Dubai: How much money should a UAE Resident earn to buy a home?

Dubai: For many expats, owning a home is a long-term goal, and a mark of financial stability, to which many assume huge amounts need to be saved/invested for years. However for UAE residents, it might actually be better – and cheaper – to buy instead of renting.

Paying Dh6,000 for 20 years in rent sums up to around Dh1.4 million – this is without accounting for inevitable rental increases. In the last year alone, rent rates have increased by 19 to 20 per cent. Even with a projected increase of 5 per cent yearly, someone paying Dh6,000 this year would have paid over Dh2.19 million in total at the end of 20 years. Add the costs of moving and other hidden costs – it is clear that buying is the smart financial move if planning to stay in the UAE long-term. We look at the feasibility of owning a home in Dubai for someone with an income of Dh15,000 to Dh30,000 – detailed at the bottom of this report.

Owning instead of renting
Indian expat Sharan (43) was fed up of yearly rental increases and moving.
“My landlord had increased my rent twice, and my wife and I had already decided that we would stay in Dubai long-term,” Sharan added. This spurred the couple’s decision to buy a flat. The sales manager is paying nearly Dh7,000 in rent every month for his current two-bedroom home and loves the layout and the size at over 1,500 sq.ft.

With the help of an agent, he secured mortgage for a two-bedroom apartment
on a different floor in the same Dubai Marina building. The apartment price
was Dh1.2 million plus fees and charges. Compared to his current rent, Sharan will dish out just Dh900 extra each month on his mortgage including service charges. The flat is already rented
out at Dh96,000 a year. Just a month in, Sharan’s new flat pays for itself through rent (plus a little extra in cash) – until he moves in. And when he does, Sharan will be immune to further rental hikes.

Off-plan or Ready Apartments?
Off-plan sales in the UAE make up a huge chunk of property sales in the country, and the main attraction is the low cost of entry and attractive payment deals. When buying straight from the developers, buyers can also take advantage of further discounts, contribute to design discussions and get high capital appreciation for the property. But which is better for residents – off-plan or ready? Milos Antic from Swiss developer DHG Properties said, “In Dubai, the strength of the off-plan sector is evident; sales values in this segment reached an impressive Dh35.71 billion ($9.7 billion) in Q3 2023.”

If you can afford to pay 30 per cent of your Dh30,000 salary towards rent – it
comes up to Dh9,000 a month. Any off-plan property purchase, along with your rental expense, would mean an additional payment out of your pocket/savings with chances of capital gain or rent income in the future.

“With that said, renting or buying depends on any given family’s situation.
Regardless of whether they are looking to rent it out for profit or live in it, off
plan properties provide something that ready-made developments do not – a
lower cost barrier to entry.”

It is important, however, to note that mortgage for off-plan properties is much
harder to get (since banks prefer allowing such loans only for major
developers), and is limited to around 50 per cent of the property value.

Most popular areas for property buyers according to data from Property
Finder were Dubai Marina, Downtown Dubai, Jumeirah Village Circle (JVC),
Business Bay and Palm Jumeirah. Bayut’s list also includes Al Reem Island,
Jumeirah Lake Towers (JLT) and Dubai Silicon Oasis (DSO).
For mid-market two-bed apartments costing from Dh950k to Dh2.2 million,
the following areas are also popular: Town Square, Barsha Heights, Dubai
Sports City, Motor City, Al Furjan and Arjan, according to Bayut.

Mid-market homes from developers
ZaZEN Properties, a developer focused on affordability and sustainability, hopes to address this. Madhav Dhar at ZaZEN commented, “In 2019, it was reported that just over 77 per cent of adults in the UAE had a net worth of less than $100,000 and approximately 22 per cent of this demographic had a net worth exceeding $100,000.”
“We understand that not everyone can afford the glamorous lifestyle that
Dubai is synonymous with,”
he added. The company aims to provide high
quality property affordable to the mid-market customers, Dhar added.

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