At BDO Lebanon, we recognise that understanding regional transformation requires both local insight and access to global expertise. As part of BDO's international professional services network, we collaborate with colleagues across the Middle East to bring businesses a broader perspective on the developments shaping markets, investment decisions and economic opportunities across the region. The expansion of Etihad Rail is one such development—an ambitious infrastructure initiative that is expected to influence trade flows, connectivity, supply chains and business strategies beyond the UAE, with potential implications for economies across the wider Middle East.
To explore these developments from multiple business perspectives, our colleagues from BDO UAE, under the leadership of Shivendra Jha, Partner and Head of Advisory Services and International Liaison Partner (ILP), together with Aayush Bagaria, Senior Manager, Deal Advisory, Shamsuddeen Khader, Head of Business Services and Outsourcing and Ashish Athavale, Partner, Tax Advisory Services, have developed a three-part leadership series examining how Etihad Rail will reshape the UAE's economic landscape. Drawing on their expertise across advisory, transactions, outsourcing and tax, the series highlights the strategic considerations businesses should be evaluating as regional connectivity continues to evolve.
In 2026, Etihad Rail moves from freight to passengers, launching services across 11 cities and connecting the UAE in ways that go well beyond a faster commute. At the same time, a bonded rail corridor now links Khalifa Port to Fujairah, bypassing traditional road-based customs handling, while the Hafeet Rail link extends the network across the border into Oman for the first time. Together, these developments represent one of the most significant transformations of the region's economic infrastructure in a generation, with implications reaching far beyond transportation.
For organisations operating across the GCC, the opportunities and challenges span real estate, workforce strategy, supply chain design, tax, customs and free zone competitiveness. In this first part of our series, Aayush Bagaria, Senior Manager – Deal Advisory at BDO UAE, explores how Etihad Rail is set to reshape real estate, labour markets and business location decisions. This perspective demonstrates why organisations should view the rail network not simply as new transport infrastructure, but as a catalyst for long-term economic transformation.
How will Etihad Rail affect real estate, labour and business location in the UAE?
Aayush Bagaria, Senior Manager – Deal Advisory at BDO UAE, believes organisations should view Etihad Rail through a much wider economic lens.
"In our opinion, Etihad Rail needs to be viewed as an economic development project, rather than purely a transport project. Transport infrastructure changes the economics of a country because it reduces what is called the generalised cost of travel, which goes beyond just distance to include the total cost of moving people such as time, reliability and convenience. Once that cost falls, it affects where people choose to live, where businesses invest and how cities grow."
At BDO UAE, our colleagues view this as a fundamental shift in how organisations should evaluate long-term investments. Rather than considering rail purely as new infrastructure, businesses should recognise its potential to reshape economic geography, influence capital allocation and redefine future growth opportunities.
How could Etihad Rail influence real estate values?
Rail changes property values through 2 main channels:
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The 1st is the accessibility premium. As travel times fall, the effective catchment of a location expands. More residents, businesses and investors can realistically access that location, increasing demand for both residential and commercial property.
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The 2nd is agglomeration effects. Businesses benefit from being located where they have easier access to customers, suppliers, talent and complementary industries. That typically supports stronger occupier demand, lower vacancy risk and, over time, higher asset values.
While proximity to a railway station can enhance property values, it should not be assumed that every nearby asset will automatically appreciate. International experience shows that the greatest uplift in valuations typically occurs when rail infrastructure is supported by transit-oriented development, including strong last-mile connectivity, appropriate zoning, mixed-use projects and vibrant retail and commercial activity. In the UAE, this could increase the appeal of locations beyond the traditional cores of Abu Dhabi and Dubai, although the extent of the impact is expected to vary considerably across different routes.
What impact could passenger rail have on labour mobility?
Beyond property markets, Aayush Bagaria believes the rail network will significantly reshape labour markets.
"From an economic perspective, rail does not increase the labour force but rather increases the effective labour market. It expands the number of people that employers can realistically recruit within an acceptable commuting time."
This creates several practical advantages for employers:
- access to larger talent pools
- better matching of specialised skills to employers
- lower recruitment and relocation costs
- greater workforce flexibility
- potentially improved productivity and employee retention
Over time, this also allows labour markets across different Emirates to become more integrated rather than operating as largely separate employment centres.
How could Etihad Rail influence future business location decisions?
The greatest long-term transformation may come from how companies choose where to locate their operations.
"Historically, companies selected locations based on road access, ports, airports, rental costs and customer proximity. Passenger rail introduces another strategic variable: network accessibility. Companies will increasingly optimise across multiple transport modes rather than relying almost exclusively on highways. This could support more distributed operating models." — Aayush Bagaria says.
"For example, headquarters can remain in Dubai or Abu Dhabi, while shared services, technical support, training centres or certain operational functions relocate to lower-cost locations that remain highly accessible through the rail network. For industrial businesses, this is particularly relevant because passenger mobility complements the existing freight network, improving both workforce accessibility and operational resilience.”
Are businesses already planning for Etihad Rail?
Asked whether organisations are already incorporating rail connectivity into strategic planning, Aayush Bagaria believes progress has begun, particularly among larger organisations.
"Major developers, infrastructure investors, logistics operators, industrial companies and government-related entities are already incorporating future transport connectivity into their investment decisions because they typically assess assets over a 10-to-30-year horizon. However, many corporates are still treating rail as an infrastructure announcement rather than as a strategic planning variable. I think that will change quite quickly. When companies review their real estate footprint, negotiate long-term leases, select sites for manufacturing or distribution facilities or redesign workforce strategies, rail connectivity should now sit alongside ports, airports and highways as one of the core location criteria." — Aayush explains.
From BDO's perspective, the conversation becomes therefore much broader than transportation and is now about capital allocation.
Boards and executive leadership should now begin asking:
- How will rail connectivity affect the long-term value of our property portfolio?
- Does it change where we should locate our operations?
- Can it expand our labour catchment and improve productivity?
- How should we position our business over the next 10 years as UAE becomes a far more integrated economic route or hub?
As Aayush Bagaria concludes: "Those are strategic questions and the organisations that begin evaluating them today are likely to have a competitive advantage as the network matures."
Stay tuned
Etihad Rail's expansion is reshaping far more than passenger mobility. As Aayush Bagaria's perspective demonstrates, organisations that begin evaluating the implications for investment, real estate and workforce strategy today are likely to be better positioned as the network continues to mature.
This article is the first in this three-part leadership series exploring how the country's evolving rail network is transforming the business landscape.
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