Dubai is the land of opportunities for every individual; however, you do need a place to crash to live in Dubai. For the working-class, renting has always been a great solution; however, buying might be a better solution if you are a successful professional moving to Dubai for work. But how does one make the comparison of buying or renting when in Dubai? Well, if you have the same impasse like many other’s between buying and renting, here’s a detailed account that will help you make a rational and profitable decision.
Many renting for years and saving up feel that Dubai’s real estate is pretty much in demand and will keep on climbing and get better returns in future. Hence it’s better to invest and enjoy good returns on investment. Property value in Dubai gets you as much returns as it does in London. Yes, the market is growing despite the pandemic.
Buying has a lot of benefits; better yet, buying with cash is a better option than leasing a property and paying instalments. You can get freehold villas and apartments in primes locations such as Jumeirah Village Circle, Mohammed Bin Rashid City, Ras Al Khor, etc. The money that goes into rent does help you stay in Dubai, but in the long run, it doesn’t benefit you at all.
Buying in Dubai currently is better than before due to both the financial crisis of 2009 and the pandemic situation in the last couple of years. Now that the industry is getting back on its feet, the prices are quite affordable with the promise of better returns in the future. Currently, mortgages are low, and the fees are minimal; it’s also easier to get a loan and acquire property in off-plan developments. After the oversupply of properties in the market in the year 2014 and the slowdown of real estate due to pandemics, the time is ripe to invest and get better ROI as Dubai is getting to its feet and the market is now more stable and climbing.
Buying a residential property in Dubai doesn’t only benefit you in the short run, but it’s also a great way to stabilize and benefit the coming generations. Apart from that, a property in Dubai also helps you get a resident visa to stay in Dubai for the long term and raise a family without any repercussions.
In a nutshell, buying can be a lot cheaper than renting if you manage to pay a reasonable amount in down payment. Here are some statistics to clear the picture:
Buying a property
There are fees to deal with when you are buying a property in comparison to renting one, such as,
- You need to pay a 2 per cent real estate broker’s fee
- You also need to pay 5 per cent VAT for the property brokerage
- There is also the 4 per cent Dubai Land Department fee that is mandatory for buying a property in Dubai
- Lastly, you need to pay the appointment and admin fee of Dh4,580
Whereas Renting a property comes with its own set of fees as well as expenses.
- Every rental needs a 5 per cent security deposit for an unfurnished unit and a 10 per cent deposit for a furnished and lavish unit
- Secondly, you need to pay a 5 per cent fee to the real estate brokerage as well as a Dh225 fee to set up the Ejari contract that is mandatory.
These are just the fees; apart from that, you will need to pay the price of the property when you are buying and monthly rental payments when you are renting.
Let’s Discuss The Advantages As Well As The Drawbacks Of Renting In Dubai:
- Renting doesn’t last longer: with renting, you can upgrade and downsize as per your budget; the shortest lease contracts are signed for 12 months. Hence you can up and move if it the rental unit doesn’t suit your needs or budget. You can move up or down the ladder conveniently and explore many locations before locking down on one.
- If you have put money in an off-plan property in Dubai, renting is the perfect option to wait out till your investment mature and the property is ready to move in. off-plan properties take time to mature and develop, hence renting in such conditions is the best option for any investor.
- Most ex-pats in Dubai are always relocating due to the nature of their jobs. Most ex-pats work on a contract basis; with renting, you can relocate as soon as your contract is up with your company to find a new job as well as a new home. This way, you can move where your new job is, without a house weighing you down.
Drawbacks of Renting in Dubai:
- With a rental unit, you have to compromise on the layout and furnishing, no matter how much you are paying, as you cannot customize anything in a rental unit.
- As the market grows better day by day, the rental rate also increases; this can be a huge drawback for people already on a tight budget.
- Renting a unit for the long term is putting money in a bottomless pit. If you accumulate all the money you have spent on renting properties, you will conclude that nothing tangible was gained from it.
The Benefits As Well As The Drawbacks Of Buying In Dubai:
- A property in the hottest city in the world is a profitable investment, you can love it in style, and at the time of selling, you get double the amount you paid in the beginning.
- Unlike rental units, the property you buy comes under your name; this means you can change and remodel the property as many times as you like.
- There are no long-term payments involved; if you buy in cash, the price, as well as a couple of fees, is all you pay, whereas rental units siphon your income every month.
The Drawbacks Of Buying A Property In Dubai:
Buying a property is a considerable investment; whether you buy in cash, pay the mortgage or even buy affordable off-plan property, it’s a huge commitment.
Apart from the actual cost, there are fees involved, tedious paperwork, as well as commission and fees of hiring a real estate agent or company.
There is always the factor of a stable and unstable market, you never know when a calamity will strike, and the prices go down, hence buying a property is also always a risk, even in a city like Dubai.
All in all, buying takes the cake over renting because, in the long term, there are many benefits of buying a property in Dubai.