What’s the cheapest residential rental property near a Dubai Metro station? While you’ll still be paying a premium, according to Mario Volpi, chief sales officer at Kensington Exclusive Properties, the best-priced apartments near a Metro station are in Deira and Bur Dubai.
“In the current market, the cheapest one-bedder rent on the Metro’s green line can be found in Hor Al Anz, which is close to Al Qiyada station,” he says. “In Al Qusais, one-bedroom apartments are around Dh58,000 per year; in Abu Hail, Al Jadaf and Naif, which are near the Baniyas Metro Station, a one-bedder costs Dh60,000.”
On the red line, Volpi says there are cheaper options in Karama, where prices for a one-bedroom apartment start at Dh60,000. “In Jumeirah Lakes Towers [JLT], an equivalent apartment is approximate Dh65,000, while units close to Deira City Centre station cost on average Dh65,000,” he says.
Property appeal
Sanjeev Krishnan, 58, from India, operates a yoga centre in Karama that is just a five-minute walk from the Metro. He says the train service provided a big boost to his business, although the rent also increased by 40 per cent in the last four years.
“My clients now have easy access without getting stuck in the heavy Karama traffic,” says Krishnan, who has operated his business for the past 14 years. “The Metro has added an extra appeal to the centre.”
Mohaned Sharifh, global property consultant at Gulf Sotheby’s International Realty, says properties close to the Metro, whether in freehold or leasehold areas, receive a slightly higher demand and therefore offer a higher return for investors.
“Many people who relocate to Dubai usually start by renting cars and later realise that it is rather costly considering all the other costs of living in Dubai,” says Sharifh. Transport facilities nearby provide a convenience factor and savings.”
Value effect
The Roads and Transport Authority’s Strategic Planning Department, in collaboration with the Real Estate Regulatory Agency, has reported a significant increase on the value of commercial property and land adjacent to Metro stations, as well as those linked by the feeder buses.
According to Dana Salbak, associate partner of research at Knight Frank, the figures vary wildly from 7-34 per cent. “Studies have shown that purchasers of property within a ten-minute walk of Metro stations in Dubai are prepared to pay a premium,” says Salbak. “They hope to benefit both from savings on transport and time spent commuting. In a city such as Dubai, where an average commute can take up to two hours per day, this can be a substantial saving.”
Salbak says rents for units located close to Metro stations are 13-26 per cent more expensive. “Because of this, there has been a surge in interest in purchasing property within these locations,” she says. “The government’s plan to further extend the Metro by 15km from Nakheel Harbour & Tower Metro station to the World Expo 2020 site has already raised expectations that communities along the route could experience a rise in value.”
Some of the locations expected to benefit from the extension of the Metro include Discovery Gardens, Jumeirah Golf Estates, Dubai Investments Park and the site of Expo itself, she says.
“Also, up to four further lines, which will extend the route to 421km, are being considered to provide a comprehensive transport system covering most of the city and passing near some of the most popular residential areas in Dubai,” adds Salbak.
According to research intelligence firm ValuStrat, properties within a ten-minute walk of the new Metro stations could see sales prices increase up to 15 per cent, with a similar increase in rents once the stations become operational.
Accessibility is a major selling point in these areas, in addition to local facilities and home amenities, says John Stevens, managing director of Asteco. He cites Dubai International Financial Centre (DIFC), Downtown Dubai, Dubai Marina, JLT and The Greens are some of the most-sought after locations that have good access to Metro stations.
“All these developments are situated along the Metro red line, making them convenient residential destinations, which will have a positive impact on price,” says Stevens. “However, depending on the budget, the tenants and investors should select the communities they can afford.”
From an affordability perspective, Al Barsha, Bur Dubai and Deira are more appealing, he says. JLT, Business Bay and The Greens are most attractive to the mid and upper-mid segment.
“Overall, these areas benefit from an attractive offering that includes open areas, landscaping and generally good levels of facilities and amenities,” says Stevens. “At the high to luxury end, Dubai Marina, Downtown Dubai, DIFC and Jumeirah Beach Residence all have good Metro or tram links.”
Volpi believes the Metro extension will ensure that housing in more remote areas will not remain vacant for long. Such areas include Al Furjan, it is currently quite isolated from a public transport point of view.
Challenges
The Metro service undoubtedly has become an added amenity for Dubai residents and extra feature for investors to make an attractive return on their property investments. However, Salbak warns investors that the disruption during the construction phase of the Metro expansion can initially cause a negative impact on prices.
“Noise, air pollution and traffic congestion near stations may also negatively influence property prices after completion – this is particularly relevant to residences or hotels in the immediate vicinity of stations along the route,” says Salbak. “In addition, buyers in these areas also have to factor in the increased price of property, which may deter some from purchasing for personal or investment purposes.”
