The launch of the Riyadh Metro project, scheduled to start operating in 2019, is likely to create new property hotspots in currently unfashionable neighbourhoods in the Saudi capital, according to a new report.
Real estate experts Knight Frank said the opening of the $22.5 billion Riyadh Metro is set to help drive real estate demand across the capital as well as reviving neighbourhoods that have historically been classed as secondary locations.
According to Arabian Business, it said the introduction of the metro may lead to a more permanent outer boundary for Riyadh, creating new future value hotspots.
“While it is too early to quantify the effect on real estate values, an analysis of international benchmarks shows that mass transit systems have the potential to be a strong driver for growth as a result of improved connectivity,” the report noted.
It added: “While there are a number of high profile new developments that are currently taking place across the city, in the longer term we see the success of these projects resting in part on being efficiently connected to the wider urban environment through major infrastructure projects such as the Riyadh Metro.”
In the short to medium-term, urban regeneration will need to play an increasingly important role across Saudi Arabia, acting as a catalyst for real estate markets, the report said.
The Riyadh Metro – 176km complemented with 24 new bus routes – will be operational in the next 18 months.
Raya Majdalani, research manager at Knight Frank, said: “The Riyadh Metro is set to have a marked effect in relation to real estate dynamics and the ability to spur meaningful urban regeneration.”
Stefan Burch, partner, Knight Frank, Saudi Arabia, added: “We see the implementation of the Riyadh Metro as a catalyst for urban regeneration and sustainable development in the capital city. Over the medium to long term, the metro is expected to transform Riyadh for the better, improving the quality of life of local community, a central objective of the Kingdom’s leadership.”
French train builder Alstom this week announced initial tests to determine the efficacy of Riyadh’s railway system before the metro system commences commercial operations.
Tests are being conducted using trains which have already been delivered.
The Riyadh Metro Project, owned by Arriyadh Development Authority (ADA), consists of six lines and 85 metro stations.