Up to 70% of UAE residents prefer renting homes – survey

The majority of residents in the United Arab Emirates prefer renting homes rather than buying them – despite the slowdown in the market, according to a new survey.

The survey by website propertyfinder among its users found that only 30 per cent of UAE residents have bought property in the country, even though half have resided here for five years or more.

“This is contrary to more developed and established parts of the world such as the UK, specifically England and Wales, where the figures are the exact opposite, with 64 per cent owning and only 36 per cent renting,” the report stated.

Although rental yields range from 6 – 10 per cent for apartments, most residents choose to rent mainly because of affordability concerns, it added.

Most respondents – 69 per cent – said property prices were too high; that they couldn’t raise the necessary deposit; or said they were unable to qualify for the loan amount required to borrow.

Propertyfinder Group chief commercial officer Lukman Hajje said: “It is clear that the want is there, but the high deposit requirements, the fees, the mortgage cap and stringent lending policies, are what’s stopping the market from maturing like its Western counterparts, and if we can overcome these points – I can really see a bright future for the UAE property transaction market.”

Introduced in January 2014, mortgage cap regulations stipulate that expats need a minimum deposit of 25 per cent for properties under Dhs 5m and 35 per cent for properties over Dhs 5m.

The Dubai Land Department has also doubled transfer fees to 4 per cent.

The rules will help avoid another 2009-type of crash where prices fell by up to 60 per cent, but in a market that has been cooling for two years, it “remains the single biggest obstacle” for those hoping to get into the market, the report claimed.

Also read: Dubai residential property prices drop 1.1% in Q2

“There is no doubt that the stabilisation of the market, from the effect of low crude oil prices and the subsequent strength of the US dollar, must be having an impact on people’s long term plans,” propertyfinder said.

“Additionally, with the recent exciting developments – both commercially, in terms of business opportunities, and physically, with projects like the impressive Dubai Canal – staying and committing to life in the UAE is becoming even more of an enticing option.”

Hajje added: “The recent Brexit news will mean that British expats will be even further enticed to stay put here in the UAE and will attract further of their fellow countrymen to the Emirates over the next five years to avoid the turmoil that many feel they will be subjected to.”