Dubai, in comparison to the Manchester, Los Angeles, Hong Kong, Venice, Mumbai, Singapore and Melbourne continues to be ranked as the most ‘affordable’ city to buy a property. On the other hand of it, Dubai has additionally taken the crown of becoming the most costly place to rent a residence. Despite a number of studies being released that 2016 will see a loss of rental prices, Dubai can come nowhere near to these cities in terms of rental yields. Villa rental costs dropped by between 2 per cent and 5 per cent in 2015, while prime residence in communities, such as DIFC and Jumeirah Beach Residence, experienced the maximum rental falls close to four per cent. After a strong growth in 2013 and 2014, 2015 saw the decrease of property prices in Dubai, however, the rental decline didn't match the pace of the fall in property prices, that directly resulted in the rental yields going up. This trend is predicted to proceed in 2016, at least until the last quarter. All of this has resulted in more buyers buying properties in Dubai to take advantage of the high rental yield and much more renters choosing to buy their own homes.
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Lease or Purchase Property In Dubai- The Big Question
The Cost to Lease ratio is considered as the International benchmark in lots of the nations around the world to show the direction you ought to be taking when creating this important decision.
The retail price to rent ratio is a calculation where the average cost of the residence you're living in or intend to buy dividend is divided by the average yearly rental.
(Price-to-rent ratio = Average list price / Average Annual Rent)
Trulia, the U.S. based marketplace has provided the following thresholds:
Price-to-rent ratio of 1 to 15 = much better to buy than rent
Price-to-rent ratio of 16 to 20 = typically better the rent than buy
Price-to-rent ratio of 21 or more = much better to rent than buy
Based on these ratios, let’s take the following examples:
Discovery Gardens
The common cost for a 1 BR apartment stands at AED 700,000, even though the average rent is AED 65,000 per annum (or AED 5000 per month).
The price-to-rent ratio is 10.76.
If acquiring the same unit:
Downpayment: AED 175,000
Monthly Installments: AED 2,650 (approx.)
Business Bay
The regular price for a 1 BR unit is AED1.2 million with average rent at AED 90,000 per annum (or AED 7500 per month)
The price-to-rent ratio is 13.33.
If purchasing the same unit:
Downpayment: AED 300,000
Monthly Installments: AED 4,500 (approx.)
Despite this, the cost savings by paying a lesser amount on a monthly basis and that too towards your own property along with the satisfaction of owning your own home, more than makes up for the initial hurdle.
Lease or Purchase Property In Dubai- The Big Question
The Cost to Lease ratio is considered as the International benchmark in lots of the nations around the world to show the direction you ought to be taking when creating this important decision.
The retail price to rent ratio is a calculation where the average cost of the residence you're living in or intend to buy dividend is divided by the average yearly rental.
(Price-to-rent ratio = Average list price / Average Annual Rent)
Trulia, the U.S. based marketplace has provided the following thresholds:
Price-to-rent ratio of 1 to 15 = much better to buy than rent
Price-to-rent ratio of 16 to 20 = typically better the rent than buy
Price-to-rent ratio of 21 or more = much better to rent than buy
Based on these ratios, let’s take the following examples:
Discovery Gardens
The common cost for a 1 BR apartment stands at AED 700,000, even though the average rent is AED 65,000 per annum (or AED 5000 per month).
The price-to-rent ratio is 10.76.
If acquiring the same unit:
Downpayment: AED 175,000
Monthly Installments: AED 2,650 (approx.)
Business Bay
The regular price for a 1 BR unit is AED1.2 million with average rent at AED 90,000 per annum (or AED 7500 per month)
The price-to-rent ratio is 13.33.
If purchasing the same unit:
Downpayment: AED 300,000
Monthly Installments: AED 4,500 (approx.)
Despite this, the cost savings by paying a lesser amount on a monthly basis and that too towards your own property along with the satisfaction of owning your own home, more than makes up for the initial hurdle.
