Like the majority of people who move to Dubai, Tom Sowler and Rebecca Forbes intend to save money during their income tax-free couple of years in the emirate. But two and a half years after arriving from the UK their goal is being severely hampered by the significant outflow of money spent on rent.
The couple, recently married, are not being particularly lavish by renting a AED95,000 two-bedroom villa in The Springs, but the annual rent is making a large dent in their ability to set themselves up financially.
“We looked very closely and I did all sorts of spreadsheets and calculations. There’s not a big difference between renting and paying a mortgage,” Sowler, 31, says. “The less we pay on rent the more we can save.”
Thousands more Dubai residents are coming to the same conclusion, leaving behind landlords and rising rents to become property owners.
Mortgage brokers and banks are experiencing huge growth in home loan applications, with the number of approvals doubling this year at many institutions.
“The rents are on the rise and the [mortgage] interest rates are declining so effectively what’s happening is the mortgage payments are now lower than rents,” general manager of Dubai finance brokerage, Independent Finance, Sam Wani says.
“The interest rates have fallen because there’s a lot of liquidity in the market and that’s fed into the banks. And rents are rising because more and more people are coming back into town because the economy is growing.”
Average residential rents in Dubai increased nearly fourteen percent in the first half of the year, pushing up the annual average by more than 30 percent, according to a report published in July by real estate advisor CBRE.
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