Rising rental prices are driving many Dubai residents to buy property for the first time in the emirate, real estate experts said.
One of the main reasons for the trend is mortgage prices are now in line, or often cheaper, than the monthly cost of renting a home in Dubai.
The hassle of having to renegotiate rent each year was another reason why people were keen to own their own homes, first-time buyers told The National.
“We’ve seen a number of Dubai residents move from renting a property to purchasing their first home across the city,” said Charlie Bannan, sales director for real estate agency, haus & haus.
“With rental prices rising around 20 per cent over the past 12 months in Dubai’s core communities, and buyer registrations being at an all-time high for haus & haus across the same period, the two are certainly linked.
“The catalyst for a large proportion of residents debating renting versus buying is due to the monthly mortgage payments now being either comparable, or often less on the purchasing side.”
Another factor behind the rise in first-time home ownership is many residents have spent several years living in the UAE and they now want to put down roots.
A three-bedroom villa in Sidra, Dubai Hills, costs between Dh280,000 to Dh300,000 per year to rent, but Mr Bannan said the mortgage payments for the houses, which are valued at Dh4.85 million, would be under Dh250,000 per year.
“Naturally, this is only an option for residents who have the cash funds available for the initial down payment to switch from renting to purchasing,” he said.
Among the most sought-after locations for first-time buyers in the emirate are Dubai Hills, Arabian Ranches and Emirates Living.
The property expert said one of the most common requests from renters hoping to buy property is that they can move into it almost immediately.
“The main requirement for buyers who find themselves looking to purchase in the current market is a vacant on transfer home, meaning they can occupy the residence once taking full ownership,” said Mr Bannan.
“We are seeing, now more than ever, buyers open to more than one community to find a home which not only fits their wants and needs but also ticks the main box of being vacant on transfer.”
There was an increase of up to 21 per cent in the cost of renting a “reasonably priced” apartment in Dubai in the first half of 2022, data released by Bayut and dubizzle showed.
The cost of renting luxury apartments has increased by an average of 43 per cent, whereas the rent on an upscale villa has risen by up to 30 per cent.
Visa status led to first-time purchase
One Dubai resident who bought a new home after renting for more than two decades is Craig Cochrane, originally from the UK.
“One of the reasons we decided to buy was the volatility of the rental market. I didn’t look forward to having to renegotiate each year with the landlord,” said Mr Cochrane, who works in the hospitality industry.
“Before, I was concerned that because my visa was tied to my work, that it didn’t make sense to buy a property, because we didn’t know how long we would be here for.
“That all changed last year when I received a golden visa. This made me think it was a good time to finally buy a property.”
Mr Cochrane is about to take ownership of a three-storey apartment in Dubai Marina next month.
He currently lives in a villa in Jumeirah Park with his wife and three children.
He would not disclose how much he paid for his new home but admitted the monthly repayments would be less than the Dh250,000 he currently pays in rent.
Also buying her first property in Dubai is Katy Granville, originally from the UK, who works in marketing.
“We wanted somewhere to call our own instead of paying rent,” she said.
“I’ve lived here with my husband for 11 years and as time has gone on, and three children later, we decided we wanted to stay here for the medium term at least.
“What gave us the kick was when property prices started to increase last year, our landlord decided he wanted to sell so he gave us our eviction notice.”
Now Ms Granville is about to move into her new home in The Villa, after renting a house in the Mira community in Dubai South for the past few years.
She had been paying Dh120,000 a year in rent. She would not say how much she is paying for her new home, other than the monthly payments will be more than she spends currently on rent.
“It’s worth it, though, to have a much bigger home and to know we don’t have the annual hassle of having to renew the rent,” she said.
Another real estate expert said it was clear the mindset of many residents is changing.
“People are thinking why should they rent anymore when the market is continuing to rise and they could get a fixed monthly mortgage,” said Mario Volpi, sales and leasing manager at Engel & Volkers Dubai.
“It makes sense if they are secure in their jobs. It’s definitely a trend I am seeing.”