danjar

My wife and I are hoping to pack up and move over to Dubai in the new year and are currently looking at property etc. With the cost of rent being extreme (to say the least), has anyone considered or even gone through with buying an apartment in Dubai? Surely a mortgage on a single bed apartment would be considerably cheaper then rent?
Or am I missing something?

Border Reiver

If you do a search you will find loads of information on this. Broadly speaking you will need a 20% deposit and then you can budget on a borrowing cost of about 8,000Dhs a month for 1M Dhs over 25 years- remember the mortgage has to be paid off before you are 65. A one bedroom apartment in a nice community (ie The Greens) will cost you about 1.2 or 1.3M. You also need to add on estate agent fees of about 2%.

The allow a bit for the maintenance charge (anything from 11 Dhs/sq ft/year upwards) and utilities- about 150Dhs/month for a one bedroom apartment.

The thing that seems to put most people off it the big deposit. Special offers do sometimes pop up with lenders going up to 95% of the purchase price for certain off plan developments but the interest rate then also goes up, and you still need to pay rent while your apartment is being built. There are also early repayment penalties which last for the life of the loan. Between 2 and 5% usually, although some lenders don't have any.

If you do take out a mortgage here, especially a Sharia compliant one - and I can't say this loudly enough- READ THE SMALL PRINT. Basically it probably makes more sense to buy if you see Dubai as a long term thing, more than 5 years or so. Otherwise, I would say rent.

admon

The fact that most Western expats (that are for the majority earning a good salary) here don't buy, should give you the answer you are looking for...

Are 95% wrong?
Or 5% right?

Ok, those figures have come out of scotch mist, but the HUGE majority of people here haven't bought.

Border Reiver

I think the figure is something like 75% to 80% renting, the rest having bought. A lot of the ones who haven't bought are likely to be on fixed term contracts of less than 5 years, or have accommodation provided by the company, but any way you look at it the vast majority of people do rent.

Robbies

We must be in the 5% who are right!

Yes, we bought and have no regrets. We had the option of company provided accomodation or a living allowance. We opted for the allowance and bought - that way we can use the allowance for our future, whereas by renting we saw it as paying for someone elses future. I just hate renting.

The deposit is correct, to get the best rates you need a bigger deposit. Early settlement fees varies bank to bank (HSBC = none, Barclays = 3%/2%/1% of balance in 1st year, 2nd year and remaining years)

Borrowing allowed is approximately 50% of your net income (take your months salary & allowances, remove any loans or regular payments (car etc) and then divide the balance by 2. This is the max amount you can pay monthly for a mortgage. You can find some mortgage calculators around on the web.

The whole purchase process is pretty stressful. Make an offer under asking, and you'll be told where to go. Make an offer of asking, and the seller will think "hmmm, they offered what I asked" and will typically up the price by 10%+

Banks aren't the best either, and you feel a bit like a walking ATM in the run up to the actual purchase with fees here and there.

Overall, happy to have bought, whether we are here 1, 2 or 20 years.

I would say however that buying a 1 bed apartment has some risk to it, in that depending on the location, there are many 1 beds out there. When it comes to selling, there will be more competion to make a sale... May affect the price you get.

admon

Another factor to consider when buying property is your allowance.

While an allowance of say 150k may pay your mortgage today on an apartment, if rents were to go down when oversupply hits the market in the next 2 years, it will follow that your allowance will go down as well.

admon

20-25% seems an excessively high figure - where have you got this from?

Robbies

he did mention that he thought those were the figures

lionheart

My primary worry is that the apartment I put my deposit on may never get built...delays and project failures are more common these days. If its already built, it may well be too expensive to constitute value for money. Also, the quality of workmanship is poor here and, last but not least, the property market bubble may well soon burst as saturation of supply rears its ugly head. Yes I know the population is growing fast but not many construction labourers from the Indian subcontinent can afford to buy so expect to see hundreds of empty apartments in the near future.

admon

Maybe 30-40,000 freehold properties have been handed over to date including JBR.
Based on the fact that a huge proportion of these properties are rented, I would say the actual figure is definitely under 10%.

Border Reiver

Gulf News did a survey a few weeks back. I read it but didn't keep it, so that is just what I remember. That figure was for the nationality of buyers- a lot of buyers, Western or otherwise, don't even live in Dubai and bought the properties to flip or to rent out. If you are talking about people who have bought and are living in the property they bought the figure would come down a lot- probably to about 5%. But, I'll say it again, those figures are based on a bit or personal experience and a bit of what I can remember reading a few weeks back.

admon

Of course any figures that the Gulf News reproduce are to be relied on 100%...

Border Reiver

Of course. And it was a small sample size- less than a thousand people if I remember correctly. As with all statistics, watch out for the spin.

I should add, I'm one of the 5% (or whatever it is!) and also very happy.

danjar

Thanks for all the info, a large deposit may be the main sticking point. With the housing market as it is in the UK, we were going to hang on to our house over here so (apart from savings) we won't have a great deal of capital to invest.
We'll probably just rent for a while and see how we get on!

Can't wait to get over!

Border Reiver

I'd rent for a year anyway while you get to know your way around and decide which areas you do or don't want to live in. That will also help you get together all the paperwork (bank statements, payslips etc..) you need. Generally to get a mortgage you will need an employment record going back about a year in the UAE, although some lenders will settle for 6 months.