Properties located near Dubai Metro’s soon-to-be-opened Green Line may benefit from a jump in rental rates as commuters favour houses with good transport links, Asteco said.
Apartments near operating stations in Bur Dubai and Al Barsha have seen an up to 10 percent rise in rents, the real estate consultancy said in a report, and the launch of the metro’s second line on Sept 9 is expected to offer a similar boost to nearby properties.
“People like to be near a transportation link,” said Vineet Kumar, head of business development at Asteco. “Since the opening of the metro, properties in close proximity to a station have become a priority for many tenants, who are prepared to pay extra for the privilege. As the network is rolled out, the rental disparity will become even more pronounced.”
According to Asteco, rates for a two-bedroom apartment near Burjuman station have risen from AED80-85,000 per year in Q4 of 2009, to AED90-95,000 per year.
Properties in Al Barsha, near the Mall of the Emirates station, have seen rents jump from AED90-95,000 per year in Q4 of 2009, to AED105-115,000, the consultancy said.
Kumar said the trend is not exclusive to mid-market neighbourhoods, and that ‘metro communities’ – areas close to the railway – have sprung up in a variety of districts.
“We are starting to see a trend which is no longer based on geographical location alone, but rather a combination of metro station and location,” he said.
“More up-market properties are showing a similar trend. A two-bedroom apartment near the DIFC and Emirates Towers metro stations will cost anywhere between AED110,000 to AED130,000 annually, whereas the same property further away will cost between AED90,000 to AED100,000.”
The Dubai Metro was the first driverless network of its kind in the Middle East, following its launch in 2009. The network was designed to have six lines stretching across the city, but plans were scaled back in the wake of Dubai’s debt crisis, triggered in late 2008.
The Red Line, which carries around 190,000 passengers per day, is currently the only track in operation, running from Rashidiya Station to Jebel Ali Station.
Dubai’s transport agency said last week the Green Line would launch on Sept 9, connecting the network to older areas of the city including Deira and Bur Dubai.
Property analysts at Dubai-based Better Homes said the impact of the new network on rents and sale prices of nearby homes may be negated by the amount of new supply entering the market.
A Reuters poll found in July that house prices in Dubai could tumble a further 10 percent amid the 18,000 new homes expected to hit the emirate’s market by year-end.
“Although worldwide, real estate near a metro station enjoys a value increase of around five to 10 percent, there continues to be a steady supply of property entering Dubai’s marketplace, so potential tenants and buyers still have the luxury of choice,” the company said in a statement.
Dubai had the world’s fastest- growing property market from 2006 to mid-2008 because of rising demand from a growing expatriate workforce and speculation fuelled by borrowing.
Prices quadrupled in the six years following the 2002 decision to allow foreign ownership of property in designated areas, but fell about 60 percent from their mid-2008 peak after the global financial crisis sent investors fleeing from the market.
About 50 percent of Dubai real-estate projects were cancelled or suspended after the collapse.