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It’s official: buying an apartment in Dubai cheaper than renting

10.08.2015
It’s official: buying an apartment in Dubai cheaper than renting
IMF report proved mathematically the advantage of home ownership over renting a similar property in Dubai.

In their latest report International Monetary Fund experts presented a mathematical calculation, which clearly shows that buying an apartment in Dubai is now actually cheaper than renting a similar unit in the same city area.

Price-to-rent ratio in Dubai, according to the IMF, is gradually decreasing since the middle of 2014, indicating a healthy correction of the overheated and overpriced real estate market.

To calculate price-to-rent ratio you need to divide the selling price of the property by the price of its annual rent. And to assess the resulting value one can use a three-stage system, proposed by American experts from Trulia, a real estate marketplace, under which 1 to 15 ratio value means that buying a house is much more preferable than renting it, 16 to 20 ratio value — typically it’s better to rent than buy, and 21 or more ratio value means that renting an apartment or a house, or a villa is much better than buying it.

For example, the price-to-rent ratio for apartments in Discovery Gardens in Dubai averages to 10.76, for as the average selling price for apartments in this district equates to US $ 190,000, while the average rental price for the same apartment is US $ 17,650 per annum. In Business Bay and Jumeirah Lakes Towers price-to-rent ratio is 13.33 and 14.4 respectively.

At the same time IMF and Global Property Guide data of the gross rental yields in Dubai reveal that this indicator continues to rise since 2014, remaining among the highest in the world. Average gross rental yields in Dubai increased by 6% in six months and amount to 5% to 7.21% per annum.

However, property owners, scared with the softened tenants’ activity in Dubai rental market, started reducing rents recently, but the cost of the property is also reduced, so the IMF experts expect that price-to-rent ratio will stay pretty much the same.

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125,000 / year
Ref.No: OF1209
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1,655 ft2
76 AED/ft2
RENT
58,500 / year
Ref.No: OF662
Office
1,300 ft2
45 AED/ft2
SALE
6,800,000
Ref.No: AP1113
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3,003 ft2
2,264 AED/ft2
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Lease process (Rent out)
Contract of the lessee and agency.

1 hour

Contract of the lessee and agency.

Required documents:

  • copy of the passport
  • copy of the certificate of ownership
Ad placement

1 day

Ad placement:
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  • client base of the agency;
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Signing of the lease agreement

Up to 2 days

Signing of the lease agreement
Expenses of the seller:

None

Additional services:

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Lease process (Rent)
Contract of the lessee and agency.

1 hour

Contract of the lessee and agency.
Real estate search.

Up to 5 days

Real estate search.

Selection of optimal options.

Signing of the lease agreement

Up to 2 days

Signing of the lease agreement
Expenses of the lessee:

-5% agency commission of the annual contract price

Additional services:

None

Purchase process
Contract of the tenant and agency.

1 hour

Contract of the tenant and agency.
Property Selection

~ 2 weeks secondary

~ 3 weeks new building

Property Selection

Selection of optimal options

Registration of the contract of purchase / sale

1 Week

Registration of the contract of purchase / sale
Customer charges:
  • 2% from purchase at transaction
  • 4% - registration of the transaction at registration
Additional services:

Property management

Sales Process
Contract of the lessee and agency.

1 hour

Contract of the lessee and agency.

Required documents:

  • copy of the passport
  • copy of the certificate of ownership
Ad placement

1 day

Ad placement:
  • 20 real estate portals;
  • client base of the agency;
  • profile exhibitions, etc.
Signing of the lease agreement

Up to 2 days

Signing of the lease agreement
Expenses of the seller:

None

Additional services:

None

the management process
Contract of the owner and agency

1 hour

Contract of the owner and agency
Rendering of management services

1 year

Rendering of management services
Reporting

1 day

Reporting
Expenses of the owner:

5% of the annual rental price

Additional services:

None

Investment Process
Contract of the tenant and agency.

1 hour

Contract of the tenant and agency.
Selection of optimal investment options

From 3 days

Selection of optimal investment options
Registration of the contract of purchase / sale

1 Week

Registration of the contract of purchase / sale
Expenses of the investor:
  • 2% when investing in the secondary market
  • 0% when investing in a new building
  • 4% - registration
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Property management