A new research report from KnightFrank providing insights on the impact of the Riyadh Metro on real estate markets across the city highlights that the mega infrastructure project is expected to be wide-ranging both in terms of social and economic development.
Riyadh Metro covers 175 km in length, with the potential implication that for every kilometre of metro line there is 10.2 sq km of a developed area on average, similar to other global cities like Dubai, Hong Kong and Istanbul.
The Riyadh Metro, which is one of the key infrastructure projects currently being implemented in Saudi Arabia, is set to dramatically alter the dynamics of both residential and commercial real estate markets when delivered.
The 176 km Metro – complemented by a new 24-route bus network – is expected to be operational in the coming 18 months. The impact of the Riyadh Metro on real estate markets across the city is expected to be wide-ranging both in terms of social and economic development. We analyse some of these aspects in light of selected key findings that were highlighted in our recently released Dubai Metro report.
Impact on real estate activity
KnightFrank’s recently released Dubai Metro report shows that the proximity to metro stations can be a trigger for real estate construction and activity.
Moreover, there is an increased appetite from developers to focus developments along existing and upcoming Mass Rapid Transit System (MRTS) routes such as the Expo 2020 route (red line extension), which is due to be operational by 2020.
We expect the Riyadh Metro to have a similar impact on real estate activity around metro stations both in the residential and commercial markets.
Impact on capital values
The Dubai Metro report examines the impact of the Metro on capital value growth in Dubai, highlighting a trend of price performance with a positive correlation to the proximity to Metro stations overall.
The analysis showed that between Q1 2010 and Q1 2018 prices for residential units, which are within a five-minute walk of a Metro station, have grown by 51% in average, surpassing the growth of those who are within a 15-minute walk which has seen a growth of 33% on average over the same period.
Turning to Riyadh, we see that once the Metro becomes operational, areas that have been poorly connected or are in secondary locations will have the potential to help deliver a wide range of new real estate projects. These new neighbourhoods are expected to benefit and have the potential to outperform the wider market over the longer term.
Impact on connectivity
Whilst it is too early to quantify the effect of the Riyadh Metro on real estate value, an analysis of international benchmarks shows that MRTS have the potential to be a strong driver for growth as a result of improved connectivity.
From a general standpoint, the impact of new MRTS is very much dependent on the inter-connectivity between different lines. In order to achieve maximum return on these infrastructure investments, there must be careful consideration for more connectivity within neighbourhoods.
The opening of the Riyadh Metro will cut journey times across the capital, opening up new markets and improving connections in existing ones. More so, due to the fact that the Riyadh Metro covers an important area of the city developed area, its 175 km length means that for every kilometre of metro line there is 10.2 sq km of developed area on average, which compares favourably with Dubai (14.3 sq km) and other cities such as Hong Kong and Istanbul.
Moreover, the Riyadh metro has been designed in a way that it covers the city from East to West and from North to South, which is not the case in Dubai where connectivity from East to West is only limited to bus networks.
Despite the fact that the Riyadh Metro covers the city from each direction, connectivity may be challenged by the fact that the stops are not always located within walking distance, which may require users to take another mode of transport.
Hence, integration between various public transportation modes (including the planned 24-route bus network) which refers to the way the various modes of transportation in the city interrelate giving commuters a door-to-door experience, is a key element to consider when looking at connectivity.
Raya Majdalani, research manager at Knight Frank comments: “The Riyadh Metro is set to have a marked effect in relation to real estate dynamics and the ability to spur meaningful urban generation”.
VIDEO: Riyadh Metro
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Posted by ????? ??????? on Tuesday, April 17, 2018