Trends in recent years tell a very exciting story: renters are “trending” into becoming homeowners. As it turns out, the perfect cocktail of rising rents, the promise of future price hikes, and the peace of owning your own space are waves of interest in buying homes here. Let’s dive into why many tenants in Dubai are making this move to buy now.
Dubai’s Rental Market: A Quick Overview
Dubai Rental Market has increased with the city’s changing economic configuration and global status. For the first half of 2024, the rental market shows an entirely different picture. For instance, luxury apartments’ rent increased by 7.23% yearly. As for villas, it grew by 4.48%. Two regions named Damac Hills 2 and Mirdif headed the chart with affordable rent for villa homes and average annual rents up by 2.75% and 2.13%, respectively. The highest increase in rental prices has been accounted for in luxury villas, followed by Dubai Marina , along with an overall increase of 7.71%.
However, there has been little change at the affordable end. Deira and International City remain the most in-demand locations, with average asking rents running between AED 62,000 in Deira and AED 88,000 in Bur Dubai. Dubai Marina leads the luxury end, with asking rents up by 1.32%. Luxury houses in the megacity cost anywhere from AED 112,000 per annum in DAMAC Hills 2 to AED 207,000 in JVC.
According to Dubai Land Department and dubizzle, the average annual rent paid in rental apartments goes as high as AED 169,000 in Dubai Creek Harbour, AED 217,000 in luxury flats in Palm Jumeirah , and AED 123,000 in luxury rental apartments in Business Bay in H1 2024, reflecting an increase of 0.82%.
Rising Rents and the Dream of Ownership
Have you noticed in the market overview that rents are only going up? You are not alone there. By the way-most of your fellow tenants feel the pinch. On the other side, the rental payments are very similar to the figures you’d pay in a mortgage while buying a property in Dubai .
According to Better Homes, 66% of the tenants in Dubai plan on buying a house within six months. Why? Simply because they do not want to pay money in the form of high rents.
DLD data also tells the same story. In the first quarter of 2024, Dubai saw 37,000 property sales, totaling AED 109.6 billion. This reflects the want of more tenants for homes they own.
Factors behind the Shift
This shift in buying tendency is not only backed up by one factor. If you scroll down you can see multiple factors inclining the renting tendency to buying.
Millennia lead and Gen X
Interestingly, the younger crowd is taking the lead. Millennials make up the largest segment of potential new buyers: 56% fall in the 28- to 43-year-old range, followed closely by Gen X buyers at 29% of the potential home-buying crowd.
What is driving this desire? Well, security, larger spaces, and shorter commuting times all have a part to play in wanting to settle into their own homes. It’s not about just having a place to live but finding a home that perfectly matches lifestyle needs.
Space and Security Factor
Another major factor in why so many people are jumping to buy is space. Think about it—how many of us in rented accommodations feel like we just don’t have enough room? A guest bedroom, a home office, a walk-in closet-these are the kinds of features that are on most renters’ wish lists. As a Tenant, anyone always thought of having more space. They want extra bedrooms, a maid room, and dedicated areas for work or study.
A gym, swimming pool, and green spaces also feature high in the list of requirements. It is all about living comfortably and having space for your belongings.
The Commute Factor
For many buyers, a shorter commute is a big reason to buy. Travel time takes away one third of your day during the busy hours of Dubai. Most renters find homes that save them a little time traveling to and from their offices, schools, or shopping areas. Interestingly, 60 percent of possible buyers seek homes close to their offices, an ideal commute within 15-30 minutes, for which Dubai averages just 23 minutes. It’s not always possible in a city that’s growing all the time, but certainly, it is a dream of many.
Investors Are Also Noticing
Not only tenants who want to break free from the rental shackles-investors are equally eager to increase their property counts because Dubai has real capital appreciation potential. According to the Betterhomes study, high-net-worth investors are primarily attracted to the high potential of capital growth.
Even those who earn less than AED 50,000 per month want to invest in the properties. They believe that the prices of the property will increase in the future. Hence, now is a great time to buy.
The rental prices in Dubai have also increased over the previous years. This is attributed to its supply, high demand, and attraction entailed in Dubai. Most people view the purchase as more attractive.
The average monthly income of an investor is AED 45,616. Tenants are able to make about AED 32,303. Many are investing in properties for their future in Dubai.
What Do Buyers Expect from the Market?
A survey shows that there’s an expectation by 42% of the tenants that house prices will rise by 5-10% over the next year, while 30% is expecting prices to rise even more—that is, more than 10% in the same period. People are now in a hurry, looking to buy houses as early as possible because they fear that house prices will be too high at a certain point. Only 10% think that prices might come down in the near future.
Since, in an economy of this nature, such as Dubai, prices tend to zigzag, that expectation is a significant reason for why so many believe that it is now the time to buy.
A Dubai long-term commitment
Many call it home, and this bodes well for the survey results. After all, an overwhelming 72% of respondents have been here more than five years, and a stunning 89% have been here for more than another five years. The idea of having a home becomes very appealing, especially for stability and laying down roots.
The tourism sector in Dubai also witnessed over 10% growth during January-May 2024, with the number of visitors increasing to 8.12 million, while 7.39 million visited the emirate during the same period last year. This tourism number also boosted the buying trend.
So is it time for you?
What does this all mean to you? Is it feeling the strain of increasing rents, dreaming of having more space, or tired of that long daily commute? Well, in such a case, buying might just be the perfect next step. Market opportunities abound, and whether you are a young millennial looking for your first home or a family wanting to stabilize, Dubai has its options that can suit your needs.
With this expectation of increasing property values, it is perhaps the best time to enter the world of homeownership and claim your space in this bustling, growing metropolis. The need for security, space, and a better quality of life are always drivers, and they’re driving people toward the dream of owning their home in Dubai.
If you are looking to buy, check out some of the popular areas: Dubai Hills Estate , Downtown Dubai, and Dubai Marina. And ask yourself now: is this the right time to stop renting and start owning? The numbers and trends make it look pretty good, and there are opportunities to be seized for your own good.
