Renting VS Buying Property in Dubai 2022
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.
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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.
Dubai is one of the most popular travel and business destinations globally.
The rich history, cultural diversity, convenient and modern infrastructure, and developed residential and tourist real estate market attract millions of tourists every year. An advantageous geographic location, a booming business, and technology sector, and many corporate advantages attract some of the largest companies in the S&P500.
The emirate is considered an investment hub in the Middle East with the safest investment environment in the region.
About 83% of Dubai’s population is made up of foreigners with varying levels of wealth. The city occupies significant positions in the main world rankings of attractiveness for investment.
Moody’s and S&P describe the emirate’s investment attractiveness as stable with positive forecasts.
Potential investors can find different properties in the city districts, depending on the investment opportunities that vary in price categories and investors’ budgets.
In this article, we will analyze the most profitable areas of Dubai in 2021, their characteristics, and given opportunities.
The content of the article:
- The main list of investment areas
- Investment areas before Expo 2020
- How to choose a property in Dubai
During 2020-2021, the emirate experienced a significant and painful decline and a quick recovery. Many sectors of the economy, including real estate, have undergone significant changes in their economic structure.
We will provide an overview of two types:
The first type – is urban districts, which traditionally represent the return on investment in real estate and indicators of economic growth. Their number decreased in 2020.
The second type: districts with special investment potential in 2021 due to the World Expo 2020, which will take place from October 1, 2021, to March 31, 2022.
This year, the following indicators correspond to the real estate market:
- High asset liquidity.
- Record low prices, especially for luxury real estate.
- We are strengthening government measures to protect brokers’ capital.
- Yields upon reaching 8-10%.
- Low vulnerability to inflation.
- Investors benefit from asset diversification across different properties with different rental levels and locations.
- Investing in real estate is a credit rating for an investor seeking to obtain loans from banks in the emirate on favorable terms.
- The possibility of acquiring 100% of the property under certain conditions.
Choosing the right investment location is one of the key factors in getting the best return on your investment. Let’s move on to an analysis of the most attractive urban districts for investors.
The main list of investment areas.
Downtown Dubai, formerly known as Downtown Burj Dubai, is the de facto center of the emirate.
It is located on Sheikh Zayed Road, adjacent to Business Bay “Dubai Manhattan” and DIFC special economic zone. There is the Meydan racecourse to the east and the Jumeirah 1 district, a water sports center, to the west.
The center is full of tourists throughout the year. The local market mixes high-rise buildings and a selection of expensive villas alongside a wide range of more affordable properties.
The composition of the population is extremely diverse. A large local population lives alongside the list of tourists and ex-pats of varying incomes. The district has many migrant workers and business representatives, especially its upper echelon.
The demand for downtown real estate is always high.
In the apartment segment, 4-bedroom apartments are widely used, but recently 5-bedroom apartments are becoming more popular.
Young ex-pats often rent downtown studios. They usually have between 42 and 52 square meters. The Burj Al Nujoom apartment complex is particularly popular.
Rental prices for mid-size studios and apartments range from $14,500 to $21,000. For medium and large apartments, it can go up to $33,000.
The actual purchase price of the properties hovers around the $2,047,400 level. “Off-plan” properties (property purchase before construction is complete) are listed in the $2,460,000 range.
Business Bay is located near the city center, Downtown Dubai, stretching from Sheikh Zayed Road to Ras Al Khor. The DIFC special economic zone is located nearby.
Business Bay is one of the main drivers of Dubai’s transformation into the region’s business hub.
The area is a mix of property types: residential, commercial, industrial, and resort. Apartments, hotels, and storage/sorting facilities occupy a special place for companies actively involved in the development of electronic commerce.
The real estate offer successfully balances high quality with high affordability. In total, there are more than 240 commercial and residential buildings.
Schools, medical centers, and various entertainment options are close at hand, along with well-equipped gyms, swimming pools, and playgrounds.
Here you will find agglomerations of luxury and middle-class villas, such as the Executive Towers Pavilion, the Marasi Floating Villas along the Dubai Canal, and the Sky Villas.
According to Bayut’s Annual Dubai Sales Report 2020, Business Bay has proven to be one of the most popular destinations for businesses and investors looking for affordable housing.
The area attracts many young professionals from abroad, so the lifestyle here is mainly focused on young couples and singles.
The average purchase price per m2. It is $3,180. The average purchase price of a property is $2,768,000. The median rental price per apartment unit is just over $21,900 per year.
Larger apartments rent for between $24,000 and $78,900 per year and sell for $625,500.
The maximum prices of the apartments reach $10,878,800. For penthouses, the price can go up to $19,799,500 per year.
Jebel Ali – Renting VS Buying Property in Dubai 2022
Jebel Ali, also known as Mina Jebel Ali, is a slowly but steadily growing region that is gaining importance in the emirate of Dubai.
The area is home to various mixed-use projects divided into five main sectors: commercial, industrial, retail, entertainment, and residential.
The following is developing within the district:
- The port of Jebel Ali, the largest artificial bay in the world;
- Palm Jebel Ali, the slightly older brother of Palm Jumeirah;
- JAFZA (Jebel Ali Free Zone);
- special industrial zone;
- Jebel Ali Village is an elite residential group with many temple buildings.
Through the Village, the area borders the Dubai Investment Park. Al Maktoum International Airport and the Dubai Parks & Resorts complex are nearby.
The port of Jebel Ali is the ninth-largest in the world and the first in the Middle East, with the JAFZA alone accounting for 23% of the emirate’s total GDP.
JAFZA is home to more than 7,000 different companies in trade, logistics, industrial manufacturing, and services.
Although Jebel Ali is an industrial and commercial area, several large residential projects are also built there.
They are mainly found in Jebel Ali Village and Discovery Gardens.
Jebel Ali appeals to all kinds of demographics.
The most popular property groups in the area are Jebel Ali Hills, Rove At The Park, Garden View Villas, Al Muntazah Complex, and Jebel Ali Industrial Area.
Residential buildings occupy the main segment of villas and townhouses with three or four bedrooms. The apartments are available in a 1-2 bedroom or studio configuration.
Rent for a standard studio of approximately 46 square feet costs between $6,200 and $8,100. One-bedroom apartments are priced around $9,500, and 125-square-foot two-bedroom apartments are priced around $10,600.
Properties for sale are priced at $170,000 – $200,000. For studio apartments and one or two-bedroom apartments, the average cost can be around $326,700 and the average price per square meter. It costs around $300.
Dubai Marina is one of the most popular areas in Dubai. The marina is located on Sheikh Zayed Road, opposite Jumeirah Lake Towers, between Dubai Media City and the Jebel Ali Free Zone.
Thus, the neighborhood occupies the geographical center of the city.
This location attracts high-income business people and vacationers who want quick access to their workplaces and luxury residential properties in a prestigious and convenient waterfront area.
The demand and prices for rental and sale of properties are seasonal. They depend on how many foreigners visit the Navy during a given year.
Renting VS Buying Property in Dubai 2022
The average rental price for a studio or apartment starts at $10,000, with medium to large apartments costing around $22,700, slightly more than the average in Business Bay and $3,000 cheaper than the average in central Dubai.
The largest apartments can cost up to $93,600 to rent. Villa rentals range from $39,200 for the smallest to $113,500 for the largest.
The average purchase price per square meter. It is $4,350, with actual transaction prices around $775,000. The purchase price of the “off-plan” property is $409,000.
There are several real estate properties for sale in “freehold” (freehold ownership of the property in perpetuity with the possibility of using it at any discretion).
Jumeirah Village District
Jumeirah Village Circle is a gated community in the center of the city. The Village is home to more than 2,000 luxury villas and townhomes.
The area is designed to attract foreigners with large families seeking permanent residence. There are two international schools, many medical facilities, several outdoor clubs, and plenty of entertainment for the whole family.
The Village Circle is a short drive from the Expo 2020 pavilion. It has easy access to the emirate’s industrial and commercial hub, Jebel Ali, the city’s main roads, and Al Maktoum International Airport.
Investors are showing an increased interest in this location due to its competitive property prices—one of the city’s best areas in terms of rental income.
Dubailand – Renting VS Buying Property in Dubai 2022
Dubailand is one of the fastest-growing residential areas in Dubai. It houses communities such as Mudon, Dubai Lifestyle City, and The City of Arabia. As a result, it offers the widest range of residential properties for every capital size.
The area is characterized by many botanical gardens, academies, and various cultural attractions. Several well-known shopping malls in Dubai, such as Dubai Outlet, Global Village, Motor City, and sports facilities
The area currently attracts many families and single ex-pats, but the district is projected to grow steadily in the coming years.
Jumeirah Lake Towers – Renting VS Buying Property in Dubai 2022
Jumeirah Lakes Towers is an area primarily known for its wide range of freehold properties for investors.
There are 87 high-rise apartments at Lake Towers, built around 4 large artificial lakes and surrounding parks. Dubai Marina and Jumeirah Heights are located near this suburb.
In addition to residential homes, there are also an office, hotels, and commercial properties, such as commercial space, available for investors.
The emirate’s main artery, Sheikh Zayed Road, runs through the area.
The district attracts ex-pats who want to move to Dubai with their families, but young professionals and business representatives also show great interest in Jumeirah Lakes Towers.
Barsha Heights – Renting VS Buying Property in Dubai 2022
Barsha Heights is the suburb formerly known as TECOM. It is an urban town that offers investors a selection of residential and commercial properties and hotels.
The area is home to many Fortune 500 companies, including Microsoft, HP, BBC World, CNN, and Reuters. Barsha Heights attracts many IT workers and representatives of medium and large companies.
The district offers a balance between reasonably high-quality real estate and affordable prices for purchase and rental.
Investment areas before Expo 2022
The event is designed to attract the largest possible audience. Below is a list of the areas of the city that will receive the largest influx of tourists and ex-pats.
The following locations are expected to experience high demand for home rentals and purchases:
- Dubai Investment Park is a commercial area with affordable housing. The Green Community Village and Green Community East are nearby. The famous group of expensive tourist condominiums is to the north of the park: Dunes Village.
- The production city of Dubai is a special economic zone known for offering an extremely wide range of properties for “freehold” purchases.
- Renting VS Buying Property in Dubai 2022
- Jumeirah Golf Estate is a very high-end residential group catering to golfers.
- It is predicted that there will be a high demand for renting and buying villas in the areas:
- Jumeirah Golf Estate, which we wrote about earlier.
- Al Furjan is a gated community offering a wide range of quality villas and townhouses for sale at a fairly low price.
- Mudon is a residential group in eastern Dubai offering a wide range of villas and townhouses, both move-in ready and under construction, and is a desirable ‘off-plan’ investment.
General growth in property demand can be expected in the already mentioned areas: Downtown Jebel Ali, Downtown Dubai, and Business Bay.
A general increase in demand for real estate can be expected in the areas that we have already mentioned above: Downtown Jebel Ali, Downtown Dubai, and Business Bay.
It is also useful to pay attention to Burj Khalifa, Dubai South, Town Square, and Wals Gate.
How to choose a property in Dubai
Suppose you are interested in investment opportunities in any of these areas of Dubai, especially in light of Expo 2020 driving the local real estate sector. In that case, our company offers services for a fine selection of properties in these and many other parts of the city.
Our experts select properties based on the desired characteristics of the property itself and consider the possibility of obtaining the highest returns on investment.
We analyze all the current changes in the real estate sector in Dubai and the forecasts for its development in the next period and fully undertake the processes of closing deals with sellers and processing documents for real estate ownership.
Renting VS Buying Property in Dubai 2022