Rent or buy a car in Dubai

Are you ready to treat yourself to a new car, or should you rent instead?

The Knowledge

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.

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Thanks to a swelling yet transient expat population and booming tourism industry, the UAE’s car rental scene has flourished in the past five years. According to the most recent data from global market research firm EuroMonitor, the car leasing market was set to be worth Dhs880 million by the start of this year, while other estimates suggest that between 70 and 80 percent of vehicle hire in the city is long-term rentals. But despite a high incidence of rentals, according to Alan Carpenter, general manager of sales and marketing at Al-Futtaim Motors, the automotive retail market in the country is growing by 14 percent every year. He puts this down to the relative affordability of cars in the UAE, particularly Toyotas ‘known for low fuel consumption, low running costs and – most importantly – high resale values’, which he explains that prices today start from an ‘affordable Dhs48,500’, with repayment plans available for those who meet the criteria.

Coincidentally, Marwan Al Mulla, general manager of Dollar Rent A Car, reveals that Toyotas are his firm’s (and the rental industry as a whole’s) most popular vehicles, closely followed by Hondas, Nissans and Mitsubishis, although price tends to be the biggest concern for his customers. That said, he believes the rental market is highly competitive, with ‘aggressive competition’ between companies to offer the best price while still making a profit. As well as being able to get a good deal, additional benefits to renting include regular upgrades to new or different models and coverage in the event of a major repair being needed.

For those who plan to stay in the city for two years or more, purchasing a modest car at a repayment rate of around Dhs1,800 (a fairly average monthly hire rate) could potentially be worth the investment, as when you decide to sell you will at least be able to recover some cash from your investment.

As Andrew Prince, financial advisor at Acuma Independent Financial Advice puts it, one of the advantages of buying a car is that it becomes an asset that is yours – though unlike buying a home, it’s a depreciating asset. Check which models are the most popular second-hand vehicles in the city, and try and invest in one of these – that way you will be able to retain the highest possible retail value should you decide your plans to stay in Dubai aren’t so long-term after all.

Those in Dubai on a time-sensitive contract or without a long-term plan are better off renting. Andrew explains: ‘Typically there’s little or no ongoing commitment and no maintenance issues – you won’t need to worry about servicing costs, arranging insurance or having to sell up on the cheap if you need to leave.’ Though it may sound simplistic, Andrew recommends whether you’re debating a car or a house, start by making a list of advantages and disadvantages for each, then you will be able to determine your biggest concerns, and make the most sensible choices accordingly.
Dollar Rent A Car, www.dollaruae.com (04 336 5065). Al Futtaim Motors, www.alfuttaimmotors.ae. Acuma, www.acuma.ae (04 332 8582).

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