For expats living in Dubai, a constant debate is whether to buy a property or continue renting it. It’s not an easy decision to make. After all, Dubai is a transient city and owning a home there continues to attract hesitancy among buyers. Over the last few years, real estate property prices in the share transfer in Dubai have softened. Also, with the cost of capital remaining low, many expats have started wondering if this might be a good time to purchase a property. In this article, we talk about the reasons behind this being a good time for expats to purchase properties in Dubai.
The Decline in Property Prices
Knight Frank, a property consultancy LLP operational established in 1896, releases a Prime Global Cities Index every quarter. This index tracks the performance of luxury residential prices across 43 key global cities. In the 2018 Q3 Index, Dubai was ranked 39th out of the 43 cities. According to the report, Dubai saw a decline in property prices by 3.8% year-on-year in the third quarter of 2018. It also saw a decline of 4.2% in the last 6 months and 2.6% on a quarter-on-quarter basis.
One of the oldest firms of real estate agents in the world, Chesterton, published a Dubai Market Report Q3 2018 highlighting the point that keeping up with the trend of previous quarters, the Dubai residential market has seen a decline in sale and rental values of properties. As compared to the previous quarter, the mean selling prices of villas and apartments have fallen by 6%. This is one of the steepest quarterly price declines since 2014. Q3 also saw a bigger decline in the sales of off-plan units as compared to the completed ones. The report also highlights the fact that since an additional 10,000 units are expected to be delivered to the market by the end of a year and an additional 70,000 units before Expo 2020, there can likely be more pressure on sales and rental levels.
Some interesting statistics for property buyers in Dubai
- Dubai Marina saw a 10% decline in prices since the previous quarter.
- Dubailand and Dubai Silicon Oasis showed resilience with a decline of only 2% since the last quarter.
- Discovery Gardens saw the highest declines of 13%as compared to the prices in Q2.
- In the villa communities, Jumeirah Park and Arabian Ranches saw the highest declines of around 8%over the last quarter. Palm Jumeirah property prices declined by 5%, while The Lakes properties declined by 4% since the previous quarter.
- In 2017, 66% of all residential property purchases were off-plan units. However, in 2018, this number has dropped to 59%. The primary reason is the increased affordability of completed units.
- Overall, the completed units are showing greater resilience to the decline in volumes as compared to the off-market ones. The number of transactions for completed units is decreased by 11% since the previous quarter. On the other hand, for off-market units, the decrease was on 31%.
- The top 10 areas for completed units (based on volumes) in Q3 were:
- Dubai Marina
- Dubailand
- International City
- Emirates Living
- Jumeirah Village Circle
- Palm Jumeirah
- Barsha Heights
- Dubai Sports City
- Al Furjan
- Downtown Dubai
- The top 10 areas for off-plan units (based on volumes) were:
- Dubailand
- Business Bay
- MBR City
- Jumeirah Village Circle
- International City
- Downtown Dubai
- Dubai South
- The Lagoons
- Dubai Marina
- Jumeirah Village Triangle
Also Read: What are Off Plan & On-Plan Properties? Which is a better option to invest?
Tips for buying a property in Dubai
- Understand the entire process of purchasing a property in Dubai for both completed and off-plan units.
- Are you buying the property to occupy it or intend to rent it out? Depending on your answer to this question, you can determine the areas that you must focus on.
- Exercise due diligence and consider the reputation of the developer/agent before investing.
- In case of a share transfer purchase, survey the property multiple times. You can also hire the services of a professional surveying company.
- Talk to an expert and understand all the legalities involved during the purchase.
- If you are purchasing with a mortgage, ensure that an opt-out clause is included in the Memorandum of Understanding or the Sale Agreement. The opt-out clause indemnifies you against the loss of deposit money if the bank evaluates the property lower than you expected. In such a case, you are required to pay a larger down payment and the opt-out clause ensures that you don’t suffer a loss in case you cannot come up with the required amount.
- Ensure that the seller obtains a NOC (No Objection Certificate) from the developer. This ensures that the title received by you is free from any debts or liabilities.
- Try to get your home loan pre-approved by your bank.
- Remember, there are many additional costs associated with purchasing a property in Dubai. Ensure that you are aware of these costs and take them into consideration while creating your financial plan for the purchase.
Also Read: Challenges of buying property in Dubai
Conclusion
Many experts believe that expats who plan to live in Dubai for 5 years or more, should consider purchasing a property as opposed to renting it. With the current market trends, affordability of properties and easy availability of loans, the now seems to be a perfect time for expats to buy property in Dubai. Follow the tips mentioned above and ensure that you make the most out of this opportunity. Good Luck!
