Etihad Rail on track to deliver UAE property price rises

Supplied

The UAE-wide Etihad Rail network is set to drive significant price hikes for properties located near its stations, according to industry experts. 

The 1,200km rail track,  which is expected to carry over 60 million tonnes of freight and 36.5 million passengers by 2030, aims to make commuting easier for UAE residents.

Ata Shobeiry, CEO at Zoom Property, said: “While it will certainly make commuting a breeze within the UAE, there will be a significant impact on the property markets. 

• UAE real estate is good inflation bet

• Gulf set for more belt tightening as interest rates keep rising

“Communities and neighbourhoods located close to the Etihad Rail stations will see a price hike. There will be an increase in rental value as well.”

In Dubai, Etihad Rail will pass through communities including Arabian Ranches 2, Damac Hills, Town Square, Al Furjan, Green Community, Arabella, Mudon and Reem.

“It’s hard to estimate how much prices will increase once this new project is ready to serve residents, but given its magnitude, we can safely say the changes in the Dubai property market will be quite significant,” Shobeiry added.

Esam Sultan, head of residential for UAE at real estate consultants CBRE, agreed. “We expect the Etihad Rail project to have a similar positive impact across the entire UAE property market, if not greater.”

He added that since Dubai Metro launched in 2009, areas within a 15 minute walking distance to a station tended to outperform the wider market. 

Typically, if a development is a five minute walk from a stop, the market increased 51 percent between 2010 to 2018. If they are a 10 minute walk away, they increased by 58 percent, and by 33 percent for homes located about a 15 minute walk away.

Faisal Durrani​, partner and head of Middle East research at Knight Frank, said: “As we have seen with the Dubai Metro, and indeed other public transport networks around the world, proximity to transport nodes often has a direct and positive correlation with house prices and rents. 

“With a greater focus on increasing public journeys by public transport in Dubai and the wider UAE, combined with an increasing focus on making greener transport decisions, it is inevitable that living close to Etihad Rail stations will attract a premium. 

“The key of course will be to ensure seamless integration with local transport networks, such as the Dubai Metro, or Dubai Tram, or local bus routes for last mile journeys.”

Robert Thomas, head of agency at consultants CORE, said: “While location, build quality, amenities and  wider community infrastructure are key aspects determining property prices, connectivity and access to public transport also play a big role in impacting capital values. 

“We have particularly seen offices and residences located within a 10-minute walk from metro stations in Dubai achieve higher rents and sales values.

“These range typically between 5 and 15 percent – along with greater capital appreciation in the long-term compared to similar build properties which aren’t well connected to the public transport network. 

“With the Etihad Rail connecting the wider region, we expect similar trends in property prices to play out along the corridor adjoining the Etihad Rail route and upcoming stations.”

Once Etihad Rail is operational, it will take 50 minutes to reach Fujairah from Dubai and 100 minutes from Abu Dhabi through Etihad Rail. This ease of commuting will give a boost to the property market in Fujairah, added Shobeiry.

Currently, many people live in Sharjah and work in Dubai due to the lower living cost. With Etihad Rail’s second phase becoming operational, Fujairah will be another prospect for tenants working in Dubai and this will impact its rental market, he said.

Launched in 2009, the first stage of Etihad Rail – a freight service connecting the gas fields at Shah and Habshan to Ruwaishas – has been operational since 2016.

There’s no firm completion date for the second stage, but more than 70 percent of the network has been built. 

It will extend across the UAE from the border with Saudi Arabia at Ghuweifat, connecting the emirates via Abu Dhabi, KIZAD, Khalifa Port, Jebel Ali Port, Dubai, Sharjah, Ras Al Khaimah, and to Fujairah on the country’s east coast. 

UK property prices rise on transport links

• According to analysis from UK lender Nationwide, there is a £46,800 premium in London for property 500 metres from an underground station, compared to a similar property 1.5km away.
• A property located 1km away commands a 4.3 percent premium, while at 750m this increases to 6.8 percent, and to 9.7 percent for a property 500m away.
• The Circle line serves London’s most expensive areas and average house prices are around £850,000 close to stations on the line.
• The least expensive are homes near Metropolitan line stations (£474,000).
• There’s a £11,400 premium in Glasgow and £11,000 premium in Greater Manchester.
• Glasgow saw the biggest increase in premium (7.2 percent up from 3.5 percent in 2020) while the premium in Manchester fell to 6.1 percent from 9 percent.