Dubai is a city that offers much more than just a world-class lifestyle. With over a century of trade behind it, Dubai is growing as an international destination for financial services, tourism and transportation. The recent announcement of 100% business ownership and various residence visa programmes will also open up new avenues for entrepreneurs, highly skilled professionals, investors and other businesses seeking to expand their operations into the Middle East region.
However, in this dynamic city, the biggest confusion is to choose between renting and buying a property.
According to an estimate, the biggest expense for an expatriate in Dubai is rent. Almost 40 per cent of the total salary is usually spent on rent, especially, if you choose to live in Dubai. Spending a major chunk of your salary on rent might not seem a wise decision. Therefore, isn’t it better to buy than rent? This is the most asked question amongst expatriates, in the UAE.
“The market and its volatility have proven that the rent or buy decision is often influenced by a person’s capacity to take risk and necessity. As there is no right or wrong in this choice, so, it is important to take time to analyse the situation before making a decision,” states Muhammad Ali Mustafa, Director and Co-Founder of HFRE.
“Renting may seem easier and affordable but there are several factors that can influence renting or buying such as the duration of stay, budget, career goals and income stability. Similarly buying a property in Dubai has also its own pros and cons,” he added further.
Rent vs. Buy – What is Better?
Before reaching a certain conclusion, you must consider some pros and cons of buying vs. renting a property in Dubai. It will help you analyse your situation and better gauge the favourability of one option over the other.
Financial Obligation – Where Do I Stand?
90% of the total population of UAE comprises expatriates and a majority of these expatriates prefer renting a property in Dubai. The reasons can be many including being new to the country, the stage of their career, the income, and the ability to pay the rent. The decision to buy a property in Dubai right after landing can be a difficult choice, mostly because you do not know much about the areas and also the process that can be more difficult if you are planning to buy a property on a mortgage. In this scenario, you must have a minimum of 20% of the total price of the property to pay as a down payment and to get bank financing, you must have a stable job for at least six months to get qualified for a mortgage loan.
Renting is preferable as the duration is short that can withstand the uncertainty of the job market and the flexibility to choose a neighbourhood of your choice. Buying a property can only be feasible, if you have the financial means to cover the cost associated with the purchase of property. Though it seems a difficult choice but the advantage is that you will have an asset. Even if you plan to move from Dubai, you can sell the property or rent it ahead and enjoy a secondary source of income. Buying a property for sale in Dubai can be one of the biggest purchases in one’s life and if you are planning to buy a property through a mortgage loan, you must have a complete understanding of the process.
What Are Your Plans to Stay in Dubai?
Before you spend time choosing whether you should buy or rent a property in Dubai – you must know your plans to stay in Dubai. If you are planning to stay in Dubai for at least 7 to 10 years, buying a property can be a rational decision in this situation. However, if you are not sure about your stay duration in Dubai or are here just for a couple of years – you must go for rental properties. It is because you will not be here enough to rationalize your investment and earn a profit before leaving this city.
Renting a property offers more flexibility and allows you to move from one neighbourhood to the other – if you do not like a certain area or development.
What is the (Current) Market Trend?
Before you choose to buy or rent a property in Dubai, it is advised to know the market trends thoroughly. Seeing the supply in the market and the market happenings right after the global pandemic, it is a buyer’s market. Right after the global Expo 2020 event and the announcement of multiple residence visa options and 100% business ownership opportunities, we can already see a large influx of potential investors in the market. The properties are rapidly being sold because the prices are at record low value after the COVID-19 induced pandemic.
However, both the prices and the number of property transactions are increasing at record levels. According to the Dubai Land Department (DLD), a total of 25,972 real estate transactions were recorded in Q1 2022. With these transactions, Q1 2022 has recorded the highest number of deals since 2010 in a single quarter. It is also the highest volume since the first quarter of 2014.
Therefore, if you are planning to buy a property for sale in Dubai, you must line up your finances now and consider all other associated costs, before the prices go back to pre-pandemic levels.
Why Do People Choose to Buy?
Dubai is a buyer’s market and a majority of seasoned investors are investing in properties for sale in Dubai, right now. Buying also comes with several advantages such as it comes with different Golden residence visa options. For instance, the investors can choose a 10-year visa or long-term visa, which is a type of investor visa with particular requirements for long-term residency in the UAE.
Though the question of buying vs. renting a property in Dubai is dependent on your personal choice but for a rational decision, you must check these parameters mentioned above. If you are currently looking to rent or buy a property in Dubai, you must work with experienced real estate agents. The professional sales team members at HFRE are always ready to help you complete this venture and make a well-educated investment decision. We can also present you a number of hand-picked luxury properties in various communities in Dubai.