We ask the experts your most popular real estate questions
From where to invest in your first home to how much your rent can be increased…
Welcome to What’s On‘s new monthly property feature, where we ask the experts your burning questions surrounding real estates. In one of Dubai’s most consistently changing and important sectors, there can be a lot to navigate, whether you’re a tenant, landlord or interested buyer.
This month, we put your most common real estate questions to Scott Bond, UAE Country Manager at Property Finder.
What’s the maximum a landlord can increase rent on renewal?
More and more landlords raising prices due to the robust demand for properties has become the most common topic of discussion. As per the Rental Increase Calculator, which is an electronic service that was created by DLD to calculate rent increase percentages in accordance with Decree No. (2) for 2011, a landlord can increase rent by a maximum of 20 per cent when renewing the lease contract, if the existing rent is 40 per cent below the average market rental rate.
A maximum increase of 15 per cent is permissible if the existing rent is between 31 percent and 40 per cent below the average market rental rate. Additionally, a maximum increase of 10 per cent and 5 per cent is allowed, if the existing rent is between 21 per cent and 30 per cent or 11 per cent and 20 per cent respectively below the average market rental rate. In parallel, if the existing rent is less than 10 per cent below the average market rental rate, then no rent increase is permitted.
What would be a key tip you’d give to a UK expat looking to buy an apartment and then lease it afterwards?
The UAE property market is one of the most regulated and transparent in the region. Presenting a wealth of opportunity for property investments, changes in property ownership and rules for foreigners have opened up the market furthermore for overseas investors.
In Dubai, foreign ownership is permitted in areas designated as freehold. Foreigners and expatriate residents may acquire freehold ownership rights over property without restriction, usufruct rights, or leasehold rights. The title deeds are issued by the Dubai Land Department in the emirate and there is no age limit to own property in Dubai.
My advice to a UK expat who is looking to invest in an apartment would be to look for residential neighbourhoods that offers state-of-the-art infrastructure, in proximity to the main city and offer priced-value amenities. The rental value of a property is significantly influenced by these options. Despite the fact that villas command higher rentals, if an apartment is rented in a desirable area, the average rent might be significant.
Can you share 5 of the best places to invest as your first investment property?
Dubai is home to the most spectacular residential neighbourhoods in the world. There is a wide spectrum of attributes, including attractive policies and 100% business foreign ownership, all of which attract overseas buyers, investors and resident property consumers. All of the communities in Dubai feature unique attributes, so it’s important to look into the nuances of what you are looking for.
In accordance to our proprietary data, the most searched localities for apartments are Dubai Marina, Downtown Dubai, Palm Jumeirah, Business Bay, Jumeirah Village Circle, Jumeirah Beach Residences and Jumeirah Lakes Towers. Whereas, the most searched localities for villas/townhouses are Dubai Hills Estate, Palm Jumeirah, Arabian Ranches, Arabian Ranches 2, DAMAC Hills ( Akoya by DAMAC), Akoya, Mohamed Bin Rashid and The Springs.
What are 3 key predictions you would make for property prices in Dubai in 2023?
Although, we can never say with certainty what the market will look like in the immediate future considering the evolving trends that might have an impact on the real estate industry, Dubai is witnessing stabilizing prices in the residential sector, there are possibilities for the prices to increase by a substantial number owing to the high demand for prime locations and properties. The influx of millionaires into Dubai post-pandemic has boosted demand in the luxury property market, which will now witness the dawn of several new luxury real estate projects.
This year, Dubai will witness an influx of visitors and benefit from COP28, which will welcome more than 80,000 delegates along with an expected rise in footfall owing to the recently introduced UAE Tourism Strategy 2031. The recently launched D33 initiative by the Dubai Government is also going to play a major role in increasing foreign direct investment from an average of Dhs32 billion annually in the past decade to an average of Dhs60 billion annually in the next decade to reach a total of Dhs650 billion by 2033, which is expected to directly affect the soaring property demand over the coming years.
As more foreign investors become interested in the property market, the demand for luxury villas will continue to grow this year. Prime areas like Palm Jumeirah, Emirates Hills, Pearl Jumeirah, Jumeirah Bay Island, Bulgari Resort and Residences, District One- Dubai Hills Estate, Al Barari, Jumeirah Golf Estates to mention a few will continue to witness a high demand.
Is it really worth buying instead of renting considering things like service charge?
Choosing to buy or rent a house in Dubai is a major decision that can affect your financial health, lifestyle, and personal goals. You will find that the overall costs really make it more advantageous being a UAE resident to buy your house when they run the figures based on the annual rent inside a given time period and how much the monthly mortgage payments would amount to.
Property Finder’s Rent vs Buy Calculator can help make this decision where the calculator compares your current rental expenses to the cost of buying a property while factoring in the number of years you plan on living in the property and automatically calculates the minimum required down payment. Factoring in additional fees such as Land Department fees, it provides a simple breakdown of the estimated costs. It then analyzes all this data to show the breakeven point where buying becomes a better option than renting. You can then decide which makes more financial sense for you in the long run.