It is a typically ambitious project for the Emirates, intended to connect eleven of its cities by 1,200 kilometres of rail lines, with both passenger and freight services planned.
Trains will of course be high-speed, travelling at up to 200 kilometres an hour and carrying about 400 people in each train. Between Abu Dhabi and Dubai, the country’s largest and most economically important cities, journey times will take only 50 minutes – currently, driving between the two metropolises can take around 90 minutes.
The project is being built in two stages. The first, which was started in 2009, has been fully operational since January 2016, and is chiefly a freight line transporting granulated sulphur from Habshan and Shah to Ruwais.
According to Zoom Property Insights, 70 per cent of the network has already been built, although there is no firm date for the project’s completion.
But once it is completed, it is expected to ferry over 60 million tonnes of freight and 36.5 million passengers around the country each year by 2030.
WHAT BENEFITS WILL ETIHAD RAIL BRING?
The project is expected to help bridge the economic divide between the various emirates and promote a greater degree of economic and social connectivity.
Currently, wealth is distributed relatively unequally in the United Arab Emirates, with the twin centres-of-gravity in Dubai and Abu Dhabi pulling investment and interest away from the periphery. Etihad Rail will benefit cities such as Sharjah and Ras Al-Khaimah, which have typically received less attention, by making commuting far easier for both Emirati and international workers.
Etihad Rail will also reduce the number of cars, as road journeys are replaced by rail. This will not only lead to safety improvements and a reduction in traffic accidents, but will also lower congestion and go some way to meeting the UAE’s climate targets as traffic-related carbon emissions are lowered.
Etihad Rail itself asserts that one fully-laden freight train trip on Stage 1 of the project will replace approximately 300 trucks on the road, resulting in approximately 70–80% lower carbon dioxide emissions than trucks moving the same tonnage.
It is estimated the project will ultimately be worth Dh200 billion (around $54 million) to the national economy. It is an important step towards the United Arab Emirates’ economic diversification plans (in which trade, real estate, and tourism play a big part), and meeting its environmental commitments.
WHAT DOES ETIHAD RAIL MEAN FOR REAL ESTATE INVESTMENT?
It’s not hard to work out why the project is fanning excitement among real estate investors. Connecting these eleven major cities will obviously bring the benefits of economic interconnectivity to the region, spurring property developments across the country as investors move outwards from Dubai and Abu Dhabi.
In the immediate vicinity of the new railway stations, property prices will inevitably increase as the land becomes more desirable – this will also affect rental value. In Dubai alone, notable communities such as Arabian Ranches 2, DAMAC Hills, Town Square, Al Furjan, and Green Community will all see values increase as the railway line passes through them.
Value will increase all the way down the line. Currently, many people live in, for instance, Sharjah and commute to Dubai due to the lower cost of living. Etihad Rail will turn the more distant Fujairah into a credible option from which to commute, driving up prices in its rental market.
This will prompt new developments in locations like Fujairah as property developers rush to be the first to build the new apartments, offices, and tourist resorts demanded by the railway line – the smart investors will want to get in on the ground floor, both figuratively and literally.
WHAT DOES IT MEAN FOR THE REGION?
Etihad Rail is a national project, but it will facilitate economic activity across the whole Gulf region.
The ultimate intention is to connect the network with the Gulf Railway project, a $250 billion scheme to develop an interconnected rail network across all six Gulf Cooperation Council (GCC) member states (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE).
The Gulf Railway was originally slated to be completed in 2023, but progress has been slow due to an absence of political alignment between the member states, and a lack of investment as a result from low oil prices.
Etihad Rail is by far the most advanced of the national railway projects. Late last year, the UAE completed Phase 2a, which links Ruwais to the Saudi border at Ghuweifat. This is intended to pave the way for the eventual cross-border rail connection, and to that end Etihad Rail has signed a cooperation agreement with Saudi Arabia’s state railway company to facilitate the connection of the two nation’s rail networks.
Like the UAE, each of the GCC countries has its own diversification plans to reduce its overdependence on oil – the Gulf Railway would go a long way towards meeting these commitments, promoting greater economic integration, smoother movement of goods, capital, and people, and boosting tourism links.
At the very least, it would be a positive step towards rapprochement and understanding among countries with often fraught diplomatic relationships.