KHALEEJ TIMES, Monday, Jul 20, 2020 | Zul Qaadah 28, 1441
How Dubai Metro's Route 2020 will impact property prices, rents
Emirates:
Property prices and rentals around areas connected to Dubai Metro's Route
2020 will be more resilient compared to the wider market, according to
property analysts and industry executives.
They believe that rates will rise in the medium to long term but not in the
short term due to oversupply in the market.
Dubai earlier this month inaugurated Route 2020, a 15km extension to the Dubai
Metro's Red Line, linking Jebel Ali, Discovery Gardens, Al Furjan, Jumeirah Golf
Estate, Dubai Investment Park and the Expo 2020 site. Route 2020 will have seven
stations and will serve communities populated by 270,000 people.
Historically, areas up to 15 minutes of walk to a Metro station tend to
outperform the wider market, says Taimur Khan, research manager at Knight Frank.
"We have seen that if you have a development in a five-minute distance of a
Dubai Metro station, the market increased 51 per cent between 2010 to 2018, and
if they are in 10-minute walk, they increased by 58 per cent, and 33 per cent
for a 15 minute walk," Khan said.
He noted that these five areas will see quite significant demand.
Firas Al Msaddi, CEO of of fäm Properties, doesn't expect property prices to
increase on Route 2020 areas in the short term, but occupancy will increase.
"Areas connected to Metro 2020 will become more favourable than before. Also, it
is something that landlords will look forward to to have a property. I don't see
any rental and price increase because macro fundamentals don't show any sign of
rental or price rise in the short term, which is a good thing because Dubai will
become more affordable than ever before and attracting tenants from different
emirates as well," Al Msaddi
"In the medium to long= term, Metro 2020 will definitely help increase both
rents and prices. Rentals as well as sale price are very much inter-related
worldwide, especially in Dubai. If rents go down, sales prices tend to follow
because price impacts rate of return that one generates out of the rent," he
added.
Rentals
Khan said rentals near Metro areas have outperformed the wider market. Rents in
the wider market fell 11 per cent from the first quarter of 2014 to the same
period in 2018, whereas locations within five to 15 minutes of metro locations
saw rents increasing 1.8 per cent over the same period.
"Locations near Metro stations tend to hold prices better. Since 2014, which is
the top year of the market, the broader rental market went down 11 per cent
while building within 15 minutes walks of metro station rents increased 1.8 or 2
per cent. That is quite a difference," added Khan.
"I don't think rents will necessary go up in these Route 2020 areas but will be
a bit more resilient because there is a lot more pressure on the market at this
time as a lot of supply is coming. Rents are going down about 10 per cent which
we haven't seen for a long time. These communities linked to Route 2020 are at
early stages and it takes time for the community to build it," he added.
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