Why more Dubai tenants will become homeowners in 2023 and 2024

Why more Dubai tenants will become homeowners in 2023 and 2024

Property prices in the emirate will continue to rise slowly, according to industry players.

Despite a slowdown in rental growth and the tendency of tenants in Dubai becoming owners, which will continue in the second half of 2023 and in 2024 as more and more foreigners adopt a long-term outlook on Dubai.

Executives in the real estate sector claim that despite global difficulties, Dubai's real estate market has not only remained resilient but has also gradually expanded, giving many individuals the confidence they desire. Others experience a dread of being entirely priced out or of missing out on the benefits. This promotes first-time homebuyers who wish to profit from both the increase in rental prices and capital appreciation.

Industry participants are convinced that Dubai's real estate prices will continue to rise gradually, albeit more slowly, notably in the high-end sector, where annual growth rates are expected to be in the mid- to high-single-digit range. Residential real estate in Dubai is expected to develop at the quickest rate in 2024, presenting a compelling argument for tenants to become owners.

According to Knight Frank, during the second quarter of 2023, real estate prices in Dubai increased by 48.8% over a period of a year, 19% over a period of six months, and 11.6% over a period of three months.

"In recent years, expat residents have begun to view Dubai in the long term. With the advent of retirement visas, the initial focus on short- to medium-term stays gradually gave way to a medium- to long-term vision,

according to HP Aengaar, CEO of Asteco.

A developing economy offers the perception of stability and job assurance that many individuals desire before deciding to purchase a home, in addition to generally improving liquidity. Even though the rate of rent rises is slowing down, owning a property is a long-term investment and means of saving. Many people find that this forced method of "saving" works better for them in the long run, he continued.

It is also simpler to purchase houses in Dubai due to the abundance of mortgages and the rules adopted by the Dubai Land Department (DLD) to encourage openness and protect investor rights, according to the chief executive of Asteco.

The rate of price growth will have decreased by year's end, according to Taimur Khan, head of research for the Middle East and North Africa, but will still be favorable.

This is already taking place in the rental market segment, and we anticipate it to continue, according to Khan on Monday.

What are tenants buying?

One of the key benefits for tenants, according to Aengaar, is the freedom to personalize the area in accordance with their preferences. This enables homeowners to design a space that genuinely reflects their demands and sense of style. Another advantage is the stability provided by fixed mortgage rates, as contrast to the erratic nature of rental rates. Additionally, owning real estate frequently results in financial growth and gradual equity creation.

He disclosed that, on average, tenants spend dramatically different amounts on purchasing homes depending on factors like family status, the number of children, culture, and other factors.

"We would estimate it to be between Dh1 and Dh2 million for apartments and between Dh3 and Dh4 million for villas."

Off-plan or ready properties?

In general, according to the Asteco chief, choosing a ready property is the best option because it allows for immediate occupancy and spares you from having to pay rent on top of the installments for the purchase of the property.

"However, the beginning funds will ultimately determine the choice. A down payment of about 20% is required when obtaining a mortgage, in addition to other expenses including DLD fees. Off-plan properties, on the other hand, frequently have lower down payment requirements (beginning at 10%) and flexible post-completion payment options, which appeal to investors and end users with little available cash up front. The buyer will have to wait a while to view and occupy the unit, which is a drawback,

he continued.

News Source: Khaleej Times

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