Units within a 10-minute walk from a metro station saw a 58% rise in value since the service began, Knight Frank study shows
Dubai Metro boosts nearby house prices by more than 50%
The Dubai Metro, which opened to the public at the end of 2009, has substantially boosted house prices in the emirate – by up to 58 per cent between 2010 and today, a study by Knight Frank shows.
The real estate consultancy found that average mainstream house prices in Dubai grew by 28 per cent between the first quarter of 2010 and first quarter of 2018.
However, residential units located within a short walk from a Dubai Metro station outperformed the market over the same period. Units within a five-minute walk from the Metro saw average price growth of 51 per cent, while those within a 10-minute walk saw price growth of 58 per cent on average.
Finally, those units located within a 15-minute walk saw price growth of 33 per cent on average, according to the report published on Tuesday.
“Given the trends identified in the report, it is no surprise we are seeing increased appetite from developers to focus developments along existing and upcoming [Dubai Metro] routes such as the Red Line extension to the Expo 2020 site, which is due to be operational by 2020,” said Taimur Khan, research manager at Knight Frank.
However, despite the positive price growth trend, residential property becomes more expensive the further from the Metro line it is located. “The price per square foot begins to increase and achieves a premium over the average rate achieved in Dubai,” the consultancy said.
In the first quarter of 2018, the average price per square foot for residential buildings located within a five-minute walk from a metro station was 4 per cent below the average, according to Knight Frank’s report. On the other hand, buildings within a 10-minute walk recorded a 9 per cent premium and those within a 15-minute walk saw a “sizeable” 32 per cent premium over the Dubai average price per square foot.
While residential sales and prices across the UAE have fallen in recent years in the wake of a three-year oil-price slump, this year the rate of decline has slowed, analysts say.
Despite falling average rents across the emirates, the Dubai Metro appears to have had a positive impact on rental values where units are located close to a metro station, Knight Frank’s report said.
Between the first quarter of 2014 (the last market peak), and the first quarter of 2018, residential buildings within a 5 to 15-minute walk to metro stations increased by 1.8 per cent on average. In the wider market residential rents in Dubai fell by over 11 per cent in the same period.
“There are a range of factors that may be driving such trends – one of the most prominent of which is affordability,” Knight Frank said. “Properties in close proximity to the Metro tend to command significantly lower prices and rents when compared to more prime areas which surround these Metro neighbourhoods.”
Demand for affordable housing in Dubai has risen as incomes have been squeezed in the past few years. “We have seen that the middle class of Dubai has grown substantially in the decade to 2017 … meaning there is a strong level of demand in the affordable to mainstream segments of the market,” the report noted.