Dubai real estate market

When to stop renting and start buying your home

Most people understand the traditional pros and cons concerning the decision of whether to rent or buy real estate.

Property ownership is generally considered to represent a solid, long-term investment that can help individuals and families to establish credit ratings and grow their equity.

While renting offers less in the way of security (and no actual property to call your own), it is nevertheless sometimes the most sensible option due to the flexibility offered by temporary accommodation.

Of course, depending on one’s age, profession and fiscal situation, buying property is not always a viable option.

Various checks and balances are in place to ensure that those who do decide to take the plunge and purchase real estate are financially equipped to maintain their investment over the longer term.

This sometimes leads to a situation wherein rents cost more than mortgages, as prospective buyers either struggle to raise the necessary deposits or are unable to secure mortgages due to factors such as their employment situation and credit history.

As such, it is not always a simple choice between renting and buying; in many markets, aspiring homeowners simply have no option but to rent.

Long-term living in a global hub

In the UAE, this situation is somewhat more nuanced. As the majority of people living in the Emirates are expats, they do not always know how long they are likely to remain in one location.

Ultimately, many of those who choose to relocate to the country eventually decide to put down roots, but this decision is usually made several years into their residency.

Very few buyers step of the plane and decide to buy property immediately, nor are many in the position to do so.

While rented properties, therefore, can represent a more attractive prospect in the UAE than they do in many other international markets – at least in the short term – many people who do relocate to the Emirates inevitably build lives and careers for themselves, establish lasting friendship networks and secure local school places for their children. In these circumstances, it certainly makes more sense to buy than to rent.

So, when is the best time to stop renting? And if you do decide to buy, which factors should you mull over before taking the plunge?

Start with your deposit

First and foremost, consider whether you can afford the initial down payment – a minimum of 25 percent for expats looking to buy properties of up to AED 5 million in the UAE.

Keep in mind, this isn’t simply a question of whether you have the funds sitting in your bank. Think about what it will mean for you and your family – in real terms – once this money is removed from your account.

Would this leave you without a contingency fund, for example, in the unfortunate event that you were to find yourself temporarily unemployed?

What if you secure your property only to find that significant refurbishment is required to make it suitable for you needs?

Would you be able to pay out another large sum of money once the deposit has been deducted from your savings?

It is vital that you ask these types of ‘What if?’ questions before going any further.

Think long term

Once you are confident you have the requisite funds and your financial situation is stable, consider how long you expect to remain in the UAE.

While it can be difficult to say with certainty how long you intend – or are likely – to stay, if you think there’s a significant chance you’ll be moving elsewhere within the next five years, it may be sensible to continue renting until your situation becomes clearer.

Fortunately, with the host of visa options now available to expat residents, including the increasingly popular Retirement Visa, the potential to continue living in the Emirates over the longer term is now greater than ever before.

Nevertheless, it’s important to take a breath and consider whether property investment is aligned with your future plans.

Remember, you can actually save money by buying

The initial down payment aside, it may surprise you to learn that buying property in the UAE is often more cost-effective than renting – especially when calculated over the longer term.

Check out this article from Bayut, which demonstrates how buying an AED 1 million apartment in Dubai Marina actually works out cheaper than renting over a five-year period.

Timing is everything

Now may just be the perfect time to plant your flag in the UAE’s property market, especially if you’re looking for a long-term investment.

Real estate has shown remarkable resilience in the wake of the global pandemic, and this is especially the case in the Emirates. While prices remain attractive, many analysts expect continued growth over the coming years.

Ultimately, the question of whether to buy UAE property or continue renting is one that you must make based on your personal circumstances.

However, if you’ve done your sums, you’re confident that your long-term future lies in the Emirates, and you’ve identified the type of property that best suits your needs, it’s difficult to see how renting would be advantageous over the longer term.

This is well and truly a buyer’s market.