Property rents in the UAE rose slightly in the past one year, although the availability of vacant units is large. As a result, many present tenants are faced with the tough task to negotiate if they want to spend one more year in their homes. Logically, two questions appear: “Isn’t it better to buy a home in the country?” and “Is it now the right time to buy a home in UAE?”
Even though the local legislation prohibits landlords from increasing rents using shady methods, they frequently find ways to circumvent the law. For example, they inform their tenants that they want to sell the estate or to move in it. However, as soon as the tenants move out the lodgings, the landlords decide otherwise and return the property on the market.
Thanks to this trend and the post-crisis revival of UAE’s economy, the rents increased over the last few months.
Talks about rising rents urge residents to consider buying homes. However, to buy a home in UAE is also not a safe bet.
The real estate market in Dubai recently shows signs of recovery from the credit crunch during which prices decreased by over 60% in many areas of the city.
Property prices reportedly and evidently increased during the past one year. How many percent exactly, is hard to estimate, as all different property consultancies and real estate agencies state different figures. Roughly estimated, the increase is somewhere between 5% and 25% and it doesn’t apply to all areas of Dubai. A fact of note is the tremendous availability of vacant units.
Additional proof for increased activity in the property market are the actions of real estate companies to hire more staff. However, buyers still need to watch their step.
Even though the crisis made investors more cautious, there are still investors who have not learnt anything from the past and many newcomers who are even more naive.
Many people who were in Dubai between 2003 and 2008 participated in property speculations back then. The most successful of them who remained in the city sensed the market current back in 2012. Some are actively speculating again, even with smaller profits. New expats and visiting tourists are the easier victims of speculations, because they have limited or no experience at all.
Another serious issue is the mode of payments. Some buyers pay cash, but there are no many of them walking around with loaded suitcases. The majority is obtaining mortgages, but not all lenders are very willing and flexible with the lending process. In addition, lending regulations are in a process of consideration by the Central Bank of UAE.
So what is the right answer to the initial question “Is it the right time to buy a home in UAE?” Those who cannot pay cash or obtain a mortgage, should better continue to be tenants. However, you need to be smarter when choosing a landlord and an area to rent a home. If you spend more time searching, you may find honest landlords and good deals. Contrary to what you may read elsewhere, still there are rental deals with free of rent two months grace period.
Those of you, who have the money to make a deposit, should consider if they are really willing to take a risk to buy a home in UAE. The commitment is long term and with so much empty lands around the property supply seem endless.
If you decide on a mortgage, you need to make a proper research and then make your final choice. A good interest rate is somewhere around 4% to 5%. In addition, you should get familiarized with all the fees you might be required to pay extra. The additional fees may amount to quite a lot.
Still, there are options to buy ready to move in property in Dubai with 2 or three years installment agreement. This is the most lucrative of all present opportunities, providing you have a substantial regular income to follow the installment plan.
As soon as the real estate market becomes more stable, which may not actually be very soon, for long term expats it will be very logical to purchase a property instead of renting it. Traditionally, summer months are slower for business and therefore considered the right time to hunt for the best deals.
