Let's not jump the speculation gun on Metro

September 9, 2009, is an eagerly awaited date for Dubai as the heart of its transportation system will come to life – the Dubai Metro. An estimated 355 million passengers per year will rely on the Metro as their main mode of travel within the city once both lines become operational, and it's hoped that this will help enhance the transportation infrastructure as well as improve traffic congestion within the emirate. As recently announced, the Metro will deliver cheap fares, connectivity along Dubai's main transportation artery – Sheikh Zayed Road – and an easing of overall traffic across the emirate as the dependence on cars and taxis eases, which also means a decrease in pollution. While almost everyone in the emirate has been discussing the positive aspects of the Metro, numerous real estate industry leaders have not been sitting idle. They have found that the Metro can assist the real estate market and have been happily announcing that prices of properties nearby Metro stations may witness a price hike. In fact, there have been reports by industry analysts that more people are interested in buying or leasing property within walking distance of the Metro and that the prices of these properties will be higher than those further away. The reports have also indicated an increase of property prices by 6.5 or even 10 per cent. These announcements and reports have surfaced even before the Metro has started its full operation. Are we, as members of this industry, returning to speculation? Dubai's real estate sector hasn't even recovered yet. Shouldn't we be more cautious? Or is it just all about wishful thinking? Before going out and reporting the effect of the Metro on prices, industry experts need to truly grasp how the Metro will affect the sector's prices, and they need to fully understand its advantages and disadvantages, and how they play out for Dubai's residents. There are several questions that remain unanswered, which only time and proper research can explain. Rents in Dubai will be governed by the Real Estate Regulatory Agency's (Rera) rental increase calculator and the Metro is not expected to have much of an impact on the rental prices in Dubai. No matter where the property is located, it still has to fall between the ranges defined by the calculator. Properties located near the Metro may be priced toward the higher end of the range, but will not go above that. Landlords in particular need to be extremely cautious before raising rental rates because that would be violating what has been set forth by the government. Many factors need to be considered by landlords and industry specialists before landlords start hiking prices, especially before the Metro is even fully operational. First of all, there is the time factor – how punctual will the trains be and will passengers get to work or their appointment on time? Will the parking spaces be sufficient or are we going to face parking congestion in residential neighbourhoods? Will the summer months see a decrease in passengers? How do residents really feel about living next to a Metro station and will they mind the daily congestion? And finally, one of the most important questions is whether the Metro will be as popular as we all expect it to be; especially now that traffic congestion has eased significantly over the past few months. These are questions that we all need to think about – especially us real estate brokers – before discussing property prices. The only way we can asses these points is by doing government-backed research once the Metro is fully operational. So far we have only had estimates and speculation to fall back on, both of which do not reflect reality. Starting to speculate and allow for higher prices in the market at this stage is unhealthy. The cost of living is already high, and inflation has not spared any working family in the UAE. We need to bring confidence back to Dubai's residents and those hoping to make it their home. - The author is Director of Leasing and Re-sale, Great Properties. The opinions expressed are her own Keep up with the latest business news from the region with the daily Emirates Business 24|7 newsletter. To subscribe to the newsletter, please click here .