Apart from having to make this decision for myself as a long term resident in Dubai, over my 22 years in Dubai - well certainly since freehold property options became available in the year 2000 - this has always been the most commonly asked questions I am asked personally and professionally.
And for me the answer is always - do the sums.
A typical case study I use when explaining the advantages of buying over renting is with an AED 1,000,000 property in Dubai, your borrowed amount will be AED 750,000 at a 2.99 interest rate over a 25 - year term. The mortgage repayments would be AED 3553 per month. If this was a one bedroom apartment and we take a conservative rental rate of AED 70,000 per year, the rent per month is AED 5833. You lower mortgage repayment is also a more manageable monthly cost rather than paying rents over 1 - 4 payments through the year. What these figures also indicate is that if you buy a property today and sell at the same price in 3 years, the money you saved in rent affords your 25% down payment required for borrowing.
I guess as the property market in Dubai continue to shift - albeit down - this questions remains very relevant and I believe will again be a hot topic at the up and coming Cityscape in September. Although a buyers market there still remains some uncertainly on where, what, when and why. So lets look at some of the points for and against renting versus buying property in Dubai.
Dubai offers strong capital value gains, attractive yields and is perceived as the safe haven of this region. Employment packages in Dubai typically include a housing allowance which can be used towards a mortgage but it still comes down to an individual's/ families financial position and comfort level.
Renting
The Pros include:
- less commitment
- less immediate financial outgoings
- more flexibility
The Cons include:
- restrictions on making changes to the 'house' you are making a home
- more long term expenses
Buying
The Pros include:
- a long term investment
- the settle, stability and security factors
- the opportunity to turn around and become the landlord rather than the tenant
The Cons include:
- additional home owners expenses
- higher cost outlay initially
- fluctuation in the market
If there is sufficient equity and a mid to long term reason to remain in Dubai - it does seem to make more sense to buy now. Buying property is still considered to be one of the best investment options available but make sure it is an educated purchase and investment.
If you are looking to buy a property as an investment or as an end user and want to discuss any of this points I have discussed please call the Exclusive Links Sales team today.
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