Rising rental prices are pushing many Dubai residents to buy property for the first time in the emirate, property experts have said.
One of the main reasons for this trend is that mortgage prices are now in line, or often cheaper, than the monthly cost of renting a home in Dubai.
The difficulty of having to renegotiate rent every year was another reason people wanted to become landlords, first-time buyers said. The National.
“We’ve seen a number of Dubai residents go from renting property to buying their first home across the city,” said Charlie Bannan, sales manager for Haus and Haus Real Estate.
“With rental prices up around 20% over the last 12 months in Dubai’s main communities and buyer registrations at an all-time high for Haus and Haus over the same period, the two are certainly linked.
“The catalyst for a large portion of residents debating renting versus buying is that monthly mortgage payments are now either comparable or often less on the buy side.”
Another factor behind the rise in home ownership is that many residents have lived in the UAE for several years and now want to put down roots.
A three-bedroom villa in Sidra, Dubai Hills, costs between Dh280,000 and Dh300,000 a year to rent, but Mr Bannan said the mortgage payments for the houses, which are valued at Dh4.85 million, would be less than Dh250,000 per year.
“Naturally, this is only an option for residents who have the cash funds available for the initial down payment to transition from renting to buying,” he said.
Some of the most popular places for first-time buyers in the emirate include Dubai Hills, Arabian Ranches and Emirates Living.
The property expert said one of the most common requests from tenants wanting to buy a property is that they can move into it almost immediately.
“The primary requirement for buyers looking to buy in today’s market is a vacant home on transfer, which means they can occupy the residence once they have taken full ownership,” said Mr Bannan.
“We are seeing, now more than ever, buyers open to more than one community to find a home that not only fits their wants and needs, but also ticks the primary box of being vacant upon transfer.”
There was an increase of up to 21% in the cost of renting a “reasonably priced” apartment in Dubai in the first half of 2022, according to data published by Bayut and dubizzle.
The cost of renting luxury apartments has increased by an average of 43%, while the rent for a high-end villa has increased by up to 30%.
Visa status led to first purchase
A Dubai resident who bought a new home after renting for more than two decades is Craig Cochrane from the UK.
“One of the reasons we decided to buy was the volatility of the rental market. I was not looking forward to having to renegotiate every year with the owner,” said Mr. Cochrane, who works in the hospitality industry.
“Before, I was worried that because my visa was tied to my job, it wouldn’t make sense to buy a property, because we didn’t know how long we would be here.
“Everything changed last year when I received a golden visa. It made me think it was the right time to finally buy a property.
Mr Cochrane is set to become the owner of a three-storey apartment in Dubai Marina next month.
He currently lives in a villa in Jumeirah Park with his wife and three children.
He did not reveal how much he paid for his new home, but admitted monthly repayments would be less than the Dh250,000 he currently pays in rent.
UK-born Katy Granville, who works in marketing, is also buying her first property in Dubai.
“We wanted a place of our own instead of paying rent,” she said.
“I lived here with my husband for 11 years and over time, and three children later, we decided we wanted to stay here for at least the medium term.
“What kicked us off was that when property prices started to rise last year, our landlord decided he wanted to sell, so he gave us our opinion of expulsion.”
Now Ms Granville is set to move into her new home at The Villa, having rented a house in the Mira community in South Dubai for the past few years.
She paid 120,000 Dh rent per year. She wouldn’t say how much she’s paying for her new home, except that the monthly payments will be more than what she currently spends on rent.
“It’s worth it, though, to have a much bigger house and to know that we don’t have the annual hassle of having to renew the rent,” she said.
Another property expert said it was clear the mindset of many residents was changing.
“People are wondering why should they continue to rent when the market continues to rise and they could get a fixed monthly mortgage,” said Mario Volpi, sales and rental manager at Engel & Volkers Dubai .
“It makes sense if they are secure in their jobs. It’s definitely a trend I see.
Updated: August 07, 2022, 04:00