To buy or not to buy in Dubai

Increasing numbers of expatriates are choosing to buy property in Dubai rather than rent. But do the maths add up?

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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Posted by: Umar Saeed

Thanks for sharing valuable information, this will surely help me in buying property in Dubai on mortgage. It is very wise not to rent rather go for mortgage and finally become the owner of the property. Thanks

Posted by: Ali

I bought properties in Dubai and in Canada back in 2006. The one in Toronto has appreciated 110%, and the one in Dubai only 50% or so (price comparison in Oct'13). The asking price in Dubai is different from the sales price. If you want to buy, spend enough time in searching for the type and price, app versus townhouse, etc. Option are much more these days comparing to 2006. Also I agree with the comment that the Dubai market is a luxury market. You earn more, and tax free comparing to many other places, and that's why you and I moved in. Any investment in real estate should be be enough study and with long term vision. The collapse that we saw in 2008/2009 happened to many other places such as US and EU too. Nothing different. With billion of dollar generated in middle east, there is a chance of property appreciation in Dubai than other places.

Posted by: Thomas Joseph

I have spent my hard earned plus fund transferred from my native to book two small properties in UAE whereas at that time the UAE Govt. assured to give a Residential Visa which later removed and prices of real estate crashed immediately. I still to get one property in Emirates city which is still under constn. In this condition, is it really good to invest here in UAE??

Posted by: Al Ameri

what ever new projects or expansions coming-up, it will not devalue your property, infarct it will increase your current property value.

Posted by: John Mackay

Sit and work out how much of your hard cash you will have to outlay (deposit, broker fees, registration fees, insurance, transfer fee etc) to buy something but do it on the basis of ensuring that your monthly mortgage/service charges would be covered by rent if your circumstances might get quite a shock about how much of your cash this takes !

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