7 Key factors to consider when renting vs. buying in Dubai real estate

Making the Decision: Buy or Rent in Dubai?

Whether to rent or buy a property in Dubai largely depends on the period of stay. If your stay in Dubai is for a medium to long term, then buying would be a prudent decision, considering that Dubai is not just an economically stable city but also a very safe one. This way, one can weather the market fluctuations and possibly gain from property appreciation. On the other hand, if it is a short-term stay, then, of course, the safe choice is to rent, considering the risk in expecting a quick sale. Of course, the choice depends on your tolerance of risk and long-term plans.

Luxury properties in Dubai can be found for both rent and purchase. Weigh the benefits of immediate occupancy with renting, versus potential long-term gains with buying. While renting, you might consider high-end, unfurnished apartments in newly built buildings. This can offer a luxurious living experience without the long-term commitment of buying.

While deciding to rent or buy can be tough, our experienced real estate brokers in Dubai have listed the important factors to help you navigate the market with confidence and make the right decision.

• Transitioning Mindsets: Renting to Buying

There has always been a healthy debate on renting a property in Dubai versus buying, which, besides various factors, is also evolving with consistent hikes in rent. Observing these challenges related to the hike in rents, several tenants, instead of downsizing their homes, are shifting to new areas that are reasonably priced. Tenants are now shifting from central locations like The Greens to bigger homes in comparatively cheaper communities a bit further out - even to locations like Ras Al Khaimah (RAK), supported by improved infrastructure. Communities that are growing in preference are communities such as Jumeirah Village Circle (JVC), where the size of mortgage payments are equal to the sizes of the current rents. This indicates the trend of people having a preference to buy in the light of a more viable option, financially.

• Affordable Communities for Prospective Buyers

If one is looking to buy property in cheaper communities, a few stand out. Jumeirah Village Circle, Arjan, Al Furjan, and Damac Hills are more affordable and offer a good lifestyle. Particularly in JVC, a popular residential community with a balance of lifestyle and affordability. Older communities like The Springs and more pocket-friendly towers in Dubai Marina, such as Marina Diamond, also offer many buying opportunities.

• Effect of Rental Increases on Tenants

At Exclusive Links, we have witnessed an increasing number of tenants forced to relocate from more central locations to cheaper alternatives. Instead of adopting a smaller property to make ends meet, most move to more affordable locations. An example here is a tenant who relocated from a two-bedroom apartment in The Greens to a four-bedroom villa in RAK. More advanced transport infrastructure is making the outskirts more attractive than before. Exclusive Links have offices in the central location of Dubai Marina but also in Dubailand - so we have a balance of coverage of properties across apartments and villas in the inner city and in communities located more on the outskirts.  

• Interest in Mid-Price Communities

The mid-market bracket communities are the most affected by rental hikes. Communities such as Jumeirah Village Circle and Arjan and Al Furjan, and Damac Hills are doing well as their rents are affordable, and their lifestyle offerings are superior, though location is not as central. Even in prime locations like Dubai Marina, tenants are willing to consider older, cheaper buildings like Marina Diamond to remain on a budget.

• Buying as a Response to Rental Hikes

Landlords who are keen to increase their rental income significantly upon renewal are forcing more residents to buy. High-income earners can source for the needed deposits, but more budget-conscious tenants have a cost-of-living-related decision to make. At Exclusive Links, we often encourage buying over letting where we feel this will be more beneficial in the long term. For those on a budget looking to buy, off-plan properties in developing areas can be an attractive option with the potential for future value appreciation.

• Property Preference for New Homeowners

Tenants who have been forced to convert into homeowners due to rental hikes will often look for the more affordable mid-market properties. Some are even purchasing the very properties that they are currently renting, signifying a genuine desire to live in their current homes but with the security of ownership.

• Looking Beyond Dubai: The GCC Perspective

The bigger GCC region is influencing Dubai's real estate market as well. With countries around it such as Saudi Arabia also launching cheap projects and more lenient policies, Dubai may not always be the obvious destination for expatriates within the region. Currently, however, it is still a preferred destination for living, working, and playing.

While property management companies in Dubai can offer a smooth rental experience, deciding between renting and buying ultimately depends on your long-term goals and financial situation. Exclusive Links are active in sales and leasing offering long and short term management options. We can help guide you through what suits your circumstances and budget. 

A Working Example 

A few figures to consider from our mortgage partner, Ronan Lynch, CEO of Mortgage Solutions.  “To keep it simple, if you were to borrow AED1.5 million @4% over 25 years would translate to AED9211 per month mortgage repayment. To rent a unit in Dubai Marina for AED150K per year is AED12,500 per month - higher than a monthly mortgage repayment. This a a rough idea and only other consideration is your service charges on your purchased property but it is certainly worth doing the sums.”  Ronan has a wealth of knowledge and 16 years experience in finance and real estate.   

If you are keen on exploring.  

Want to dive deeper? Explore these related articles:
Understanding Dubai's Rental Index: A Guide to Assessing Your Community's Prices

Ahead of the Curve: Trends and Predictions for UAE Property Prices in 2024

Decoding Title Deeds: Understanding Property Ownership in Dubai

Or watch this latest episode from our Podcast Property Talk from Louise’s Lounge  

EPISODE 32 Finding Your Place in Dubai’s Mortgage Market 

In a nutshell, the decision to rent or buy a property in Dubai is based on the period of intended stay, the economic condition of a person, and market movements. While rental increases are increasingly becoming the curse leading most decision-makers to gravitate toward the buying option, affordability and location are still the priorities for intending buyers.