Local Expats : Buy vs Rent Debate
A latest consumer survey by global digital consultancy RedSeer showed that a significant portion – about two-thirds – of local expats and residents are opting to purchase property rather than renting, as rental rates continue to increase.
“With residential rents on the rise, coupled with growing confidence in the UAE’s real estate market, the decision to rent or buy property has become increasingly important [for local expats],” revealed the survey by RedSeer Strategy Consultants.
“This shift in consumer behaviour also reflects the growing preference for long-term stability and financial security that property ownership provides,”
Local expats accounted for 40% of all property purchases in Dubai last year, and this figure is projected to reach 50% by 2025, industry experts said.
Local expats are poised to lead the next property market boom in Dubai and the UAE, driven by the rising rent costs and the increasing allure of the county’s economic growth prospects and stability, a latest market survey and industry insiders said.
Dubai is also fast transitioning from being just an attractive real estate investment destination to a place of choice to settle down on a long-term basis for families from around the world, aided by numerous government initiatives aimed at deregulating the economy and attracting talented expatriates.
The prospects of a high-return on investments based on expectations of continued price rise in Dubai’s property market is also expected to further drive expat investments in Dubai’s real estate market.
“The increasing cost of rent in Dubai has become a significant driving force behind the decision of local expats to invest in property rather than continuing to bear the burden of escalating rental rates,” Abhishek Jha, CAO and Managing Partner of Foremen Fiefdom, a Dubai-based leading real estate investment firm, told Arabian Business.
Jha said besides the rising rental costs, there are a multitude of other factors that contribute to the expected surge in local expat involvement in the property market in Dubai and the UAE.
“The UAE’s robust economic growth, stability and prosperity and favourable regulatory environment solidify the appeal of property investment for this demographic [segment],” Jha said. “Taking into account these factors, the trend of local expats venturing into property ownership is likely to persist.”
The RedSeer study said as one of the world’s fastest-growing economies, Dubai presents a plethora of opportunities for career advancement and a high standard of living.
“The UAE stands out as one of the most economically viable geographies for real estate investment, boasting the lowest price-to-income ratio compared to other regions of interest,” the study said.
It said though Dubai’s real estate market has rebounded well after Covid-19, the market is now only back to its 2019 price level, and still 20-25 percent below its 2014 peak.
“While real estate rentals and property prices have been going up in UAE recently, people often don’t appreciate that it is still one of the most attractive markets globally when it comes to property price-to-income ratio,” Akshay Jayaprakasan, Associate Partner at Redseer Strategy Consultants, told Arabian Business.
