The Dubai Metro Report 2023

Key Takeaways

1. Between Q1 2010 and Q4 2022, properties which were within a 15-minute walk of a Dubai Red Line metro station saw prices increase by 26.7% on average, outpacing Dubai’s average increase of 24.1% over the same period.
   
   
2. The highest rate of price growth was recorded by properties which fell into the 10 to 15-minute walking distance category, which saw prices increase by 43.8% on average.
   
   
3. Average rental rates for properties within a 15-minute proximity of a metro station increased by 5.7% from Q1 2018 to Q4 2022. Over this period, Dubai’s average rental rates decreased by 4.1%.
   
   
4. The highest rate of rental growth was also recorded by properties which fell into the 10 to 15-minute walking distance category, where rents increased by 11.7% on average.
   
   
5. Our findings show that developments within a 15-minute proximity to metro stations can outperform the wider market, but only if the development encompasses the right amenities and suitable urban infrastructure. This entails a number of different factors alongside proximity to an efficient transit system, including walkable, scooter and cycle-friendly neighbourhoods and mixed-use non-concentric developments.

Source: CBRE Research

Background and Methodology

Transport Oriented Development (TOD) has been a widely, and successfully, used planning and development strategy in major metropolitan centres around the world. The strategy encompasses many factors, key amongst which is the provision of public transport networks. Such networks, such as train and metro networks, have been shown not only to improve economic productivity, congestion and lower pollution levels, but can also help spur new residential development and underpin marked increases in real estate values. There are a number of academic and market studies which point to the considerable premiums and outperformance that residential developments in proximity to transit stations are able to achieve, compared to their wider respective markets.

With this in mind, we have undertaken a detailed study to determine if residential units which are within a 15-minute walking distance to Dubai Metro Red Line (Red Line) stations have been able to achieve price and rental premiums or outperformance, or both.

In this study, which focused solely on properties which were within a 15-minute walking distance of the Red Line, CBRE has analysed the development of average prices and rents per square foot for over 300 residential or mixed-use properties since the inauguration of the Dubai Metro in 2009. Alongside looking at the headline outcomes for properties within the specified walking distance, we also segmented each of these properties into the following three categories:

• 0 to 5-minute walking distance
• 5 to 10-minute walking distance
• 10 to 15-minute walking distance 

As part of the analysis of sales prices and performance, we have analysed close to 74,000 residential sales transactions from Q1 2010 to Q4 2022. Within the rental market section of the study, close to 112,000 rental contracts (Ejari) were analysed. However, due to rental contract (Ejari) data currently only being available from Q1 2018, we were not able to analyse the rental premiums or performance achieved since the inauguration of the Dubai Metro. As a result, this analysis is limited to the period starting Q1 2018 to Q4 2022. Finally, we have also had to exclude properties which were located within the Dubai International Financial Centre, this was primarily due to the lack of availability of comparable data which would have restricted like for like comparisons.

Sales Market Performance

From Q1 2010 to Q4 2022, average residential prices in Dubai have increased by 24.1%. Over the same period, residential properties located within a 15-minute walk of a metro station have seen prices increase on average by 26.7%.

There are however some variances in performance across the three proximity categories. Whilst those properties within 0-to-5 and 10-to-15-minute walks show marked levels of outperformance compared to the Dubai average, where they respectively recorded average price growth of 35.8% and 43.8%, properties which are within a 5 to 10- minute walking distance have significantly underperformed the wider market. Average prices for properties in the 5 to 10-minute proximity category increased by only 0.2%. This subdued level of performance has been largely due to lackluster performance in price growth in secondary locations, which have tended to consist of affordable stock with limited amenities and urban infrastructure. Properties within the 5 to 10-minute proximity category, which have modern amenities and quality urban infrastructure, such as JBR and Marina, bucked this trend and recorded price growth of 40.5% and 35.9% respectively. Secondary locations have also on the whole seen lackluster performance in the highest performance category of the 10 to 15-minute walking distance.



Source: CBRE Research/ REIDIN




Source: CBRE Research/ REIDIN

Rental Market Performance

Average rents for properties within a 15-minute walk of a metro station from Q1 2018 to Q4 2022 increased by 5.7%, over the same period, average rents across Dubai decreased by 4.1%.

Once again, we have seen a marked outperformance for properties located within a 10 to 15-minute walk of a metro station, where rents increased on average by 11.7% from Q1 2018 to Q4 2022. For properties located within a 0 to 5-minute and 5 to 10-minute walk, both have outperformed the wider Dubai average, albeit relatively marginally. However, whilst average rental rates in the former grew by 0.9%, for the latter, they fell by 0.5%. These softer levels of performance were largely underpinned by affordable properties in secondary locations, where properties in the likes of Discovery Gardens, Barsha Heights and Al Furjan have seen average rental rates decrease by 35.0%, 15.1% and 0.6% from Q1 2018 to Q4 2022 respectively.

Another notable finding has been the level of outperformance key residential hubs have recorded. Properties within 15 minutes of a metro station, in City Walk, Downtown Dubai, Business Bay and Dubai Marina recorded average rental growth rates of 55.4%, 49.7%, 20.8% and 15.1% from Q1 2018 to Q4 2022 respectively.



Source: CBRE Research/ REIDIN



Source: CBRE Research/ REIDIN

Development Implications

Dubai residents remain very reliant on personal cars as the primary mode of transport, where latest estimates suggest that five in ten residents own a car, compared to around one and a half in ten in Singapore and three in ten in London. However, as its population continues to increase, its socioeconomic profiles normalise, its built environment matures and the city becomes more densely populated, we expect that reliance on the Dubai Metro will only increase. After a surge in population post COVID, we have already seen ridership increase to 225.1 million, up 10.9% from its 2019 total. We expect ridership to continue to increase rapidly, particularly as congestion in the city becomes more acute, where in 2022 road users spent more than an additional day and seven hours in traffic compared to 2021 according to TomTom. With Dubai’s population expected to increase to 5.8 million by 2040, and limited development opportunities in key communities within the vicinity of a metro station, which have already seen marked increases in population (figure 6), we expect that developers will have to look towards development opportunities in more nascent communities with TOD likely to become an increasingly key component going forward.

Given that Dubai’s 2040 Master Plan stipulates that new developments with efficient commuting are a key priority of the plan, developers can utilise our findings as a guide to how existing developments have performed given their attributes. Our findings show that developments within a 15-minute proximity to metro stations can outperform the wider market, but only if the development encompasses the right amenities and suitable urban infrastructure. This entails a number of different factors alongside proximity to an efficient transit system, including but not limited to walkable, scooter and cycle-friendly neighbourhoods and mixed-use and non-concentric developments. In Dubai, there are already a number of master developments which are planned in such a manner and preliminary data show that despite their emerging status, they are already achieving above market prices and rents, even in nascent locations. Finally, in the long-term, these increased values can also help fund future transit infrastructure spending which will help Dubai’s Mass Transit System’s topology develop into a more inter-connected system and further improve the resilience of the city’s built environment.



Source: CBRE Research/ Macrobond