Will the Metro be a carrier of change?


    By Sean Davidson    www.business24-7.ae

    Twelve days from today Dubai will witness another historic milestone as the emirate undergoes a paradigm shift in its commuting habits.

    The much-awaited launch of the Dubai Metro on September 9 – or 09/09/09 – will transform public transportation, and the authorities hope residents will gradually embrace it as their primary means of moving around.

    The Roads and Transport Authority (RTA) is ramping up bus and taxi services and bicycle tracks to complement the Metro and provide an integrated, comprehensive solution to Dubai’s needs.

    Almost every part of the economy – from petrol retailing to residential and commercial real estate to hospitality and retail – will be touched by this revolution.

    Businesses are gearing up to gauge the Metro’s success and socio-economic impact. And it all hinges on how many residents adapt to this new way of life.

    For its part, the RTA has done everything it can to ensure the ride is smooth. Peyman Parham, Director of Marketing and Corporate Communications, said: “The Metro is a cross between Burj Al Arab in terms of quality and the best shopping mall in terms of the services provided.

    “This is probably the biggest event in the history of Dubai, it’s going to change the way people live. It was completed in four-and-a-half years flat, which is a third of the time similar projects usually take.”

    Only seven per cent of Dubai’s 2.2 million population currently use public transport, a number the RTA is hoping to increase to 30 per cent by 2020. The Metro is intended to cater to a little more than half the total.

    “This requires a cultural change,” added Parham. “And we’re hoping our message, My City, My Metro, which was coined to link everything we’re doing, resonates with residents. We want people to take ownership of the Metro. We want them to talk about it and say this is their Metro regardless of whether they are nationals or expats. People should boast about it when they travel elsewhere.”

    The RTA will look at a “push and pull” – push those who’ve used public transport, pull those that haven’t – method to lure commuters onto the unmanned state-of-the-art trains.

    “The majority of our population consists of expatriates who have lived in countries where public transport was a major means of transportation. We want to get these people who were used to it to go back to it. We’re going to tell people to start using the Metro on occasion and we’ll grow it from there.”

    The RTA has initiated a new corporate social responsibility programme aimed at educating future generations about the benefits of using public transport.

    Khalid Hadi, Enoc’s Group Brand and Marketing Manager, said he hoped the new form of transportation would ease traffic on the roads.

    “People should use it to get to work and to visit malls and other places of interest. The fares are very reasonable and I’m very surprised to see how affordable it is. It’s been done to encourage more people to use public transport.”

    Hadi said it was too early to say whether the Metro would affect fuel consumption and, consequently, Enoc’s revenues.

    “At this stage it’s hard to say what the impact will be for the fuel business. There is no clear indication on how it will affect fuel consumption, though there is no doubt there will be an impact.

    “It will depend on how many consumers shift from using cars. We will be monitoring our fuel sales from 09/09/09 to understand the trends from the beginning. We’ll get our first indications within three to six months and have a deep insight a year later.”

    Enoc and its Eppco subsidiary have expanded rapidly to meet the demand created by an annual 15 per cent rise in cars on Dubai’s roads, and serve 150,000 vehicles per day through 170 stations.

    However, a dip in petrol consumption would in fact benefit petrol retailers because the pump price is pegged and when crude prices are high sales have to be subsidised.

    “The break-even point for petrol stations is when oil is priced at $40 per barrel,” said an analyst. “Whenever it goes higher petrol stations have to swallow that difference because they cannot pass it on to the consumer. So more people on the Metro and fewer cars on the roads would mean reduced losses for these companies.”

    At optimum levels, the Metro will be able to carry 23,000 passengers in one direction every hour – equivalent to 12 lanes on the Sheikh Zayed Road.

    The real estate sector has so far seen only minimal rises in the prices of homes near stations because the Metro’s possible impact is still uncertain, industry analysts told Emirates Business.

    “The impact on prices so far has been marginal,” said Jesse Downs, Director of Research and Advisory Services. “This is because the market is still unclear about Metro usage patterns at the outset and how usage patterns will evolve over time.

    “On average, I could imagine a five to 10 per cent average premium developing in areas around stations over the first one or two years of operation. Of course, the actual premium will depend on the residential location and specifics of the development and individual building.

    “For commuters, the office location will be a critical factor. Some popular commercial and residential areas are becoming increasingly congested and have limited parking. The Metro will be most advantageous to residents 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 prices would adjust accordingly.”

    The Metro is expected to have an eventual impact on commercial prices and rents, with offices in easy reach of stations likely to gain a premium as its use increases.

    “This will happen over time and offices in more congested areas will be the first to benefit,” added Downs. “The primary reason is the parking issue. 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.”

    The Metro’s sheer technological achievement will draw hordes of residents and tourists curious to experience it. The RTA hopes to cash in on such “trial” trips by offering an unforgettable experience that triggers several “retrials”.

    Parham added: “We want to create that retrial, which will only happen if the connections are good, service is good, and efficiency is good. That’s why we’ve focused on facilities like WiFi in the stations and on the trains, walkalators, numerous restaurants, banks and pharmacies. This will be a new platform for social interaction.”

    On the retail side, malls and stores attached to Metro stations or in its proximity will receive a great boost to business. Eisa Ibrahim, General Manager of BurJuman, which plays host to one station, said: “The impact of the Metro on bringing traffic to the shopping malls will be superb. It will bring in huge numbers through its station. In addition, the ease on traffic will also help a lot more people come through with their cars. We see a very positive benefit to all the malls either connected to or located close to the stations. But it is still too early to say how much this will boost revenues and footfalls.”

    The impact will be far less on dining said Ahmed Ramdan, Managing Director, Roya International. “The station locations are for the masses, so I don’t see a great impact on dining. It will be slightly positive at best because the type of people going to four and five star hotels have their own cars and hardly any hotels are close to the stations.”

    The launch has drawn interest across every sector and level of management.

    Gerald Lawless, Executive Chairman of Jumeirah Group, said: “The Metro is hugely important for Dubai. What a statement to make! We have one of the most sophisticated, driverless metro systems in the world.

    “And believe me it will work and everybody will look forward to using the Metro. It makes Dubai a real international city.”

    Metro users?

    Jason Ong, 30, Singapore, marketing executive

    I will only use the Metro when it is fully functional and all the stations are operational. I don’t think all stations on the Red Line will be operational from the launch date.

    I applaud the RTA and the Dubai Government for giving a fillip to public transport, since people depend too much on cars here.

    Unfortunately, my job involves a lot of travel and I don’t think it will be feasible for me to use the Metro regularly.

    Natasha D’souza, 32, India, software executive

    I doubt I will use the Metro a lot, because I work at Dubai Sports City and stay in Al Qusais – and the two are not connected by the Metro right now.

    I am still waiting to know the train timings. I hope they make it possible to have a late dinner around the Dubai Marina and head back to Al Qusais using the Metro. While I clearly see the benefits the Metro has to offer Dubai, my trips on it, unfortunately, will be limited to the odd joy ride.

    Phil Yousef, 30, Syria, motorsport technician

    The Metro will be the best form of transport for the city because it will be cheap and fast.

    Since there are no stations close to my office, it will not be too convenient for me to use the Metro to get to work. But with trains running every few minutes, on the weekends I’ll be able to get where I want to go much quicker. I won’t get stuck in traffic or have to wait in line for a cab. The Metro, once it starts, will become my second option after my car.