Why more UAE residents are opting to buy apartments than rent them
Young and middle-aged residents who intend to stay in Dubai on a long-term basis are increasingly opting to buy properties rather than rent them.
Real estate industry executives and analysts say that this trend is mainly witnessed among the salaried class people who are in their 20s, 30s and 40s who are investing to hedge against inflation.
As a result of this, the market, of late, has seen newly-launched projects being sold out very quickly, some of them in a day.
In March, Danube Properties’ Dh300 million Pearlz project was sold out on day one of its launch.
A recent study by real estate brokerage Union Square House said that from 2021 to April 2022, residences by all major developers in Dubai have been fully sold out, and now trading at a premium on the secondary market.
“We have successfully sold out the complete launched inventory of the project,” said Rizwan Sajan, founder and chairman of Danube Group.
Sajan credited the company’s attractive payment plan and affordable luxury developments that resulted in its projects being sold out in a day.
“The projects are being successfully sold out because investors have a lot of confidence in Dubai, plus prices in the Emirate are much lower than other major cities,” he said, adding that the company’s long-term payment plan also makes it easier for people to purchase the property.
Danube’s newly-launched Gemz project in Furjan offers a 10 per cent advance and one per cent per month and five per cent after six months.
“That’s one of the successful mantras of Danube Properties. My aim is to convert people who are living in rented apartments to buying their own homes. And that’s happening because people here in Dubai are staying for a long time and they have savings. People who earn over Dh20,000 can easily pay instalments and own an apartment in Dubai,” said Sajan.
He said around 70-75 per cent of buyers are professionals in the age of 20s, 30s and 40s who have been already living in Dubai while the remaining people are foreign investors.
Edward Macura, partner at real estate consultancy Core, says residents with a long-term outlook have been increasingly looking to buy than rent over the last 12-18 months. “With rising prices as well as rents and a potential rise in interest rates, many are looking to hedge higher acquisition costs and climb the property ladder by becoming owner-occupiers.”
He said while residents form a higher share of buyers, foreign investor interest has significantly increased over the last 12-18 months. “With a range of property-linked visa reforms coupled with Dubai’s socio-economic positioning and a very investor-friendly market, we expect many more foreign investors to invest in Dubai over the near to mid-term.”
Most buyers, according to Macura, are between the age group of 30-40 years of age.
Ayman Youssef, vice-president of real estate company Coldwell Banker, said most of the time, a population increase supports the demand for rent. “This is because when people move to Dubai they prefer renting a property for a year or two before making the buying decision,” Youssef said, adding that the demand for off-plan property buyers is coming equally between residents and non-residents while resale is dominated by residents.
He added that UAE, India, Pakistan, China, Middle East have been the main markets but they have seen a significant increase of buyers coming from Europe, the UK, Germany, France and Russia.
“International clients prefer off-plan as they are more comfortable paying over three to four years, as it’s easier than obtaining a mortgage. A lot of investors are investing in property to hedge against inflation,” added Youssef.