
That is helping to cushion the blow somewhat in the central business and residential district near the Dubai Mall station, where a one-bedroom apartment would cost Dh1.1 million, a 15 per cent drop from last year. At the end of the Red Line near Burjuman, leasing costs have fallen 10 per cent from last year, to about Dh90,000 for a two-bedroom home.
Naturally, renters across the city are content so long as prices continue to favour them. Living near a station was crucial to the shift Mishka Kozlov made in March to the al Barsha area, near the Mall of the Emirates station. She moved with her brother and her sister-in-law from a one-bedroom apartment that cost Dh118,000 per annum to a similar flat that rented for Dh90,000, a savings of 24 per cent.
“All the people were waiting for the Metro,” said Ms Kozlov. “There’s no need to be dropped to work or take a taxi. There is no traffic, no rush and we pay less rent. Life is just perfect.”