The residents of Dubai are facing a steep rise in accommodation rental prices and it is forcing many Dubai residents to buy apartment properties for the first time in the emirate.
The main reason behind this trend is mortgage prices are now cheaper than the monthly cost of home rent in Dubai.
First-time buyers in Dubai said that it has truly become a hassle to negotiate rent each year with the homeowner and this was another reason why people were keen to buy their own homes.
What Is The Matter?
Charlie Bannan, sales director of a real estate agency, Haus & Haus observed there was a huge rise in the percentage of Dubai residents choosing to own a real estate property rather than rent a home. Most of them were first buyers too.
The rent price average has been on a spike to almost 20 percent over the past one year in Dubai’s major residential communities. The buyer’s registering their new properties with Haus & Haus also increased during the same period. Both of these events are connected and the most obvious reason is the hike in rent.
One of the main encouraging factors for buying versus renting is that the monthly mortgage payments for buying have almost been made comparable to or more profitable than the rent charged to the resident.
This creates a clear-cut economic disparity in choosing to rent or buy a property for oneself or a family in Dubai. The investment angle also helps make such a decision easier as Dubai is considered to be one of the most economically successful nations in the world with a potboiler culture and tourist destination.
The first-time homeowners are mostly residents who have spent several years working and living in Dubai or UAE and now they are choosing to settle in.
Comparing the rent and mortgage payments, Mr. Bannan remarked that a three-bedroom villa in Sidra, Dubai Hills would cost approximately Dh 280,000 to Dh 300,000 per year to rent whereas the mortgage payments are valued at Dh4.85 million, which would roughly come under Dh 250,000 per year.
He also stated that buying is an option for residents who could afford the initial down payment. Dubai Hills, Arabian Ranches, and Emirates Living are considered to be the most in-demand residential communities for first-time buyers in Dubai.
The average cost of renting a luxury apartment in Dubai rose to an all-time high of around 43 percent and an upscale villa rent has increased by 30 percent. Mr.Craig Cochrane, a UK-based resident of Dubai who works for the hospitality industry found it rather unsettling to have to renegotiate rent with the landlord every year and this was one of the reasons he decided to buy a property for himself and his family in Dubai Marina.
Receiving a Golden Visa was another reason he cited as it allows a 10-year resident visa with a lot of other exclusive benefits to the residents. Mr.Cochrane and his family currently reside in a villa in Jumeirah Park. He was not ready to disclose the amount he paid for the new property but admitted that the monthly repayments would be less than Dh250,000 which he currently pays as rent.
According to real estate experts, one of the most common demands of the people who buy properties is that they should be able to move in almost immediately. Being vacant on transfer is another condition that the buyers keep and they are open to more than one community to find a home that fits their liking and needs.