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In this article, Maysa Sabah, Managing Director for the GCC region at the Affordable Housing Institute (AHI), provides an insight into the concept of providing affordable housing in so-called Transit Oriented Developments.

July 2015

The growth of Dubai Metro from 60,000 passengers daily in 2009 to 500,000 in 2014 has been one of the region’s most extraordinary success stories. The metro will continue to be vital for Dubai’s competitiveness and sustainability because it eases the daily commute for thousands of workers, relieves traffic congestion, reduces air pollution, develops a transit-oriented culture, and contributes to a more functioning city.

To middle and low-income residents, the metro presents an affordability paradox – on the one hand it improves their mobility, but on the other hand the cost of housing near metro stations has been rising, reflecting higher demand, and pricing them out. According to Dubai’s Road and Transport Authority (RTA), the emirate’s tram system has sparked a rise in values of properties situated within a 1.5 km radius of metro stations on both the Red and Green Lines by a rate ranging from 13% to 41%, since 2010. Such a rise in property values is consistent with global trends.

According to the Nationwide Building Society, London properties located 500m from a tube or railway station attracts a 10.5% price premium over otherwise identical properties 1.5 km from a station. Similarly, a 2013 report by the Centre for Neighborhood Technology concluded that, between 2006 and 2011, homes near fast and frequent transit stations performed 42% better than the region as a whole in Boston, Chicago, Minneapolis-St. Paul, Phoenix, and San Francisco.

In this context, many transit agencies are “baking-in” affordable housing (typically defined as targeting a specific income range) in community developments that include a mixture of housing, office, retail and/or other amenities integrated into walkable neighbourhoods and located close to public transportation, also known as Transit Oriented Developments (TODs). TODs have been growing in popularity worldwide, because by building around access to transit and other urban amenities, TODs improve air quality and reduce traffic congestion. More specifically, Transit Oriented Affordable Housing (TOAH) increases fare revenues reflecting improved ridership (car ownership is usually positively correlated with income), creates efficiencies and cost-savings, and improves the access of low and moderate-income families to jobs, schools and opportunity-rich areas, which benefits the entire city. To successfully integrate affordable housing in TODs, government agencies use a variety of tools, which create value “out of air”, a portion of which can be monetised back into affordable housing.

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