The appeal of renting vs. buying residential properties in UAE
What would you choose – Rent or buy a residential property in the UAE? The surge in property prices has sparked curiosity. According to The luxury playbook, there has been significant growth in the Dubai real estate market. Have a look at the price trend of Dubai real estate.
(Source: Theluxuryplaybook)
The property price, which was 11,92,888 in 2022, has risen to 12,67,000 by 2024. You also might talk about end number of factors which will lead you to decide – renting a home suits your needs or buying a home is the right choice for you. Why rely on a few factors? – let’s dive into facts. Let’s find out what UAE residents had to say.
To get a clearer picture of preferences, we reached out to UAE residents through a survey. 58% of respondents were male, while 41% were female, with average earnings of $1500 to $7500. Additionally, approximately 65.78% of respondents work in the private sector. Here’s what they had to say about navigating Dubai’s real estate scene as we complete Q2 2024.
We asked our respondents,
Are you living in a rented property or owned?
Approximately 80.21% of respondents live in rented properties, while 14.44% own their own apartments in the UAE. Additionally, 4.28% of respondents converted their properties into investments and opted to live in rented accommodations. Only 1.07% of respondents owned commercial properties.
Let’s delve into the primary factors driving the choice of renting.
Which was the important factor when choosing a property to rent in the UAE?
The winner was – “Location”, followed by “price” and “safety”. Interestingly amenities came at 4th when it comes to choosing the right home. What would be your top priority when choosing a home?
What are the benefits of renting a property?
Here are the top benefits:
Less upfront cost
For 51.32% of respondents, less upfront cost was a very important aspect to consider. When you rent a home, you don’t have to worry about down payment, property tax, homeowner insurance, legal fees etc.
Decreased maintenance responsibility
46.71% of respondents rated decreased maintenance responsibility as “Very Important,” indicating that nearly half of the respondents view this benefit as a crucial factor in their decision to rent rather than own property. While, 38.16% of respondents considered it “Important,” showing that a substantial portion also values this benefit.
Fixed cost
With 48.68%, nearly half of the respondents see fixed costs as a crucial factor. Additionally, 35.53% rated it as an “Important” factor when renting a property.
What made you choose to rent instead of owning?
You might be wondering if you’re still trying to decide between being a “wanderlust” traveller or settling down. Check out what our respondents thought. Here are some key reasons why people are leaning towards renting instead of buying property:
Financial constraints:
Over 50% of respondents mentioned financial constraints as the primary reason for renting. Some of the financial constraints are listed below:
Lack of capital:
Respondents indicated they do not have the necessary capital to purchase property. This lack of capital is a significant barrier to ownership.
Insufficient earnings and low Income:
Respondents also cited low income and insufficient earnings ranging from $1500 to $2500 as reasons they cannot afford to buy property.
The real cost of buying a house:
The high costs associated with purchasing and maintaining the property, such as down payments and ongoing expenses, were also mentioned. According to Property finder, there are end number of extra costs to consider when buying a property in Dubai. For example- government fees, agency fees, insurance fees, mortgage fees etc.
While renting a home offers its advantages such as flexibility of changing homes, lower initial costs, access to amenities, financial flexibility etc, still owning a property might be a goal on your bucket list. Let’s explore what it’s like to own a property in the UAE.
What does owning a property look like in the UAE?
14.44% of respondents own a property. We further wanted to analyze which factors led respondents to buy a property rather than renting it. Let’s dive into the findings.
We asked respondents,
What type of property do you own in the UAE?
74.29% of respondents owned apartments and 25.71% owned villas. Interesting data was revealed by Square Yard on how much money people are spending on buying a property. Take a look –
“In Q2 2024, UAE’s real estate market reveals intriguing trends. Budget-wise, 67% of transactions fall under 2 million AED, showcasing affordability. Transactions above 5 million AED account for a modest 4%, indicating selective high-end investments.”
Buying a property might make sense for some of the residents. The primary question would be why to invest in UAE real estate at this point. Besides a strong return on investment, the UAE offers several other advantages for those considering real estate investment:
Return on investment
Many respondents view property ownership in the UAE as a sound investment offering good returns and a steady income through rent. This includes the promise of high ROI and the benefit of inflating cash value rather than letting it devalue in the bank.
A tax-free environment and promising market conditions in the UAE further enhance the attractiveness of owning property.
Quality and comfort:
Respondents appreciate the quality, comfort, and safety of the UAE properties, noting that these factors contribute to a better living experience for themselves and their families.
Cost savings:
Owning property is seen as a way to save on rent costs and avoid the ongoing expense of renting. It is also noted as an opportunity to secure one’s future.
Security:
The UAE is regarded as one of the safest countries for property ownership.
One of the latest initiatives from Dubai police, to increase security in the emirate is to use drone alerts. Dubai Police mentioned,
“We aim to utilise cutting-edge technology to boost safety and security by swiftly responding to emergencies, in line with the highest global standards” Next time you see the drone, you know it’s from Dubai Police.
Lifestyle:
The UAE is regarded as one of the most appealing places to live and invest, thanks to its city environment, exclusive facilities, and overall attractiveness for property ownership.
Long-term commitment:
Some respondents have a long-term vision of living in the UAE and see property ownership as a way to cement their commitment to the country, reflecting a stable lifestyle and family security.
Understanding all the reasons to buy a property is crucial. Equally important is focusing on the benefits of property ownership in the UAE. To gain insights, we asked our respondents which was the most important benefit for them while buying a property. Starting from amenities, freedom to invest elsewhere, fixed costs and flexibility in relocation were very important benefits for respondents.
The million-dollar question would be,
Would you ever choose to buy a property instead of renting? – the residential properties dilemma
You’d probably say “yes” without a second thought. Here is what UAE residents think:
The majority of respondents (54.25%) prefer to purchase a property. Additionally, 38.56% are open to the idea, while only 7.19% would choose not to invest in real estate. Which one are you?
What factors influence your decision to invest in residential properties in the UAE?
Real estate market growth with 44.39% and personal interest in the location with 41.71% – were the majority factors when making a decision to invest in properties in the UAE.
According to Square Yard, “The Dubai Land Department registered a staggering 32,109 transactions in the April-June 2024 period, marking a 32% increase compared to the same period last year. The total sales value reached AED 63 billion, reflecting a robust 23% growth year-on-year.”
Real estate market growth is influencing investment decisions. Along with it, economic stability in the UAE and rental yield potential are also key factors in determining whether to buy property in the UAE or not.
Usually, when it comes to investing in property, rental benefits have come on top as they provide steady income with long-term value.
We asked our respondents which are the key factors they focus on while buying property as an investment:
According to our survey, property value growth and location stability are the major factors to consider when investing. The stability of a property’s location is crucial for ensuring steady rental income and minimizing risk. Look for areas with low crime rates, good schools, and amenities that attract long-term tenants. 57.14% of respondents considered it a very important factor. 51.43% of respondents also focused on investment diversification to keep real estate in their portfolio.
Top tips by UAE residents for residential properties
If you are planning to buy a property in UAE consider below criteria:
Conduct thorough research:
Explore a wide range of properties to find the best fit for your needs and preferences. Don’t settle for the first option that meets your criteria—compare various properties to ensure you’re making an informed decision.
In our survey, 80.21% of respondents relied on online property portals to gather information on properties, locations etc. And 69.52% of respondents relied on friends and family before making investment decisions in property.
Choose location and developer wisely:
Select a location that suits your lifestyle and plans. Opt for a reputable developer with a strong track record of quality and reliability to avoid potential issues down the line.
Key developers in the UAE include – Damac Properties, Emmar Properties and Binghatti.
Understand facility management:
Before moving in, familiarize yourself with the facility management provider. Speak with current residents to gauge their experiences and ensure the provider maintains high standards.
Evaluate true ownership costs:
Calculate the full cost of owning the property beyond the purchase price. Consider additional expenses such as service charges, maintenance fees, and other ongoing costs that may vary significantly.
If you want to understand what would be a better choice for you – renting or owning a home – you can run your numbers using propertyfinder calculator.
As per our survey, currently, 66% of respondents own property outside the UAE, still 32.62% are planning to buy property in the UAE.
Conclusion
As property prices rise and preferences evolve, both renting and buying offer distinct advantages. Our survey underscores that while renting provides flexibility and reduced upfront costs, owning property remains a coveted goal for many, driven by long-term investment potential and the allure of stability. With key factors like location stability and property value growth shaping investment decisions, it’s clear that UAE residents are strategically evaluating their options.
Ready to run your survey or do you need help with your next study? Reach out to our UserQ team for expert guidance. With access to over 13,500 testers, we can help you gather real feedback quickly.
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