Is Now A Good Time To Buy? Top Questions I Get Asked About Investing in Property in Dubai
Dubai property market has investors buzzing, but with so much hype, it’s hard to know what’s real and what’s just marketing fluff. If you’re thinking about investing in property in Dubai, you’ve probably got a million questions swirling around your head.
This is where Dr. Michael Waters comes in. As the go-to Dubai Real Estate professor who’s been tracking this market longer than anyone, Michael has heard every question in the book. From “Is it a good time to buy?” to “Which areas are actually worth my money?”, Dr. Waters provides the clear and honest answers every investor is looking for.
1. Is It a Good Time to Buy?
This is the most common question I get asked.
It is a question of perspective and it really depends on what kind of buyer you are.
If you’re planning to live in the home long-term, your decision will be very different from someone looking to flip a property or buy an off-plan. Not everyone will see the current market the same way.
For homebuyers who are currently renting, ask yourself if your monthly rent makes financial sense compared to buying a home. If you plan to stay less than five years, renting could actually be the smarter choice.
And, if you believe property prices will rise in the long run, does it matter much on whether now is a good time to buy?
The real question isn’t about perfect timing – it’s whether you can ride out a storm if it comes.
Ask yourself:
- Will you be financially stretched after buying?
- Will you sink all your spare cash into the property?
- Will your mortgage take up more than 40% of your income?
- Can you afford the mortgage if the rates jump up 3%?
- If the market drops 20%, can I stay calm and hold on?
- Or would you be forced to sell at the worst possible time?
So, make sure you do a financial stress-test before jumping in, instead of just chasing market gains.
2. Is it better to jump in early with off plan property or play it safe with ready property?
When investing in property in Dubai, ready and off plan property appeals to different types of buyers.
In recent years, off plan property has worked well as Dubai property prices have jumped 81% over the past five years, which works out to about 12.6% annual gains.
Sure, that 81% gain looks like an easy sales pitch for off-plan, but expecting another 81% over the next five years? Very unlikely.
We started at an all-time low in April 2020. Fast-forward 5 years and now we are at an all-time high. So, investor should probably expect returns somewhere between those two extremes.
Ready properties work better for homeowners who want to see exactly what they’re getting on the specific unit: its view, amenities, condition and aspect within a community.
And, the big advantage with ready properties is you can move in or start collecting rent right away. The recent clarification on tenancy law makes things easier. Eviction notices now stay with the property, not the owner, so it would be rare for a buyer to have to wait more than 12 months to get vacant possession after buying.
Off plan property is well regulated, but I would recommend getting legal advice before signing a purchase agreement, as there is a wide variance across developers and it would be important to fully understand the agreement being signed.
For instance, what happens if the development is delayed? Or what is the variance permitted in specification and unit size upon handover?
Both options are credible, but go in fully understanding the merits and drawbacks of each.
3. If you had to pick right now, which area or types of properties are giving the best bang for your buck?
Personally, when investing in property in Dubai, I’ve always looked to buy in the most central areas of the city, as they always stay in demand, no matter what’s the market doing.
For Dubai, this relates to the 5 urban centres.
For investment, I’d look for developments with strong master plans in up-and-coming areas that are still reasonably priced but have all the infrastructure you’d expect in the city center – offices, retail, malls, and entertainment.
In terms of undersupply, there’s still a shortage of townhouses and villas. They make up the smallest percentage of available properties but are exactly what incoming families and long-term residents want most.
However, big apartments in central Dubai may give you more options, you can rent to families or shift to short-term rentals as and when the market may demand.
In my book, ‘The Essential Guide to the Dubai Real Estate Market’, I talk about how buyers can run comparable analysis and simple investment appraisal to cross-check numbers on real-case scenarios. These straightforward methods can help you reduce risk and find properties that truly give you the best value for your money.
4. How do people typically save money on their mortgage loan in Dubai?
There is not much scope to save once you sign the mortgage loan agreement.
Of course, you can switch or refinance, but there are additional costs, buyout fees can be as high as 3%, plus you’ve got title deed registration and other costs that often wipe out any savings from a lower rate.
My advice would be do not just look at the introductory rate. Check what the variable rate will be after 2-3 years, which is usually a margin above the 3-month EIBOR from the UAE Central Bank.
Run the numbers today and add 2-3% to the rate as a stress test. This way, you’ll know if you can actually afford the mortgage loan if rates do go higher later.
A qualified mortgage broker will be able to get the best deals and also look beyond the initial fixed term rate for you.
5. What are your thoughts on crowdfunding platforms that allow you to invest in Dubai real estate?
I think these offer merit for younger investors who are more familiar with using apps and technology to manage their investments.
They’re also great for investors who want to increase their Dubai property market exposure without the hassle of managing tenants and maintenance.
Leading real estate crowdfunding platforms, like Smartcrowd or Getstake, allow much lower entry (as low as AED 500) to invest in Dubai real estate. And, it also gives people an opportunity to start investing in property in Dubai today, regardless of market prices, by dollar-cost averaging with regular investments over time.
