Dubai Tram: Game Changer?

The inauguration of the Dubai Tram was a much-publicised affair in the city, with the emirate now becoming the first to introduce a tramway system in the entire Middle East region.

The tramway also boasts many other ‘firsts’; it is the first outside Europe to be powered by ground-based electric cables, avoiding the need for hanging cables; the first tram in the world to utilise platform screen doors; the world’s first to offer air conditioned stations and different cabin classes including gold, silver and women & children carriages; and importantly, the first tram in the world able to run in temperatures of up to 50 degrees and withstand humidity and a sandy atmosphere.

Opened in typical Dubai-style on 11/11 (November 11), the first phase stretches 10.6 kilometres with 11 stations covering major residential and commercial areas between Dubai Marina and Al Sufouh.

The second stage of the Dubai Tram will extend 14.6 km along Sufouh Street, according to Dubai’s Roads and Transport Authority (RTA), although it is not yet known when work on it will begin.

The tram fleet comprises 11 trams in the initial stage, with 14 trams to be added in the second stage, bringing the total to 25 trams. It is expected to serve about 27,000 riders at the start of operations in 2014, increasing to an estimated 66,000 by 2020.

According to Mattar Al Tayer, chairman and executive director of the RTA, the decision to start a tram service came about after the RTA conducted a study which revealed that the JBR and the Marina areas needed massive improvement in their road network and a mass transit system that linked to the Dubai Metro and the Monorail on Palm Jumeirah.

“The tram aims to improve the mobility within Dubai in general and areas of tourist and economic importance served by the tramway in particular. It also contributes to boosting the integrated public transport systems in the emirate, providing a smooth, handy and highly efficient transit experience within communities characterised by business and tourist importance in the city of Dubai,” he said.

“It also enhances the business, trade and tourism structures as well as the economic base of the emirate, besides minimising carbon emissions, sustaining the environment, and improving the living environment of residents,” he added.

The Dubai Tram is hoped to contribute significantly to the emirate’s aim of boosting the share of public transport usage to 30 per cent by 2030.

The share of public transport in Dubai – including buses, the Metro and marine transport – is expected to hit 14 per cent by the end of this year, up from six per cent in 2006 and 13 per cent in 2013, according to the RTA.

In the first half of the year, more than 262.5 million journeys in the city were made using public transport, up 37 per cent compared to the same period last year.

But the positive impact of the tramway system is not just limited to boosting public transport; the new system is also expected to have a bearing on one of the most crucial sectors in the emirate’s economy, real estate.

DRIVING PROPERTY GAINS

Most real estate experts agree that areas around the Dubai Tram will see property price increases, although this could happen over a period of time. It could take up to a year to tell the impact of the tramline on property, as with the Dubai Metro, opined Nick Maclean, managing director of CBRE, Middle East.

“Even if it does not have a direct impact on the pricing, it will have an impact of the attractiveness of the housing units close to the tram stations. In the event of tram launching, we had a look at how the opening of train stations and other infrastructure projects affect the property market elsewhere in the world. At the moment we see an increase of 20 per cent in pricing.”

According to Cluttons, the government is adding long-term infrastructure premiums to residential values through localised infrastructure investments, such as the tramway.

Faisal Durrani, Cluttons’ international research and business development manager, said: “We must take a longer term view as the Dubai Tram is exactly the sort of infrastructure that the Dubai Marina area is likely to benefit from, and over time, this will start to significantly bolster house prices.

“Tenants and buyers are already actively seeking to be in close proximity to the Marina’s Metro stations, The Beach, and Jumeirah Beach Residence. We expect that the Dubai Tram stations dotted around the Marina will similarly drive demand up in their immediate vicinity.”

However, unlike the vast established public transportation networks of larger cities like London, Dubai still has a long way to go.

“During the summer, UK building society Nationwide revealed that being located within 250m of a Tube Station in Greater London could add as much as 10.5 per cent to the value of your property, which equates to about Dhs250,000 ($70,000). While we are not looking at uplifts as significant as that just yet, there is a rapidly growing appreciation in Dubai of the benefits of being close to a public transportation node.”

The challenge, he argued, is creating an integrated and accessible city that is pedestrian friendly.

“The key now to unlocking the true potential of public transport is to stitch together all of Dubai’s communities in a cohesive and sustainable way, which makes getting around easy… The benefits to real estate values will follow naturally.”