Buying a property instead of renting it in Dubai: when it’s worth it

Buy house in Dubai
Buy house in Dubai

Many people want a Buy House in Dubai of their own. But is buying or renting cheaper in the long term? There is no general answer to this key question. Tips on the conditions under which buying as owner-occupier is more worthwhile than renting.

Buy or rent – in a nutshell

The persistently low interest rates mean that many people are considering Buy House in Dubai their own property. This can actually be worthwhile, provide the property price is not too high. But prospective buyers should also think about whether they will still be flexible enough with their own property in the future and also calculate alternative investment models.

Advantages and disadvantages of a property you use yourself

Whether renting an Buy House in Dubai  or your own property – both have their advantages and disadvantages. More precisely, the advantage of one is the disadvantage of the other. Therefore, willing buyers should carefully consider what is more important to them:


Unlike stocks, gold or bonds, real estate has a practical utility: You can live in it.

Property owners don’t pay rent.

If the property is paid off before reaching retirement age, it represents a good pension.

At least in good locations and in sought-after metropolises, increases in value can also be expect in the future.


Change of location or employer: Tenants can usually terminate their apartment at short notice, an option that owners cannot use. So mobility is limit.

Stocks and stocks are sold within seconds. Selling a property, on the other hand, usually takes several months.

Unlike tenants, owners pay completely for renovations and maintenance themselves.

Neither tenants nor owners can choose their neighbors. However, tenants can move faster.

Real estate prices: too expensive or is it worth buying?

If you want to buy Buy House in Dubai a  property, you have to deal with current property prices. In recent years these have risen sharply depending on the region. The question quickly arises whether it is really worth buying or whether renting is cheaper in the long term.

A cheap property will be more worthwhile than one that is too expensive. A key figure that provides information on whether a property tends to be expensive or rather cheap is the rental price multiplier. Although this is primarily a key figure for capital investors, it can also provide indications for owner-occupiers as to whether the plan acquisition is economically viable. The multiplier indicates how many annual rents would have to be paid for a property. As a rule, the higher the multiplier, the worse the return.

However, a specific statement about the actual net return cannot be made with the multiplier, as factors such as ancillary purchase costs and subsequent running costs are not taken into account in this key figure.

How high the multiplier can actually depend on several factors: location, equipment, and condition or the potential for appreciation of a property.

Buy house in Dubai
Buy house in Dubai

The majority will not be able to afford a property without a loan. These are granted by banks for a fixed period with a fixed interest rate. While interest rates are currently on the low side, things may look very different in 15 years’ time. Therefore, potential buyers should also consider follow-up financing from the start .

The decisive factor is how high the remaining debt is at the end of the fix interest period, because this has a direct impact on the follow-up financing. For example, anyone who takes out a loan of 250,000 Dirham to buy a 300,000-euro apartment. Pays 1.5 percent interest and chooses an initial repayment of only one percent, will still have around 223,000 Dirham in debt after a ten-year fixed interest rate.

During this period he only pays a monthly installment of around 520 Dirham- much less than an assumed alternative rent of 1,000 Dirham. However, if the market interest rate is significantly higher after ten years than it is today, a much higher rate for follow-up financing must be expect. If you cannot afford this, you may lose your home again.

Comparison: cost of rent versus cost of purchase

Decisive for the question of whether it is better to buy or rent is also a comparison of how much rent you would have paid during the financing phase. Assuming an average annual rent increase of two percent, in our example you would have paid around 131,000 Dirham cold rent over the course of ten years. For the alternative – and constant during the fixed interest rate – loan installments, around 125,000 Dirham would have been due.

Even if one assumes that the tenant would have invested his equity with interest in these years instead of tying the money into the property. The buyer is in a better position in this example. Because Real estate companies in Dubai the buyer has already paid off almost 100,000 Dirham of his debts during this time, which in fact corresponds to an increase in assets of this amount, while the tenant has not accumulated any assets. However, this approach only applies if one assumes that the property will not lose value over time. Conversely, if the property increases in value, the increase in assets of the buyer is even more pronounced.

Conclusion: buy or rent?

Buy house in Dubai
Buy house in Dubai

If interest rates are low, buying a property Real estate companies in Dubai you use yourself can often be financially worthwhile, even if purchase prices are rising in many regions. However, the prerequisites are a good financing strategy and a good location of the property .Buyers should also be sure that the value of the property will rise rather than fall in case of doubt – in the event that they later have to move and sell the property.



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