7 reasons why now is the best time to buy a home in Dubai
Traditionally, most expats that move to the UAE rent apartments instead of purchasing one, with the intention of saving the money they make in Dubai to buy property in their home country.
With many expats staying in the country for longer periods of time and with real estate prices continuing to see a decline, experts say that buying a home in the UAE can save you money. And here are some of the reasons why:
1. Buyer’s market
Certainly, Dubai is currently a buyers’ market. JLL estimates that average residential prices in Dubai have dropped by roughly a quarter of its value since its peak in 2014. This includes a 10 per cent fall in apartment values and a 9 per cent fall in villa prices in 2018.
With more new stock coming onto the market, the firm predicts that prices in the sector will fall by another 5-10 per cent this year.
2. Rent Vs Buy
But does this mean that it is now cheaper to buy than rent?
Mario Volpi, sales and leasing manager at Engel & Völkers Dubai, says that buying usually makes financial sense for anyone who intends to remain in Dubai for seven years or more.
“Assuming one stays in Dubai for a longer period, typically seven years or more, it is definitely cheaper to buy than rent, even taking into consideration all the fees and costs involved,” he says. “If one is staying for a shorter period than renting is still a better option. My advice to buyers is to get onto the property ladder now while prices are still good value.”
3. Do the math
However, Volpi adds that the amounts work out differently for each person and depend very much on not only the price of the property and the length of time you stay but also your current rent, the size of your down payment, the term of the property finance and interest rates.
“The market has not yet bottomed out, but is softening and heading towards the trough, for this reason, buyers use this opportunity to pick well located properties and negotiate the price downwards in their favour,” says Haider Tuaima, head of real estate research at ValuStrat.
4. Higher returns
However, even for investors who have no intention of living in a property and just want to take advantage of Dubai’s relatively high rents, brokers say that purchasing now can still make financial sense.
They point out that returns on investment for residential property in Dubai currently stand at around 6-8 per cent. This compares with an ROI for similar property of less than 2 per cent in Hong Kong while in London and Singapore the figure stands at between 3.7-4.5 per cent, according to a report by Moody’s Investors Service in April.
To support investors who want to buy property in Dubai and take advantage of rental yields, Amlak Finance, a leading specialised real estate financier in the Middle East, has a product called Istithmari that is designed for investors looking to invest in completed residential and/or commercial properties. It is the first-of-its-kind buy-to-let property finance product (Ijara) that offers up to 65 per cent financing available for ready properties.
5. Finance rate as low as 3.99%
Record low finance rates around the world also make it cheaper to buy at the moment. In April, the US Federal Reserve decided to hold rates steady suggesting the current unprecedented low rate environment is likely to remain for some time to come.
Amlak Finance has a unique product that offers a fixed financing rate of 3.99% for the first year for customers who are looking to finance a ready residential property in UAE.
6. New visa rules
New UAE visa rules are also expected to boost demand for Dubai homes, pushing up prices and rents in the long term. Last year, the UAE government approved a series of measures aimed at stimulating the economy and encouraging long-term investment.
This included enabling expats over 55 to secure five-year retirement visas if they own property worth at least Dh2 million or have Dh1 million in savings or an active income of more than Dh20,000 a month. The new rules also allow key workers such as doctors and engineers access to long term visas.
7. Expo 2020 is coming here
With Expo 2020 just over a year away, experts are also banking on the additional demand from visitors and a stimulus to business confidence which could signal a house price recovery.
“Capital appreciation on any given property purchase will begin to show once the market starts to rise. Everyone will have an opinion as to when this is likely to happen, but given the Expo is only 483 days away must point to a change of fortune for property soon,” says Volpi.
Source: Gulf News