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Tue 8 Sep 2009 04:10 PM

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Dubai Metro could lead to up to $7.6bn boost - DIFC

Economics chief calculates potential benefit of metro to Dubai's national output.

Dubai Metro could lead to up to $7.6bn boost - DIFC
METRO MONEY: DIFC has calculated the potential benefits to Dubai of the metro system. (ITP Images)

Dubai’s investment in a metro system could add between $4.6-7.6bn to the emirate’s national output, the chief economist of the Dubai International Financial Centre (DIFC) said on Tuesday.

DIFC said empirical analysis shows that for emerging economies, a 1 percent increase in the stock of core infrastructure is associated with an increase in the level of national output of between 0.15 to 0.25 percent.

A country’s stock core infrastructure includes transportation, water supply, wastewater treatment, and power facilities.

“Since national output is about 4 times the value of core infrastructure, then an AED100 infrastructure investment can generate an increase in output of between AED60 to AED100 within a year,” chief economist Nasser Saidi and director of macroeconomics Fabio Scacciavillani said in an e-mailed statement.

“In the case of the Dubai Metro the capital investment of AED28bn ($7.6bn) through 2014 will likely lead to an increase in national output of between AED17bn ($4.6bn) and AED28bn.”

The Dubai Metro is expected to generate revenues of more than AED17 billion ($4.6bn) over the next 10 years, the chairman of Dubai’s Roads and Transport Authority (RTA) said on Tuesday.

Sources of income would include fares, advertising, stores and AED1.8bn ($490m) worth of station naming rights, he said.

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ahmed 11 years ago

We have not yet started and there is already a talk about how much money we will make...!!!not a good beginning...help!

Andreas 11 years ago

Yeah, I like it. This kind of report is very important because it is giving a real outlook. We could avoid the current rezession if we would calculate all our investments betimes. I'm going to Dubai in October to admire this marvel by myself. See you all in the metro ...

Honest Chappy 11 years ago

Typical, not that it will reduce traffic, time, pollution, etc, but the fact it will rake in cash, cash, cash.... doesn't sound like Dubai that, does it????

MM 11 years ago

Honest Chappy, in reply to your post. OFcourse money needs to looked at here as to run metro we need money. So its not about the cash cash cash. Its about the source of fund to run the metro. And there is absolutely nothing wrong in it unless you wish to sponsor for next 10 years.

John 11 years ago

Having been a property development with limited parking since it was born it is gratifying to see someone in the plush offices at The Gate has an eye on the economy. But why are they suddenly starting to make relevant noises, after all the years of blathering and spin? Has someone finally woken up to the fact there are intelligent beings in those gleaming corridors? However, these comments are self-serving because they are about another investment from the same central investor.

John Smith II 11 years ago

Heres an another fact of where the RTA gets its revenue. i thot you said that the UAE Economy is going in debits. THINK AGAIN !!! RTA is doing good.

Mohammed Saeed 11 years ago

If Dubai Metro has been funded by RTA gets(Salik), then RTA should have to thank whoever used SALIK gets to achieve such great event. Sincerely Moh'd Saeed

Juspassinthro 11 years ago

I am quite tired of some of our commentators suggesting that Salik is funding Metro. After trawling the net for some good data (which was extremely difficult to come by, I have attempted to work out some numbers). See below: Peak hourly traffic volume (one way on SZR) - 18,000 Daily one way traffic volume (one way on SZR) - 300,000 (This translates to 5 vehicles per second passing Salik at peak hour and 3.47 vehicles during non-peak hours, which is reasonable) Assuming 50% of 300,000 vehicles initiate their journey before Garhoud / Maktoum, Salik will be earning not more than AED 3.6 million per day (150,000 X AED 16 and 150,000 X AED 8). At 20 working days assumption per month, this translates to AED 864 million per annum. I have been very conservative on the higher side in the above calculations (no % volume set aside for people driving through floating bridge or vehicles exempted from Salik - taxis etc). As such, AED 864 mio can only be lower. Assuming that traffic is expected to remain at the same level (in contrast, with Metro running, traffic is expected to reduce), it will take 32 years to plough back the AED 28 billion invested in building the Metro network. Of course, this is even before factoring in time value of money (Current value of future revenues) into consideration or the operation cost of maintaining and running the Salik gates. From the perspective of a person performing an educated guess, Salik has not, and will not be funding the Dubai Metro.