UAE Property: ‘Is it more financially savvy to buy or rent?’

Question: I’m considering buying a two-bedroom apartment in Dubai. I earn a monthly income of Dh28,000 ($7,624) and my current house rent is Dh6,000, which will likely increase over time.

I am considering buying property in Dubai Sports City, International Media Production Zone, Jumeirah Village Circle, Jumeirah Village Triangle or Arjan.

I plan to stay in Dubai for the next 15 to 20 years, so I’m thinking about shifting from renting to owning. However, I’m hesitant because Dubai's real estate market feels quite different from other developed cities.

There's a seemingly endless supply of land, and new buildings are popping up constantly. This makes me worry about the demand (and value) for older properties declining sharply.

Building quality is also a concern. I’ve heard that not all buildings are constructed to the same standard, which could affect their long-term value and maintenance costs.

My main goal is to divert the money I currently spend on rent into a mortgage, hoping to at least break even when I eventually leave Dubai. However, I’m unsure if an apartment will hold its value in the long run, given the market's current dynamics. Am I making a mistake by investing here instead of continuing to rent? I can't afford a villa, so that’s off the table for now. PT, Dubai

Answer: The argument of whether to rent or buy is one that has been debated for many years now and, of course, it depends on one’s personal circumstances, but mainly, you should look at it from an economical point of view.

Renting offers more flexibility, allows you to move around and live in different areas in order to understand what one may like. But remember that rent money is dead money and only if you buy a property, will you benefit from any capital appreciation, when it eventually sells. Obviously, prices rise, but they fall too, so this needs to be taken into consideration.

I would like to address some of your concerns. Firstly, the potential endless supply of land. Technically speaking, you are right, however, most would like to live where there is life and action in the form of amenities and facilities, malls, attractions etc. For locations such as these, land is not freely available, therefore, I would suggest that this problem of an endless supply of land is not really an issue, as you may think.

The demand for residential real estate is currently very strong and will continue to be so, driven mainly by the current level of population growth. The way the federal and local governments are driving investment and spending in areas of trade, tourism, infrastructure and real estate, which are the main pillars of Dubai, will ensure that the population keeps increasing, especially by having a strong and stable economy. Dubai specifically and the UAE in general is attracting many individuals from around the world to live, work and enjoy the lifestyle here.

Building quality differs from developer to developer and their maintenance is also an important factor when choosing where to buy. I would urge any investor to do their due diligence by assessing the quality of each developer’s different towers and how they stand up in today’s market.

Lastly, developers mainly build apartments as this asset class offers them the best value in cost per construction ratios. Even if there is a lack of villa and town houses, I wouldn’t worry that there are too many apartments being built because apartment living offers residents all their needs when comparing the facilities offered such as the pool and gym etc., and often the location will have all that is required on a day-to-day basis.

The areas you’ve picked are desirable, especially JVT, JVC, Sports City and Arjan. IMPZ, or Production City as it’s known now, is also popular due to its affordable aspect.

I would, therefore, say that if you decide to buy, you will not be disappointed because your reason for investing is a strong one and you are likely to gain in the short to medium term. Buying for living purposes is the best reason and you will, no doubt, be pleased with the results for years to come.

The opinions expressed do not constitute legal advice and are provided for information only. Please send any questions to mario@novviproperties.com