Which is better: Buying a property in Dubai or renting? This is one of those questions I am asked on a regular basis, and the short answer is that it depends on your circumstances.
In order to take the right decision there are a number of factors that you need to consider. First, think about your personal situation and the location and type of property in which you wish to live. If it is a non-freehold area then you will have to rent, and perhaps your monthly budget will dictate whether you can buy or rent in your chosen location.
You also need to look at your personal finances and plans. Do you have savings? how far will your income stretch? Are you eligible for a home loan? Are you in Dubai for a short period or do you plan to stick around for a while? The answers to each of these questions will have an impact on what you eventually decide.
Even after the Dubai Government permitted freehold ownership of property for foreigners in 2002, many expatriate residents continued to rent. The reasons for this are varied, but one of the primary factors is the transient nature of Dubai. Many people view their time here as a stopgap before moving on and settling elsewhere.
Feasible option
Upon arrival in Dubai, with such short-term intentions, renting has traditionally been the most feasible option for many people. However, things are now changing. People are coming to Dubai and staying for longer and the Dubai real estate industry has gone through an incredible growth phase. This has created a wider range of freehold property options for buyers and significantly increased the number of end users entering the market. There is so much going on here, the economy is thriving and the emirate is fast developing, giving people more reason to base themselves here for the mid- to long-term, if not permanently.
The rental situation at present, where we have experienced an unprecedented shortage in supply and dramatically rising prices, has spurred many residents to invest in their own home. Financially speaking, this can make a lot of sense. If you are paying such a large amount of your income on rent, why not take a mortgage out instead and actually make that money count?
The increase in the number of finance and home loan service providers has also played an integral part in the continuing development of Dubai's real estate market. With property prices on the rise and more and more people setting up homes here, the demand for mortgages is greater than ever.
In general, securing finance in Dubai has always been a little tricky, but the situation has improved a great deal in recent times. Certainly, banks want to give mortgages, but at the same time they don't want to take too many risks. In the absence of a credit scoring system or any available credit history, banks have had to work at finding ways to help secure loans for their clients, evaluating the risk against the value of the property while assessing individual criteria such as visa status and monthly income.
Now that more sophisticated options for credit scoring are available and more international companies have established a presence here, the environment has become more competitive, which can only be a good thing for buyers.
With rental rates reaching an all time high and additional options available to buyers, more and more people are taking the plunge and buying their own property. Deciding whether or not you should do the same is a decision that can only be made by you.
There is so much going on here, the economy is thriving and the emirate is fast developing, giving people more reason to base themselves here for the mid- to long-term, if not permanently.
The writer is managing director of Better Homes
