UAE property survey: Dubai leads buying trends

The AME Info Buying Property in the UAE survey highlighted that people want to own their own place in the UAE, but rising costs are leading some to look for bargains in less headline-grabbing emirates. In our survey we found that while most people had not bought, a massive 59.5 per cent planned to plunge into the property market in the country.

Not surprisingly, Dubai was first choice for most people, with 81.5 per cent planning to buy in the emirate. But Abu Dhabi (22.5 per cent) - which is behind Dubai in is building programme but now beginning to deliver completed properties - Sharjah (14.6 per cent) and Ajman (11.4 per cent) were all popular destinations.

The latter two benefit from the fact that many workers brave daily traffic jams to Dubai because they can get a lot more for their money in these two emirates. Ras Al Khaimah, despite heavily promoting itself, scored low as a destination.

Of those that had bought, again most lived in Dubai, with Ajman and Abu Dhabi being the other popular places. We also found that many people owned more than one home, clearly using their additional properties as investments.

High property costs

For those not planning to buy, the most common reason was the cost of property, and here, people will have been thinking mainly about prices in Dubai, as with the exception of Abu Dhabi, the other emirates are all far cheaper to buy in. Twelve per cent were holding off because they were concerned about the market, again suggesting that people felt prices in Dubai had become overheated and they were worried about a property crash.

The two most popular reasons for buying were to live in and as an investment, showing that while some respondents have held back because they lacked confidence in the market, there are plenty who still believe they can make money through property. The most common reason for buying given by respondents was because they were unhappy with prices in the rental market. A number said that because Dubai rents were so high, they might as well have a mortgage and own the property.

‘Cost benefit analysis...payment of instalments should be around the rent being paid in Bur Dubai or Karama. Better to buy and make an asset,’ said one respondent. ‘Rent is too high in Dubai, and I prefer to use the money by investing in real estate in a good property, to be used by my family while I am in Dubai, and rent [or] sell [it] in the future,’ said another.

Others pointed to the good rental yields; ‘Escalating rents make it attractive,’ said one.

Family home

The most popular properties were family home sized three bed villas (36.2 per cent) and couple or singles sized two bed apartments (42.6 per cent), although over a quarter said they would also consider buying a one bed flat.

There was no clear trend for buying pre-built or off plan properties, and many of those looking to buy said they hadn’t yet decided what to go for. But among those who were looking to buy off plan, the chief reason was cost. A number also cited location and in a pointer to demand out-stripping supply in desirable areas, the lack of available existing properties. In our follow up survey next year, we will be interested to see if this view has changed once more properties come online.

The penultimate question looked at property prices, and it was no surprise to see that 70 per cent thought places were too expensive. Again, that’s largely the Dubai effect as prices continue to reach dizzying heights. But almost a quarter felt prices were where they would expect them, and some felt that prices in Dubai were still cheap compared to other world markets.

‘Property prices are at a premium and the market is unsustainable. The current real estate prices are not out of reach, however my fear is that to buy now, when the market is high, quality is low and the secondary market is untested, may mean you end up in a negative equity position for some time. The only investment grade real estate in the UAE is commercial,’ explained one respondent.

The overwhelming trend among respondents with this question though, was that property prices were too high, particularly when compared to the build quality, with many saying it was too poor. Which flew in the face of the final question, where the majority of respondents were happy with the quality of properties available in the UAE – 63 per cent thought places were of a high standard or as they would expect. Only eight per cent felt quality was poor.

It’s difficult to say for certain why the difference, but it suggests that those who have not bought due to high prices felt the quality of finishing was poor, while those that had bought, were generally happy with their home.

Dubai is still the emirate of choice for many buyers. But as prices rocket, it is having a ripple effect that is reaching other emirates. Overall the survey shows there is a thirst to buy in the UAE – many people see it as a good investment and want to get in before prices go higher to escape the annual cycle of rental increases

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Property survey graphs
Reader's views on Property prices
Reader's reasons for buying in the UAE
Reader's comments on build quality