Is it better to buy or rent?
Dubai is known for its international appeal as being one of the biggest tourist and financial hubs in the region. This city is a melting pot of various cultures and demographics, with the majority of residents being expatriates. Residents in Dubai choose to lease or rent their property compared to buying real estate because this is an easier and more affordable option for them. This fact has always brought a lot of appeal to investors that are looking to make a quick and easy annual income.
Traditionally, this was only available to wealthy investors that benefited from a high cash return (due to the high demand for property) in a tax free environment, whilst at the same time holding an asset that could potentially see capital growth upon resale in the future.
More recently, we have seen a lot of stability and confidence in the market and now even banks and financial institutions are willing to lend and provide mortgages so that consumers can invest in their dream property.
There has been a rise in developer confidence to build new developments which bring in more availability for potential buyers to choose from. This is very normal in new and emerging property markets and whilst some people choose to be a bit more open to new opportunities others would prefer to wait to see what the future brings.
More people choose to settle in Dubai instead of using the Emirate as a transient city for short term purposes. Residents want to ensure that their money is spent well and using this money to invest in property would be a better and even more affordable compared to a leasing option. Currently, low annual interest rates make buying with a mortgage a cheaper option than the high rents that landlords demand. It also provides potential owners, the security of a home as well as being able to pay a monthly mortgage payment as opposed to paying in advance, which is typical in the region. This, aligned with other new laws as set out by Dubai’s land department, brings consumer confidence and also provides a sense of protection.
Whilst there is no guarantee of any increase or a higher return from a property purchase, as it can appreciate or decline in value depending on market trends, it is clear to say that eventually prices will always increase.
As Dubai is still an emerging market, it still needs to see a large capital growth over the next five to ten years.
So even if you are not planning to stay here and use your property as your home, holding the property as an asset and then turning into an investment for future lease purposes, could create an income to cover your financial obligations, and also provides a tax free annual financial return which is ultimately the best option.
So the choice is yours to make, either you can lease and have the flexibility of being able to move on a whim as the lease agreement expires, or commit to a long-term home from home and not only have the security but also the financial gain it will provide in the future.
If you need any help when it comes to real estate in Dubai, then contact Driven Properties. We have expert agents that provide excellent market advice and also help with free valuation of your property.