UAE: 70% of residents rent rather than buy homes
Approximately 70% of UAE residents choose to rent rather than buy property, according to research from propertyfinder.ae
Approximately 70% of UAE residents choose to rent rather than buy property, according to research from propertyfinder.ae.
Despite apartment and villa sale prices falling steadily for the past two years, a survey conducted by the property portal found that just 30% of UAE residents have purchased property – even though half of respondents had resided in the Emirates for five years or more.
Survey respondents cited affordability as the main driver behind their decision to rent rather than buy property in the UAE. A combined 69% of participants said that prices were too high, they couldn’t raise the necessary deposit, or they were unable to qualify for the required loan amount.
Commenting on the findings, Lukman Hajje, group chief controlling officer of propertyfinder, said” It is clear that the want is there, but the high deposit requirements, the fees, the mortgage cap, and stringent lending policies, are what’s stopping the market from maturing like its Western counterparts.
“If we can overcome these points, I can really see a bright future for the UAE property transaction market.”
The authors of the survey noted that, year on year, expats are staying longer in the UAE. With rental yields across the Emirates ranging from 6% to 10% for apartments, they explained that most of those choosing to rent for three to five years could cover a deposit.
Mortgage cap regulations introduced in January 2014 stipulate that expats must have a minimum of a 25% deposit for properties under $1.36m (AED5m), and 35% for homes above $1.36m (AED5m).
Experts from propertyfinder.ae also stated that although the doubling of Dubai Land Department (DLD) transfer fees to 4% helped to avoid a crash similar to that of 2009, it remains the biggest single obstacle for those hoping to enter the market.
The real estate portal contrasted the UAE property market to that of the United Kingdom – specifically England and Wales – where the split between those who own and rent homes is 64% to 36%, respectively.
Hajje concluded: “The recent Brexit news will, I’m sure, mean that British expats will be even further enticed to stay put here in the UAE, and will attract further of their fellow countrymen to the Emirates over the next five years to avoid the turmoil that many feel they will be subjected to.”