Is now a good time to buy an apartment in Dubai?

by admin on August 19, 2024

As rental rates in Dubai soar, many residents are contemplating a switch from renting to owning their homes. However, with apartment prices increasing, potential buyers face a dilemma: Is now a good time to buy an apartment in Dubai?

Rising Apartment Prices in Dubai

Over the past 18 months, apartment prices in Dubai have been on an upward trajectory, though the rate of increase varies by location and desirability. Many of the residents who have been renting so far ask themselves: is this a good time to buy an apartment in Dubai?

The Dubai property market appears to be nearing its peak. Buying at this stage and selling in the short to medium term poses a higher risk of capital loss unless the property is intended for long-term ownership and occupation. The longer the owner keeps the investment, the more profitable the net return is going to be, ideally in the real of double-digits.

However, Dubai’s long-term population growth forecast, which predicts an increase to 5.8 million by 2040, suggests ongoing demand for housing. This demographic shift, coupled with extensive economic development, presents a compelling case for investing in new real estate projects now to achieve greater returns over time. Experts, including Arabian Sunrise Properties’ General Manager, Maria Mitrea, agree that delaying a purchase could lead to higher costs due to inflation and premiums, potentially lowering returns.

According to her, Dubai’s property prices are still relatively low compared to major global cities. This makes the city’s real estate market attractive and competitive, all the more reasons in favor of buying vs still renting. However, potential buyers should ensure their financial health aligns with the investment.

Simplified Buying Process

The process of buying an apartment in Dubai is relatively straightforward once the decision is made and a buyer has a general idea of what they want, whether it is a house or an apartment, what the size should be, and in which area, to begin with. Brokers typically guide buyers through the necessary steps and documentation, much of which can be processed via smartphone.  The Dubai Land Department regulates all property-related transactions, ensuring efficient, secure, and transparent execution.

However, the buyer should consider the registration of the project with the Dubai Land Department, confirming an active escrow account, verifying milestone-linked payment plans, and reviewing the developer’s profile and history. It is also advisable to ensure that their cash inflows match the payment plan of the property they intend to buy. Ideally, the investor should cover at least 50% of the payments and reach 50% of construction milestones.

Best Areas to Invest in Dubai

Now let’s dive into the most attractive area to invest in Dubai. We should start by saying that beachfront developments and Dubai South are areas with significant long-term growth potential. These areas can generate approximately 7% rental yield for long-term leasing and even higher yields, up to as much as 15% ROI for short-term rentals, making them investors’ no. 1 option.

However, there has been a shift in the market towards smaller, more affordable properties. Communities such as Discovery Gardens, The Greens, The Views, Town Square, International City, and Dubai Production City have witnessed the highest annual capital gains and accelerated rental growth, resulting in potentially higher yields.

The future looks bright

Looking ahead, potential oversupply is a concern for some of the potential investors, who expect to have an impact on future prices, with 120,000 new residential units expected in the next five years. However, government development initiatives, coupled with regulations and significant investments aimed at achieving sustainable economic growth are likely to drive substantial demand in the property market, potentially pushing prices higher.

While Dubai’s rising rental rates are pushing residents towards homeownership, the decision to buy should be carefully considered, with support from real estate brokers with genuine expertise. Prospective buyers need to evaluate their financial situation, market conditions, and long-term investment goals. With the city’s solid development plans and growing population, now is a strategic time to invest in Dubai’s real estate market, provided one is prepared for the financial commitment and potential market fluctuations.

So this way, we’ve answered the eternal question: Is now a good time to buy an apartment in Dubai?