When it comes to driving in Dubai, one of the most frequently asked questions is whether it’s worth buying a car instead of renting, even if you’re only planning to live and work here short-term. And now that the city’s real estate market is at its strongest since the credit crisis, more and more residents are contemplating whether it’s worth taking the leap and redirecting their annual rent into their own mortgage. To help you start working out what suits your own circumstances best, we’ve spoken to some of the city’s experts to find out what you should consider in each scenario.
There’s no doubting a renewed sense of confidence in Dubai’s property market – in 2013, real estate transactions in the emirate topped Dhs236 billion, up from Dhs154 billion in 2012 according to the Dubai Land Department. With rents rising almost as fast as property prices in the past year, it’s hard not to wonder if you’re throwing money away.
‘Currently the rental market shows no signs of slowing down, while the sales market, which experienced an approximate 27 percent growth in the first quarter of this year, is steadying – and if anything, prices have had a slight correction recently,’ explains Mark Wellman-Riggs, general manager of Crompton Partners Estate Agents. ‘For those who are in a position to place the required deposit and secure funding, now could be a good time to buy property in Dubai.’
He notes that buying also removes you from being at the mercy of landlords, who may decide to sell or move into their property at any point. ‘Many tenants feel very insecure in that respect, although the laws have tightened. People are still concerned about having to move around every year or pay lots more to landlords who keep pushing their prices up,’ he adds. Mark also acknowledges that buying in Dubai may not be an option for many people due to a lack of cash for the deposit or not meeting the criteria for a mortgage – a sentiment that is echoed by Nadia Butt, managing director of Lannhill Real Estate. ‘With the introduction of the mortgage cap at the end of 2013, it may take some buyers longer to save for their deposits, and they may not be able to react as quickly as they’d like to in the current market,’ she explains.
Unfortunately, if you can’t get together the deposite or secure financing, renting really is your only option. But for those who can afford the deposit and secure funding, Mark is adamant that now is a good time to buy property in the city. ‘We predict further growth before the end of 2014 of about ten to 15 percent, so if new or prospective homeowners decide to sell soon, it’s unlikely they will lose money on their investment.’ Nadia is in agreement, ‘Now is a great time to invest – many people are travelling over the summer months and prices are currently stabilising, so this is time to pick up a great deal.’ With that said, she has a few words of advice for those weighing up their options: ‘For an expat with short-term plans, I suggest renting. Buying suits someone with long-term plans to stay in the region and who wants to invest in their future here. Of course it may not be financially viable for everyone, so isn’t always down to preference.
‘Invest and buy something if you can afford to. Think of your long-term versus short-term goals, where you want to be in your home life and where you see yourself in the next three to five years.’
Crompton Partners Estate Agents, www.cromptonpartners.com (04 367 8637). Lannhill Real Estate, www.lannhill.com (04 365 7222).