Renting vs Buying a Home in Dubai: What You Need to Know

Wed, 04 Aug, 2021

Choosing to buy or rent a home in Dubai is an important yet difficult decision. The outcome will not only affect your lifestyle; it will also affect your financial health in the long term.There are pros and cons to both, often making it a tough choice.

To help you onto the right path, we’ve compiled a comprehensive guide to both renting and buying a residential property in Dubai. Here we look at both the advantages and disadvantages of both, comparing the options side by side. We’ll look in-depth at:

  • The property market in Dubai right now for both renters and buyers.
  • The best areas in the city to rent or buy.
  • The benefits of home ownership in Dubai.
  • The benefits of renting in the city.

By the end of the guide, you will feel up-to-date and informed, and in a much better position to make a decision. Here’s what to expect:

TABLE OF CONTENTS

  • Renting Vs. Owning: A Dubai Situationer
  • Top Areas for Property Investment in Dubai
  • Why Own Vs. Rent A Property in Dubai?
  • Why Rent Vs Own A Property in Dubai?
  • Making A Decision
  • FAQs About Renting Vs. Buying Property In Dubai

Renting vs. owning: An overview of the situation in Dubai

Let’s start by looking at what it means to buy or rent in Dubai. Each involves different levels of stability, different lifestyles, and very different financial commitments.  

Dubai has long been known for good returns on property investment. Current data available from the Dubai Land Department shows that one-third of properties are bought by satisfied returning investors. Property in Dubai is affordable. You can use DAMAC’s mortgage calculator to work out potential monthly repayments.

Click here for the Mortgage Calculator

Renting has its advantages too, especially given that Dubai is a city of many expats who may not wish to make a long-term investment in property here.  It is not all about money however; lifestyle is an important factor.

Renting vs. buying: A lifestyle choice

Dubai is unique in that both renting and buying are both popular. Depending on your situation, there are distinct advantages to both. When making the choice to rent or buy, your lifestyle will be a very important factor.

Take a look at this infographic for more idea of what might suit you:

The level of stability you are looking for in a home is very important, as well as the financial aspects. Look below at the sections that explore both buying and renting in greater depth.

Top areas for renting and buying in Dubai

Dubai has a very diverse range of properties of all types and for all budgets. This applies whether you intend to buy or rent. You are spoilt for choice. 

Whether you wish for an urban lifestyle with immediate access to leisure and retail facilities, or a quieter pace of life surrounded by green space, you can find it in Dubai

Here we look at some of the best properties available now in Dubai for both buying and renting.

5 example properties to rent

Enjoy the sprawling greens and lush fairways close at hand from this immaculate studio apartment. DAMAC Hills is a well-established and friendly community in Dubailand. 

Enjoy swimming, gym and spa facilities from this spacious studio apartment. Golf Promenade offers an array of excellent community amenities including world-class shopping.

  • Prime 1 bedroom apartment at Golf Promenade

Golf Promenade is an outstanding location on Umm Suqeim Road, meaning excellent access to the rest of the city. Living here on this spacious, airy development allows for the best of both worlds.

This nine tower development offers a selection of hotel apartments. It’s the perfect place to relax and unwind; feel like you are on holiday every day.

  • Fully furnished apartment with a pool view at Golf Promenade

With excellent access to the city, this furnished apartment makes living easy. Enjoy more free time on the golf course.

5 example properties to buy

Celestia offers a selection of studio, 1 and 2 bedroom apartments close by the Expo 2020 site. All stylish fully furnished apartments for sale are designed to offer easy, convenient living for the busy professional.

  • Luxury 1 bedroom apartments at Zada Tower, Business Bay

This area is known as Dubai’s most exciting, vibrant community. Enjoy a balanced lifestyle here; it features a wellness centre, landscaped gardens, an open-air cinema, and other outstanding community facilities. 

The ornate Chicago School of Architecture is the inspiration for the beautiful buildings of DAMAC Lincoln Park at Arjan, Dubailand. Enjoy rooftop terraces and beautifully styled apartments.

  • Luxury homes at DAMAC Heights

Invest in a dream lifestyle with these spacious, beautifully designed homes. DAMAC Heights at Dubai Marina offers stunning views of the Arabian Gulf and Palm Jumeirah.

This luxury hotel and residential tower is set to bring Hollywood glamour and California cool to Dubai. The development will feature a rooftop infinity pool and magnificent panoramic views from its location next to Sheikh Zayed Road.

Why own vs. rent a property in Dubai?

Question: Is now the right time to purchase property in Dubai? The answer: It depends. The outlook for Dubai’s property market continues to brighten, with a 34.5% year-over-year increase in residential purchase transactions in the first three months of 2021 already.

But this exciting property boom comes with rising prices, too. For the best real estate deals on property for sale in Dubai, you may need to act quickly.

While this might not be the best choice for everyone, owning property in Dubai has advantages over renting.

Whether you want to buy a permanent home where you can expand your family, or you’re searching for an investment property that will build wealth and accrue value over time, there are some important facts to keep in mind when considering homeownership in Dubai.

What are the benefits of buying property in Dubai?

Purchasing property in Dubai appeals to a variety of buyers, from expats who want to put down roots in this bustling global hub to Emiratis building their dream homes from the ground up. Dubai allows Emirati citizens, GCC nationals and foreign nationals to purchase property here. A residential visa is not required.

Whether you’re searching for a primary residence, a holiday home, or an investment to build wealth, owning property in Dubai offers comfort, stability and a tangible financial asset that will accrue value. Property ownership also helps to increase equity and credit, while paying rent does not.

Another advantage of buying a home is that it allows you to personalise the property to your needs and specific tastes. Rental properties come with limits as to what you can change, update and customise.

Also, any funds that you put into your home’s maintenance improves your quality of life now and increases your home’s value later. This isn’t the case when you rent because any money you spend on upgrades will ultimately benefit the property’s owner.

At the higher end of the property market, ownership presents a path to establishing residency in Dubai. For foreigners who purchase the title deed to a completed freehold (not off-plan) property valued at AED 1 million and above, Dubai’s government offers renewable 3-year to 5-year residential visas. 

What to carefully consider before buying real estate in Dubai

While owning a home in Dubai is more financially favourable in the long run, it might not suit your lifestyle.

Emiratis can live here permanently, for obvious reasons. But expats, who make up over 88% of people in the UAE, require a visa. For expats who are dependent on work visas, it might not make sense to buy property in Dubai if they are not sure how long they’ll stay.

Others, both expats and nationals alike, enjoy the unencumbered life of a renter. Renting allows them the freedom to live in different areas, or even move year-to-year if they wish, without making any long-term commitments.

However, the major roadblock to homeownership for most people is the significant down payment required for first-time property buyers. It is equivalent to 25% of the property price for expats and 20% for UAE nationals. (This rises to 35% for expats and 30% for UAE nationals when the property is valued over AED 5 million.)

If you’re unsure how long you’ll reside in Dubai, if you prefer to try out various areas of town before committing, or if you simply cannot afford such a large investment right now, it would be better to rent a property.

What are the costs associated with property ownership in Dubai?

Once you’ve determined that buying a property in Dubai is the right choice for you, it’s time to calculate the costs of homeownership here.

The down payment price of the property is the largest sum you will need to account for. But there are other fees incurred during the homebuying process that you might not be aware of.

Here are some figures you will need to add to your budget:

Dubai Land Department, the emirate’s real estate regulatory agency, charges a 4% transfer fee and an AED 540 administrative fee for all properties.

If you’re buying an off-plan home (meaning one that is unbuilt or partially constructed) directly from a developer in one of the new residential projects in Dubai, there is something called an Oqood fee, which the buyer pays to register the off-plan property. The Oqood fee totals 4% of the price of an off-plan home.

Buyers working with a real estate broker or agent to purchase resale properties (meaning real estate that has already been built and/or lived in) should figure in the estate agent’s fee. Estate agency fees range from 2% to 5% of the property’s price.

You will also need to appoint a licensed conveyancer to handle and file the legal paperwork that comes with buying a home. Conveyancing fees vary from approximately AED 6,000 to AED 10,000.

Some homebuyers pay entirely in cash, but most will require a mortgage. If you’ll be using a mortgage to purchase your home, consult DAMAC’s mortgage calculator to determine what your monthly payments will be.

You should also plan for a mortgage arrangement fee of around 1% of the loan amount. This, along with a property valuation fee between AED 2000 and AED 5000, goes directly to the bank providing you with the home loan. There is also a mortgage registration fee of 0.25% plus AED 290 paid to the Dubai Land Department.
Check the table below for a breakdown of these additional fees:

Buying a Home in Dubai: Key Takeaways

  • Consider your lifestyle
  • Determine how you’ll use the property
  •  Choose either off-plan or resale
  • Ensure you can afford the down payment
  •  Calculate the mortgage
  •  Prepare for extra fees

The Advantages of Buying a Home in Dubai

  •  Provides stability
  •  Offers a good ROI
  •  Builds equity and credit
  •  Allows for customisation
  •  Establishes a path to residency (if property costs + AED 1 million)

 

What are the benefits of renting property in Dubai?

Since most people living in Dubai are expats (more than 88%), it follows that renting property is the most popular choice for residents. The options are nearly endless, and every budget range is well-represented in available properties.

There are rental properties located in various areas to suit every type of lifestyle. Choose between a property set in or near the urban centre with all the conveniences and excitement of city living or a family-centric development with plenty of privacy and space.

Whether you’re looking at luxury villas, fully furnished apartments or new residential projects in Dubai, you’ll find a wide range of rental options on the market.

Though some people prefer to purchase a home, it’s not the right option for everyone. Renting in Dubai has plenty of advantages, with affordability and flexibility topping the list.

For newcomers to Dubai, it’s easier and more cost efficient to rent a fully furnished apartment or villa rather than move all their belongings or fill an entire home from scratch.

Others like the flexibility that renting affords them. Rental tenants have more freedom and can move yearly or even every few years with ease. This allows renters to try living in various areas of Dubai or in different types of spaces (such as going from an apartment to a villa, for example) at their leisure. Moving so often would be extremely difficult and impractical for homeowners.

Renting is more affordable, too. If you have budgetary constraints, renting is an economical choice. The deposit and related rental fees to secure a lease are far less than what you would pay to buy a home in Dubai.

If you’re just acclimating to Dubai, have budgetary constraints, or like the idea of moving homes whenever it suits you, renting in Dubai is clearly the better option for you.

What to carefully consider before renting a property in Dubai

While many people initially plan to live in Dubai for a specific amount of time, they find that they love it here and end up staying for longer than they initially planned — sometimes for decades.

Though it may seem like an encumbrance for some people, owning property in Dubai is a better long-term investment than renting for years and years.

Renting does not allow you to accrue value on a financial asset. Your rental cheques do not result in your ownership of the home.

Likewise, any time and money you put into a rental home’s upkeep eventually benefits the property owner, not the renter. Also, rental properties have strict limits as to what tenants are allowed to change or upgrade.

Homeownership confers status and can establish a path to residency with renewable 3-year to 5-year residential visas at the very high end of the property market.

Non-residents are allowed to buy property in Dubai, but long-term rental contracts are dependent on residency visas. Tourist visas are ineligible for yearly rental agreements.

If you think you’ll reside in Dubai for a while and you can afford to purchase a home, or if you’re interested in using your property as a wealth-building strategy, it would be better to buy property than rent it.

What are the costs associated with renting property in Dubai?

Once you decide that renting property in Dubai is right for you, it’s time to begin calculating the costs and planning a budget for your move.

The first rental cheque and security deposit are the largest expenditures you’ll make as a tenant. Generally, the security deposit is equivalent to 5% of the yearly rent. It will be returned to you when you move out, minus any maintenance or repair costs for damage to the property.

The number of rental cheques you submit to your landlord will be stipulated in your tenancy contract. Any number of cheque payments between one (meaning one cheque paying for the entire year) and four (meaning one cheque paid every three months) is normal.

Your landlord may be willing to negotiate a decrease in the yearly rent if you can pay a larger sum upfront or in fewer cheques.

You’ll also need to budget for the agency fee if you work with a real estate agent. The estate agency fee varies from 2% to 5% of the annual rent.

It is mandatory to register your tenancy contract with the Dubai Land Department’s Real Estate Regulatory Agency (RERA). This is for your benefit and your landlord’s, should any dispute arise. There is an Ejari fee of AED 220 required to register property, regardless of its type.

To set up your water and electricity supply, you’ll pay the Dubai Electricity & Water Authority (DEWA) a refundable deposit of AED 2,000 for apartments or AED 4,000 for villas. There is an additional DEWA setup fee of AED 110.

It’s important to note that the Dubai Municipality adds a housing fee equivalent to 5% of the annual rent to your DEWA bills, too. This amount is spread out over 12 months.

Keep in mind that there are other expenses like gas and chiller (air conditioning) fees, which depend on the size of your rental property and your usage level. Internet, television, phone setup and service charges also vary depending on each provider

Check this infographic below for a breakdown of the additional fees:

  

Renting Property in Dubai: Key Takeaways 

  • Decide on an area 
  • Choose furnished or unfurnished 
  • Check that the property meets your needs 
  • Ensure you can afford the yearly rent 
  • Familiarise yourself with the processes 
  • Anticipate additional fees 

The Advantages of Renting Property in Dubai

  • Affordable on any budget
  • Provides more flexibility
  • Good for short-term residents
  • Allows more freedom of movement
  • Will not accrue debt or lose value

Should I rent or buy?

Making a decision: Should you buy or rent a home in Dubai?

●       Check yourself

Make sure you meet all the requirements, whether you intend to rent or buy. Do you have the documents, visas, and statements you’ll need?

●       Budget it out

Calculate costs realistically. Think beyond the down payment and the rental cheque. Fees are hiding everywhere!

●       Set a timetable

You can look for a home to buy a year or more in advance, but two or three months is enough time to secure a rental property.

●       Plan forward

Think about your immediate needs and what you might want later. Do you intend to settle down here or establish your family? Your future self will thank you for your foresight.

●       Make smart choices

If you cannot afford to buy property right now, it’s better to rent. If you are ready to buy, consider locations where property values are projected to increase in the years to come.

●       Trust your partners

Only work with approved developers and licenced estate agents or brokers, whether you are looking to rent or buy property in Dubai. Check for RERA accreditation and ask for recommendations.

●       Prepare for the paperwork

Renter and buyers should expect plenty of signing and filing. Making extra copies of all required documents will save you time later.

Frequently asked questions about renting vs. buying property in Dubai

It depends. If you plan to stay in Dubai for the foreseeable future (or want an investment property) and you can afford it, owning a home is a smart financial choice. If you need flexibility or you’re not sure how long you’ll live here, renting is the better option.

How do I get started?

Renting and buying begin the same way. Check listings in the areas that appeal to you and make a list of your favourites. Contact the estate agent or developer, then visit each property if possible. Prepare a timetable and decide how you’ll finance the transaction.

How can I tell if my estate agent or developer is trustworthy?

Whether you’re renting or buying property, it’s extremely important to work only with licenced estate agents and approved developers. Visit the Dubai Land Department website to perform a quick check.

Do I need a residency visa?

You do not need to be a resident of Dubai to purchase property, but you do need a residency visa to secure a long-term (annual) property lease. 

Now that you know the differences between renting and buying a home in Dubai, you’re ready to take the next step.

Renting vs Buying a Home in Dubai: What You Need to Know

Helpful Links
To Calculate Rent Increase:

https://dubailand.gov.ae/en/eservices/rental-index/#/

To Check Fluctuations in Rental Price By Area:

https://www.propertymonitor.ae/research/uae-communities-index/dubai-rent...

Download an Ejari form, File a Complaint & Check The License of an Estate Agent:

https://dubailand.gov.ae/en/#/

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