Few years ago I purchased a house in Dubai and I am living in it now, rather happy and satisfied.
I am often asked, why did I decide to buy in Dubai specially when it is considered a very volatile and unstable market for real estate investment. I will try to answer this question in this post.
When I moved to Dubai, I had no option but to rent a place. The property values, or Dubai bubble as some may call it, was at its peak. The rents were super high. But still, I had to rent a place, like many others who live in Dubai. But what bothered me most was that I was paying very high rent to live in this city, and I didn’t know how many years I was going to live here, but at the end of my stay in Dubai I would have nothing to show for it. I probably would have paid hundreds of thousands of dirhams in rent over a decade or so (assuming I was going to live here for 10 years) but I would still be empty handed.
And then the property market crashed. Real estate prices dropped like a stone. Interest rates plummeted. It was a buyer’s market. The banks offered highly attractive deals for a mortgage. So I talked to a bank and applied for a mortgage. Meanwhile I also started looking for a nice apartment or house to purchase. Until that time I wasn’t sure I would actually purchase something, but I wanted to see how to goes.
Turned out luck was on my side. So the bank approved my mortgage application, and I found a beautiful newly constructed town house, perfect for my family and ideally located. I made my offer and the seller accepted it. Rest of the paperwork took a few weeks and before I knew it I found myself moving into my very own house in Dubai. It was surreal!
I have been living in this house for a few years now, and I can say for sure it was one of the best decisions of my life to purchase a property at the peak of a downturn. It was a big risk but it was well worth it. The peace of mind is just priceless. I don’t have to worry about rent increases, finding and moving to a new place every couple of years, the stress and hassle of moving, and settling down all over again. Many of my friends are still doing it.
The two biggest factors that influenced my decision to purchase were:
1. I was paying the rent anyway. So why not pay the bank in form of mortgage and have this peace of mind that my money is not going to waste. I can sell my property and get my money bank. The fact that property value has more than doubled since the downturn means I will earn a decent profit when I sell it. I can even rent it out and live off the rent since mortgage payments are so low because of low interest rate, I will be left with enough cash even after paying the mortgage.
2. There are no property taxes in Dubai. And despite all the speculations, it is a pretty safe form of investment. The property value in Dubai will only increase in long term. Yes, there might be some minor corrections here and there, but in the long term the value will not be lower than what I purchased at.
If you ask me, I would say If you have enough money to pay the down payment, and if your mortgage is going to be more or less same as what you are paying as rent, then go for a purchase. Another factor is if you are planning to live in Dubai for long term then it makes most sense to buy your own property and sell it when you leave, for a decent profit.
Needless to say, the above circumstances might not apply to you. So do your own research and analysis before making a decision.