Completion of the metro project in Riyadh will raise values of commercial and residential real estate in the Saudi capital, especially those in close proximity to the mass transit system, a study finds.
The 176-kilometre metro line and a new 24-route bus network is expected to be operational within the next 18 months. Its impact on real estate markets across the city is expected to have a similar effect to that of the Dubai Metro on real estate in the emirate.
The Dubai Metro, which opened to the public at the end of 2009, has boosted house prices by up to 58 per cent in some areas since 2010, the real estate consultancy Knight Frank said in a report in November.
"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 consultancy said.
The average mainstream house prices in Dubai grew by 28 per cent between the first quarter of 2010 and first quarter of 2018. However, residential units located within a short walk from a Dubai Metro station outperformed the market over the same period. Units within a five-minute walk from the metro saw average price growth of 51 per cent, while those within a 10-minute walk saw price growth of 58 per cent.
Price rose by 33 per cent on average for units located within a 15-minute walk.
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"We expect the Riyadh Metro to have a similar impact on real estate activity around metro stations both in the residential and commercial markets," Knight Frank said.
"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 neighbourhoods are expected to benefit and have the potential to outperform the wider market over the longer term."
The opening of the Riyadh Metro will cut journey times across the Saudi capital, opening up new markets and improving connections in existing ones. The length of the project means that for every kilometre of metro line there is 10.2 square kilometres of developed area on average, which compares favourably with Dubai’s 14.3 square kilometre and other cities such as Hong Kong and Istanbul.