Buying vs Renting: Key Factors to Consider in Dubai

Many seek to reside in Dubai, a city with an impressive skyline and active nightlife. Knowing the difference between buying a home and renting is imperative if you are trying to decide whether to rent or buy a home in this exciting city. Let us focus on buying versus renting a property to assist you in the decision-making process.Many seek to reside in Dubai, a city with an impressive skyline and active nightlife. Knowing the difference between buying a home and renting is imperative if you are trying to decide whether to rent or buy a home in this exciting city. Let us focus on buying versus renting a property to assist you in the decision-making process.

The Rental Market in Dubai

The rental market in Dubai has become more saturated, and tenants can expect rent rises ranging from 5 to 20% due to property revaluation. New rental registrations were 5.8% higher in Q1 2024, meaning people are taking up renewals to pay higher prices. It added that as average rents have increased, tenants are saying no to increased rent charges, especially with expected new projects.
 

Below is the table of current rental prices in Dubai:

Source: Property Monitor

Advantages of Renting

• Renters can easily move to a new location if their job or personal needs change, unlike buying a home, which ties you to one place.
• Renting allows for less capital outlay compared to purchasing.
• Renting a house or apartment in Dubai typically requires a security deposit.
• The security deposit is usually one month's rent paid in advance.
• You can avoid the costs and time you may incur as a tenant in maintaining and repairing the house.

Drawbacks

• Rent payments do not count towards ownership, so paying thousands of dirhams feels like waving money at the wall if you rent for a long period.
• Some properties may have restrictions on pets, alterations, or subleasing, limiting renters' freedom.
• Rent payments do not contribute to building equity, meaning renters take advantage of potential long-term financial benefits.

Steps to Rent in Dubai

• Consider your economic conditions and determine how much you can afford monthly rent.
• Investigate different neighbourhoods to find the most convenient one for your well-being and pocket.
• Consult independent resident brokers that will expose you to the market realities of rental accommodation.
• Make appointments to check the property is in the right condition.
• When you have selected the right space, always review and sign the lease agreement.

The Buying Market in Dubai

The average annual growth rate of the property market for 2024/2025 is quite promising for Dubai. The total sales in July 2024 reached AED 49.6 billion, and compared to the last year, sales have increased to 31.63%. The value and the number of transactions increased by 30 per cent compared to 2023, with a total of AED122.9 billion from 43 179 transactions during the first half of 2024. There should be 41000 new homes next year, but robust demand will likely prevent oversupply next year. The luxury sector is developing, especially in the Palm Jumeirah area; the mid to lower-price segment also attracts investors seeking stable rental incomes. The total sales volume is 164485, and the total value is AED426.9 billion. The mean price for all categories is AED 2.6 million, AED 1.9 Million for Apartment units, AED 3 million for townhouses and AED 10.5 million for villas. The average price per square meter, as measured, is AED 155.262, and the price per square foot average is AED 1,692. Dubai continues to occupy a preferred position on the global investors’ map.

Below is the table of the current sale prices in Dubai:

Source: Property Monitor

Advantages of Buying

• Homeownership has more benefits than renting. The payments you make go towards ownership so that you will enjoy the appreciation of the property.
• A home makes you proud and successful, whereas renting can lead to evictions and price changes.
• As a homeowner, you can freely redecorate and change the house's look according to your preferences.

Drawbacks of Buying

• A real estate purchase involves a down payment, generally 10-20% of the price, and other expenses, including registration and legal fees.
• A homeowner has to pay costs, such as maintenance costs, which add to the expenses.

Steps to Buy in Dubai

• Arm yourself with knowledge by learning your budget, where to find a mortgage and other expenses.
• Explore other areas and kinds of properties to determine what works best for you.
• A good agent can assist you in the buying process and help you find the right property.
• People must visit homes to appraise the state and suitability of the prospect's homes.
• After searching for a property, negotiate the price using your agent and make the offer when you agree on the figures.
• Execute the sale agreement and transfer the ownership.

Conclusion:

Deciding when to buy or rent a property in Dubai is a function of lifestyle, wealth, and vision. Housing: Leasing or purchasing a home is also good and bad, depending on certain factors; therefore, look at the facts that suit you. In cases where you prefer the subtlety of change and where the actual costs of ownership are too high, consider renting. However, home ownership is always more secure and considered a better long-term practice than renting, so buying is preferred.

It will require time, better consideration of the options, and talking to the experts to get the best for you amidst this extraordinary city's opportunities.

Please read Why Invest in Dubai's Real Estate Market in 2024