Dubai Tram effect: Rent hikes in Marina, JBR?

Rents and prices for residential properties in Dubai Marina and Jumeirah Beach Residence (JBR) – the two master communities – are set to increase with the Dubai Tram now becoming operational.

Cluttons, a real estate consultancy, says investors and renters are already looking to buy and lease units in close proximity to tram stations, which will increase values and rents in coming months.

“Tenants and buyers are already actively seeking to be in close proximity to the Marina’s Metro stations and Jumeirah Beach Residence.

“We expect that the Dubai Tram stations dotted around the Marina will similarly drive demand up in their immediate vicinity,” Cluttons’ international research and business development manager Faisal Durrani said.

The 10.6 kilometre route that takes the Dubai Tram around Dubai Marina and along Al Sufouh road is expected to go a long way in alleviating traffic issues in Dubai Marina and JBR.

Dubai Marina, according to Cluttons, saw an average 4 per cent increase in prices between January and August 2014, as against 7 per cent for whole of Dubai.

However, other local and international property consultancies have said prices and rents declined in the second and third quarter 2014, primarily due to traffic congestion and tenant relocation.

“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,” Durrani said.

Studio units in Dubai Marina are currently available for Dh70,000 to Dh85,000 per annum, according to Asteco’s third quarter report. One- and two-bedroom apartments are being leased for Dh90,000 to Dh120,000 pa and Dh135,000 to Dh185,000 pa, respectively.

Similarly, studio units in JBR are being leased for Dh70,000 to Dh90,000 per annum.  Lease rates for one and two-bedroom apartments are between Dh90,000 and Dh140,000 pa and between Dh125,000 to Dh200,000 pa, respectively, Asteco figures reveal.

A report by UK building society Nationwide has found that being located within 250 metres of a Tube Station in Greater London could add as much as 10.5 per cent to the value of ones property, which equates to about Dh250,000 ($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,” Durrani stated.

Earlier this year, data analysed by Emirates 24|7 found rents in residential towers located near the Metro stations in Jumeirah Lakes Towers (JLT) were between 13 and 26 per cent higher than ones further away.

Read: JLT units near Metro 26% costlier… worth it?

A joint study conducted by the Roads and Transport Authority and the Real Estate Regulatory Agency in 2012 found high demand for properties closer to the Metro stations that had resulted in prices going by up to 34 per cent.