Buying vs Renting in the UAE

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February 24, 2020

A big question on the lips of expats making the move to the UAE, is whether they should buy or rent property. Expats have options to both own freehold real estate or rent out flats for their stay.

But which would be better?

The Emirates offer great options for both renters and would-be buyers. As such, the debate around renting or buying is one that comes up often. In this article we’re going to discuss the pro’s and con’s of both renting and buying property in the UAE. 

Before making any decisions, there are a number of important factors to take into consideration. Important factors weighing on the decision include the stage of your life, income, personal status and commitment to a specific place.

In this article we’ll be weighing up:

  • The pros & cons of renting
  • The pros & cons of buying

The pros & cons of renting

Renting is always seen as a harsh market, with residency often linked to employment visas, there has always been a term limit on the length of stay. As a result, many expats have chosen not to invest in residential property, choosing instead to rent.

Why do people choose to rent over buying?

  • The pros of renting

It’s budget friendly. For expats looking for a quick cost-efficient fix, then renting will avoid all the upfront costs that otherwise add up when buying property. For example DLD fees, registration, mortgage registration, agency, valuation and maintenance fees.

For those only planning on staying in the UAE for a short period of time, renting will get you a lot more for your money. Ideally, you’d look for somewhere that’s ready to live in, with furniture and appliances, this way the move would be quicker and cheaper.

It’s a temporary commitment. For expats who aren’t sure about their employment plans, or how long they’ll be staying, renting allows them to have more flexibility and freedom if they’re planning on leaving again. 

This makes it easy to relocate which is perfect for an unpredictable schedule. Working ex-pat professionals may need to relocate to another part of the world to fulfil their duties. 

Most contracts are only signed for a one-year commitment with a landlord, so an investor has a short time horizon before making his next decision. Renting property is perfect if you’re only planning on making your investment run for a short period of time. 

  • The cons of renting

Renting property has customisation restrictions. All landlords have their own rules but most don’t allow changes to the property, which means you’re not permitted to make the property feel like home. this can also cause an issue if you have pets.

Being forced to move is a risk for renters. While expats can extend the length of a lease, the landlord might not agree or adjust the rental fee. Hence, potentially finding yourself needing to move quickly which is stressful and exhausting.

Property rentals are good for short term investing but for expats planning on staying in the UAE for a long period of time, then ploughing money into rental can become costly in the long run. 

Now we’ve looked at the positives and negatives of renting in the UAE, let's move on to buying property. 

The pros and cons of buying in UAE

For a long time, expatriates were not entitled to own property in the UAE. ‍

Thousands of expats relocate to the UAE every year and stay in the country for long periods of time. Now expats can retire once reaching the age of 55. The quality of life, tax-free income and savings are major factors for expats and encourages many to make the move.

Read more about investing in property in our blog post; Buying Property in UAE: The Guide to Real Estate For Expats >

  • The pros of buying property

Buying your property is a great long-term investment. If you’re planning on working and retiring in the UAE then buying property will be a great return on investment for you and your family. 

You’re paying a mortgage towards a longer-term asset. This is whether you’re buying to occupy the property, lease it as an investment, or even to sell it after a period of time.

You have full rights over your home which means you get to do what you like with it. There is also a sense of stability and security when owning your own home and your monthly payments may be more predictable than in the rental market.

There is a wide range of opportunities when buying a property, unlike renting it offers a number of opportunities which could generate revenue, such as purchasing a property as an investment and leasing it to generate more income. 

Learn more about Why You Should Invest in Property in The UAE >

  • The cons of buying property

Owning your home comes with additional costs compared to renting. These include insurance, service charges, maintenance and of course mortgage payments. There are more upfront costs when buying property, so it's crucial to have the funds readily available.

If you’re planning to invest in property in the UAE you’re essentially tied down to this property until you’ve paid off your mortgage, so it’s important to be sure on the duration and longevity of your life in the UAE. 

Changing market dynamics mean that property prices can fluctuate due to changes in the market and prices can fall. However, the real estate market in the UAE-Dubai in particular, has become the fastest-growing investment opportunity in the past 20 years. 

Ai Investment Group’s extensive network of global developers and current affiliates give us exceptional access to plenty of exciting residential, commercial and off-plan properties not just in the UAE but across exciting markets such as the UK and Europe.

Our experts support you every step of the way towards your real estate

Investment, handling everything from raising finance, property management and even rentals.