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GCC metro push could bring a $700bn economic boost

Reuters/Faisal Nassser
Years in development, Riyadh Metro is due for completion in April
  • Investing in metro systems would benefit GCC states, analysts says
  • Dubai Metro passenger numbers grew 3,000 percent in ten years
  • Good capital flow is essential to keep projects from stalling

Investing an extra $220 billion into GCC metro systems could lead to $700 billion worth of benefits over 20 years, according to experts, as the region seeks transport solutions to meet demand from rising populations.

Growing populations, ambitious economic growth goals, new expectations for commute times and plans to improve quality of life are all “compelling reasons to expand public transport” – especially metro systems – in the region, said Mark Haddad, partner with Strategy& Middle East.

He added that cities can make “considerable gains”, with a large-scale metro system generating three to four times the cost of investment in direct and indirect socioeconomic benefits.

The urban sprawl and car-centric nature of many GCC cities makes public transport solutions more challenging, but analysts say their introduction will still pay off financially and contribute to carbon-reduction goals.

Strategy& estimates that cities in the region together require an additional 1,100km of metro track by 2030, compared with the 400km that exists at present. 

Less road traffic would mean fewer road accidents, a cut in healthcare and social costs, and less need to spend on road infrastructure, it said. 

To date, Dubai, Doha and Riyadh have begun implementing large-scale metro systems.

As of 2022, Dubai – the region’s first system, which opened in 2009 – and Doha have 90km and 76km of operational metro system track, respectively. 

In Riyadh, which is planning to launch a 176km metro system by 2024, an extra $34 billion in capital investment is needed by 2030, in addition to the $40 billion already invested.

Abu Dhabi began electric bus trials in 2019 and has outlined plans for a 131km metro system by 2030. Metro systems have also been proposed for Kuwait City, Manama in Bahrain, and Medina, Mecca, Dammam and Jeddah in Saudi Arabia.

Earlier this year, Oman also opened bids for the consultancy contract for the Muscat metro project which will run from Seeb to Ruwi, passing through several areas of the capital city.

Faisal Durrani, partner and head of Middle East Research at real estate consultancy Knight Frank, told AGBI that the success of Dubai Metro showed what could be achieved.

“We have seen the train system quickly become integrated into the city’s urban fabric. The Dubai Metro has undoubtedly transformed access across the city and has also been instrumental in bridging what were previously ‘mushroom communities’,” he said. 

“Urban infill and better transport connectivity has meant the metro has also been hugely important in activating development sites.”

He added that with a near-3,000 percent increase in ridership between 2009 and 2019 to close to 203 million passengers, Dubai Metro is also playing a “critical role” in boosting the city’s sustainability drive.

Opportunity for transformation

GCC metro systems are spreading after a period of 20 years in which many cities deliberated whether to invest in them on a large scale. 

According to analysts, many delayed taking the leap because of concerns about the long development time and the steep costs of building and operating them. 

Another challenge for Gulf cities was the car-centric nature of their societies and urban sprawl, which made it costlier and more difficult to establish urban transport connectivity. 

But Ruggero Moretto, principal with Strategy& Middle East, said: “Cities in the Middle East have the opportunity to transform their public transport systems.

“Irrespective of where they are on that journey now, they require an implementation framework to ensure that their large-scale investment meets future demographic and economic demands.” 

He added: “Properly implemented and managed, metro systems can create long-term socioeconomic returns, promote sustainability, and improve the quality of life for residents.” 

Governments are also increasingly reimagining transportation systems given the return to normal commuting habits following the easing of the Covid-19 pandemic. 

“Many riders have little patience for lengthy commute times and greater expectations about the quality of their journeys. Rising fuel prices are eroding the affordability of private car transportation,” added Moretto.

Strategy& said that cities must have clear objectives to prevent conflicts during the implementation of metro projects, which must be planned to work alongside other public transport options. 

It added that cities must also ensure a continuous flow of funding is available throughout system development, launch and early operations to prevent projects from stalling, stopping or cutting corners. 

Regarding returns on investment, analysts said: “City authorities can seize medium-term revenue generation opportunities such as advertising and renting retail spaces at metro stations. 

“In the long term, there are possibilities for to work with developers to build new commercial and residential areas that connect to their metro system.”