The hottest topic and one of the most common queries around moving to Dubai and tapping into its’ housing options is whether to rent a home here or go the extra mile and purchase one. In a lucrative and superiorly developed real estate market like Dubai’s, housing options are endless and surplus, whether you want to rent or become a proud property owner. Both paths have their pros and cons, a different set of costs, and offer various degrees of benefits. Today, we deep dive into the entire ‘renting vs. buying property in Dubai’ context to help you decide which works better for you.
The current speculation is that the property market in Dubai favors buyers instead of tenants. The competitive property prices and a stable ROI reinforce this notion. Yet, renting and buying comprise different stability and financial commitment levels. Before you decide which route to go for, you must consider a few primary factors.
Factors to Consider When Renting or Buying Property in Dubai
The following factors directly influence your eventual property buying or renting decision and must be accounted for carefully.
Your Length of Stay in the UAE
Whether you eventually end up renting a home in Dubai or become an owner of one depends mainly on how long you plan to stay here. Do you see yourself calling Dubai home for the next 3 to 5 years? Or are you just exploring different locations and not sure where you’ll end up next year?
If you’re in Dubai for a longer period, purchasing property will prove to be a more viable and affordable option in the long run. Yes, you read that right; we said ‘affordable.’ Dubai’s property prices are notoriously low and affordable compared to cities like London, New York, and Hong Kong and can land you a profitable deal.
Meanwhile, renting a fully furnished villa or apartment will be more cost-effective and realistic if you are here only for the short term. You will only need to pay your rental cheque and security and move into a furnished fully-fitted space without the hassle of buying everything from scratch to set up your place. You will have the freedom to give advance notice to your landlord and vacate the property, depending on your travel plans.
Your Financial Health
Another primary consideration when considering renting vs. buying property in Dubai is your financial health. After all, whatever route you choose, various financial commitments are required.
Sound finances allow more freedom to buy property, yet it is a significant financial decision. A buyer requires sufficient funds to make a down payment and monthly mortgage payments thereon. At the same time, tenants must pay a monthly or quarterly rental payment to their landlords.
Before you decide to rent a swanky apartment in an upscale neighborhood and pay hefty rental cheques, consider how wise it would be to pay instead monthly payments that would eventually enable you to become the owner of the property you’re living in.
However, renting may be your best option if your budget doesn’t allow it. Renting property makes it possible for people of all income levels and budgets to find a home in Dubai.
Market Situation
Finally, before making such a significant financial leap, check the current real estate market situation and price trends. These fluctuate occasionally, depending on global and geopolitical scenarios.
Currently, the market favors buyers with lower property prices and stable ROIs. However, this can change in the near future. To ensure you make a safe and minimum-risk decision, check out updated primary and secondary market data, prices, and other real estate trends. These trends will also include reports on in-demand areas that offer good ROIs for renting and buying.
Upfront Costs of Buying Property in Dubai
It may surprise many foreigners that it is cheaper and more affordable to buy a property in Dubai than to rent one. Once you get down to doing the math by adding all the costs involved stretched out over a year and five years – you’ll be pleasantly surprised to see that buying property in Dubai is, in fact, a great option.
Here are all the upfront costs involved when you buy a home in Dubai.
| Down Payment | 25% of total purchase cost |
| Dubai Land Department Transfer and Administrative Fee | 4% + AED 540 administrative fee |
| Property Registration Fee | AED 2000 for properties with value below AED500,000
AED 4000 for properties with value AED 500,000 and above |
| Mortgage Registration | 0.25% of loan amount + AED 10 |
| Mortgage Processing Fee | Up to 1% of loan amount |
| Agent Fee | 2-5% of purchase amount |
| Property Valuation Fee | AED 2500 – 3500 |
| Conveyancing Fee (if applicable) | AED 6000 – 10,000 |
| Oqood Fee for Off-plan | 4% of purchase price |
Benefits of Buying a Property in Dubai
Here are the major benefits you’ll get if you purchase property in Dubai.
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Long-Term Investment
Buying property in a lucrative market like Dubai provides you with a stable life-long investment opportunity. You acquire financial stability through a tangible asset that only increases in value over time. Even if you don’t stay in Dubai long term and live in your property, you can rent it out or convert it into a holiday home. This way, you’re on your way to acquiring a stable, lifelong ROI.
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Pathway to Residency
Once you invest in property in Dubai, you become eligible for several long-term residency visa options. If you purchase a completed property worth AED 1M or more, you can get a 3-to-5-year Resident Visa. When you invest in a ready or off-plan property worth AED 2M or more, you become eligible for a 5-to-10-year Golden Visa that is renewable without any conditions.
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Greater Control Over Property
A property owner always has greater control over their unit than a tenant. They can personalize the property according to their requirements. Do upgrades, extensions, and repair as and when they deem necessary. A big plus is that whatever money is spent on these upgrades is well spent on increasing the value of one’s own property.
A tenant, meanwhile, does not have the privilege to make any changes or adjustments to their home and has to do with whatever is available.
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Buildup of Equity and Credit
As mentioned above, purchasing a property in Dubai and spending any money on it from thereon only builds up your own equity and credit.
Upfront Costs of Renting a Property in Dubai
If you plan to rent a property in Dubai, you must be aware of all the upfront costs you must pay. The first rental cheque and security deposit will be your significant costs. From thereon, you will need to pay for additional things such as the remaining rental cheques and your utility charges.
Find below a list of all the costs of renting a property in Dubai.
| Security | 5% of annual rent |
| Rent | 25-100% of the annual rent (depending on no. Of cheques) |
| Ejari registration | AED 220 |
| DEWA | AED 2000 + AED 110 (for apartments)
AED 4000 + AED 110 (for villas) |
| Agent Fee | 2-5% of annual rent |
| Municipality Housing Fee
(added to DEWA bills over 12 months) |
5% of annual rent |
| Chillar/Gas | Varies on consumption |
| Internet/TV/Phone | Varies on provider and plan |
Benefits of Renting a Property in Dubai
Find below the main benefits you’ll get if you decide to rent property in Dubai.
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Affordability
If your budget is small, renting a home is always an affordable option. You can choose from a range of housing types with different rent price points. Plus, a variety of residential communities in Dubai cater to people across the economic spectrum – from high-end to budget.
Also, if you rent a fully furnished apartment or villa, you can pay your rent and move right in without bothering about buying furniture and appliances to set up your home. Thus, renting proves to be a more cost-effective route for newcomers to Dubai.
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Flexibility
With rentals, you have more flexibility to change properties and locations. You only have to give your landlord prior notice and vacate the property. It’s as simple as that. Of course, once you own the property, you cannot simply dispose it and move elsewhere. You will have to go through the entire process of selling it and then buy one in a new place.
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Avoidance of Debts and Property Value Loss
Tenants are spared the stresses of accumulating debts and losing their property’s value. Something that homeowners often have to live with.
To Rent or to Buy? Make an Informed Decision
Your eventual decision to rent or buy a property will significantly depend on the length of your stay in Dubai. If you plan to make it your home in the long run or have some investment link to it, buying property in Dubai will be of great value to you. Dubai’s real estate market is one of the most thriving markets in the world, with lucrative property prices and ROIs.
Although if you’re not quite ready to make a substantial financial leap just yet, are unsure whether you will live here in the long run, and are seeking more of a touch-and-go experience, then renting a home will be a practical solution. Either way, it’s best to take factors like market trends and prices and your budget and lifestyle into account before you make a decision.
Whether you’re looking to rent a property or buy one, we have the right options for you.
Get in touch with Maple & Rose to find your perfect property
