[theflyingguy]

Hello. A bit of background. We (a family of 4, kids being 4 and 8 years old) have been living in Dubai for little over 5 years now. We have always been living in rental apartments for the ease of changing apartments whenever needed and the ROI on apartment purchase made little sense.

Recently, Dubai real estate market has gone through the roof, partially thanks to the ongoing war(s) and the relative safety and stability offered by UAE. This means that rents have gone up by almost 60% in last 24 months and changing apartments with school going kids is a hassle

Hence, the thought of outright purchase came to mind. While it may make sense financially now (ROI is close to 10% compared to rentals, so apartment would be paid off in 10 years if compared to renting the same), I am not sure if the pace of price growth will continue since Dubai had a history of boom and bust cycles in real estate. Since my spouse is working for a bank, the home loan will be almost interest free.

Ongoing escalation in conflicts in Middle East is also playing a devils advocate. While I have the golden visa, UAE will probably never offer citizenship so the future will be in India for me and family. Also, parents health is a factor which would bring shutters down on UAE stay.

Not sure of how to make the decision. Is/was anyone in same boat? What could lead to a final decision?

[ags82]

I would say buy. Rental is anyways going to waste into someone's pocket. If you buy now and see the opportunity to sell if off at some point when you need to return to India, you get all your money back and more as it appreciates. It's a proper investment. To top it off your loan would be almost interest free as you say. Would like to hear other thoughts here.

[satishv1987]

If the loan is nearly interest free, then it makes sense to buy instead of renting.

If you want to return to India, the apartment can be rented out. That way the rental income pays for the EMI. Besides, even if there were to be a slump in property prices in the future , you can always hold on to the apartment for a while and then dispose it once prices recover.

[dicor]

I am not a Dubai expert but here is my take on short-term ownership of an apartment.

Does owning an apartment incur any recurring hidden charges that you do not bother when you live in a rented apartment? Like monthly maintenance, property tax, insurance, painting etc?

For how long you will be staying there? Would it be easier to sell your house at that time? Will you get good value? Are there any hidden charges at the time of selling (commission to broker/builder, LTCG tax)?

In Pune, there are hardly any takers for 5-year-old properties. People are ready to wait for a few years to get into a new home rather than buy an old property, resulting in poor resale value (especially when you want to quickly liquidate it). What is the scene in Dubai?

[pavanmadhini]

If home loan is almost rent-free, then your rental income’s RoI is going to be significantly more than 10%. For eg. if the home loan is for 10 years, then the RoI in your first year is going to be 100%!

[hothatchaway]

Originally Posted by pavanmadhini

If home loan is almost rent-free, then your rental income’s RoI is going to be significantly more than 10%. For eg. if the home loan is for 10 years, then the RoI in your first year is going to be 100%!

Rental income can be included in the rate of return only if the owner is living in another self owned property and not paying rent to someone else. If not, then the gains are offset.

Agree that of the loan is interest free then the total cost of purchase is not inflated.

Will be interesting to learn what the average home loan rate of interest is in Dubai and what% is the annual rent paid to the value of the home one is renting

[pavanmadhini]

Originally Posted by hothatchaway

Rental income can be included in the rate of return only if the owner is living in another self owned property and not paying rent to someone else. If not, then the gains are offset.

I disagree - the gains should be basis the rental yield which the buyer gets out of the property, irrespective of their existing rental situation. Either he consumes that value by staying there or gets rent. So the rental value of the purchase is part of the RoI equation.

Personal consumption or not doesn’t impact the RoI equation.

[cayenne]

Being a Dubai resident, my opinion would be to wait for the inevitable ~15% correction. You would be able to get more value for your money

[Rangy62]

If you have planned a long term stay then it makes sense to buy. I have had friends buy flats and have sold at a loss due to fluctuations in market value.

[Fuldagap]

Originally Posted by theflyingguy

Hello. A bit of background. We (a family of 4, kids being 4 and 8 years old) have been living in Dubai for little over 5 years now. We have always been living in rental apartments for the ease of changing apartments whenever needed and the ROI on apartment purchase made little sense.

Recently, Dubai real estate market has gone through the roof, partially thanks to the ongoing war(s) and the relative safety and stability offered by UAE. This means that rents have gone up by almost 60% in last 24 months and changing apartments with school going kids is a hassle

Rentals have increased in Dubai but it is not so much the story outside Dubai like in Ajman or Umm Al Quwain, which are not far from Dubai.

Prices of gas, food etc have also increased a lot, inflation has hit a high roof while salaries have remained quite the same.

People who can manage to live in say Ajman or Umm Al Quwain whether buying a house or on rent, are better off. But compared to Dubai they offer not the same lifestyle, not even close. Even if they have great connectivity to Dubai and have more or less all of the basic infrastructure/amenities in place. Also, many companies (manufacturing units) are slowly shifting base to or extending to such areas owing to high expenses in Dubai.

If the disturbance in the regional countries is having a bearing on the high prices then it may not be a judicious decision to buy when prices have peaked. In my opinion the high rentals are a result of the sudden increase in the construction cost of building materials. Prices of food like vegetables, rice, meat have skyrocketed too in the past couple of months due to various external factors. Credit is easy for people with credit worthiness and it might be another reason for renewed high prices in real estate. This factor needs expert analysis from somebody who knows in and out of the financial sector here.
Rules change overnight and there is no way one can ascertain the real reason for the real estate market prices boom. For long termers it is not wise to decide to buy based on volatality or seemingly temporary phenomenon.

If it is at all possible I'd suggest living lavishly in UAQ while working in Dubai. It's a 90 km distance one way and a great villa can be rented in a great locality beachside for half the price of a studio or 1 bhk in Dubai, speaking generally.

[Redex]

Rental is stress free, risk free and predictable. Buying in another country is risky, things can change. The government can decide that you cannot own property and loose everything. As happened to foreigners who thought they had bought and owned property in India. Several of my friends, long stayers in India have had that exact problem.
I thought about buying in India 10 years ago as we spend at least 4 months here.
Fortunately we decided to rent.
Long stayers in India were allowed to spend 180 days in India, leave the country for 1 day and then spend another 180 days in India, repeat, repeat. So they could spend 364 days per year in India. Meaning they could retire and live in India. Many thought they had bought their homes.
Now without warning and regardless of what type of tourist visa you have you are only allowed to spend a maximum of 180 days in any calender year. Repeat : a maximum 180 days only per calender year !!! These people have no other homes to live in for the other 185 days of each year !!! Not to mention the loss of foreign currency that they would have spent during those 185 days.
Now imagine that happening to you when you buy property in Dubai.

[ajmat]

Originally Posted by Redex

Long stayers in India were allowed to spend 180 days in India, leave the country for 1 day and then spend another 180 days in India, repeat, repeat. So they could spend 364 days per year in India. Meaning they could retire and live in India. Many thought they had bought their homes.
Now without warning and regardless of what type of tourist visa you have you are only allowed to spend a maximum of 180 days in any calender year. Repeat : a maximum 180 days only per calender year !!! These people have no other homes to live in for the other 185 days of each year !!! Not to mention the loss of foreign currency that they would have spent during those 185 days.
Now imagine that happening to you when you buy property in Dubai.

There is also the issue of tax. If you spend more than 180 days in India, you come under the radar.

[Redex]

Originally Posted by ajmat

There is also the issue of tax. If you spend more than 180 days in India, you come under the radar.

Hi,
I appreciate the comment about paying tax. I would happily pay tax if it means I can get an Aadhar Card and own a vehicle and property legally. However someone with a tourist visa has never been able to pay tax as they can never stay longer than 180 days. There won't be any tax to pay because you cannot work on a tourist visa.
The point is, imagine you had bought a house in Dubai and we're then told you can only spend 180 days every year in the country.
Regards Neil
To be honest, every year there is some sort of problem that International Tourists have to deal with, just to enjoy India and bring Sterling into the country. We are made to feel unwelcome. My wife and I have been coming to India for 17 years and spend 4 months here. So far I have put up with hassle, changing rules, demonetisation etc etc but am now considering other Asian Countries that welcome tourists. We are just one couple but will take our £6,000:00 (6 lakh Rupees) and spend it in another country. Many of my friends are also thinking the same way, 4 couples did not come this year and will never return. Sadly

[mjk24]

If you see Dubai as your long term home then I would suggest buying, but not now.
Price have skyrocketed and a drop is imminent. I wouldn't call it a bubble but rather a correction of around 10-30% depending on the property & area.
The tricky bit is to wait but 'how long'?
Some say prices should start cooling down Q4 '24 some say later, nobody can say with certainty.