Prices for homes near Dubai Metro boosted by more than 50%

The Dubai Metro, which opened 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 property consultancy found that average overall house prices in Dubai grew by 28 per cent between the first quarter of 2010 and first quarter of 2018.

However, homes 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 registered average price growth of 51 per cent, while growth for those within a 10-minute walk was 58 per cent on average.

For units within a 15-minute walk, price growth was 33 per cent on average, according to the report published yesterday.

“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 routes such as the Red Line extension to the Expo 2020 site,” said Taimur Khan, research manager at Knight Frank.

However, despite the positive price growth trend, residential property becomes more expensive the farther 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 this year, the average price per square foot for residential buildings within a five-minute walk from a metro station was 4 per cent below the average, according to Knight Frank’s report.

Buildings within a 10-minute walk registered a 9 per cent premium and those within a 15-minute walk showed a “sizeable” 32 per cent premium over the Dubai average price per square foot.

While residential sales and prices across the UAE have slumped in recent years in the wake of a three-year oil-price slump, this year the rate of decline has slowed, according to analysts.

Despite falling average rents, the Dubai Metro appears to have had a positive effect on rental values where units are located close to a station, Knight Frank’s report said.

Between the first quarter of 2014, the last market peak, and the first quarter of this year, residential buildings within a five 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 more than 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.

“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 said.