Deciding between renting vs owning property in Abu Dhabi can be daunting for many. The decision affects your investment portfolio, financial flexibility and lifestyle. Amidst multiple things to consider when deciding between buying vs renting, financial considerations take the lead. Initial investment, personal financial situation, subtle costs and returns, all need to be considered.
For your convenience, we have mentioned the financial considerations of buying vs renting property in Abu Dhabi in more detail.
Financial Considerations of Buying vs Renting Property
Following are some financial aspects that should be taken into account when buying or renting a property in Abu Dhabi.
Financial Status
One of the most important financial aspects to consider when deciding between buying vs renting a property in Abu Dhabi is your earning. The minimum salary required to buy property is around AED 15,000 to AED 16,000/month. Aside from the minimum requirement, consider monthly expenses, mortgage payments, savings and travel expenses.
Add all the expenses and subtract the total amount from the monthly income. Now decide whether to rent or purchase on the basis of the remaining amount.
Down Payment
Down payments are the initial money paid prior to buying the property. Usually, a down payment is around 15% for locals and 20% for expats. Moreover, the down payment can’t be paid through a personal loan or mortgage. In fact, many financial institutions obligate applicants to clear a down payment to receive a mortgage amount. Besides, here are some tips to save money for down payment that can aid you in the process.
On the other hand, tenants are exempted from down payments, instead, they have to pay a security deposit. The security deposit is generally equal to one month of rent and is also refundable.
Upfront Cost
Aside from a down payment, there are other upfront costs that should be considered when buying a property in Abu Dhabi. This includes Abu Dhabi Municipality fee, mortgage registration, title deed cost, property valuation and real estate agent fees, among others.
Renting a property in Abu Dhabi requires less upfront cost. It only includes real estate agent fees, annual rent and security deposit. That said, here are some properties for rent in Abu Dhabi that you can opt for.
Ongoing Expenses
Property owners are obligated to pay different ongoing expenses including mortgage payments, insurance and development fees. Moreover, landlords are also responsible for regular maintenance of the property. Although you can avoid some mistakes that increase home maintenance costs, it is still a huge expense.
On the contrary, tenants are only liable to pay monthly rent and utility charges. That said, renters have fewer ongoing expenses contrary to landlords.
Mortgage Repayment
If you opt for a mortgage, the monthly repayment instalments are also a financial aspect that should be considered. Buyers have to pay the property value in instalments along with interest. Here are some loan services by Abu Dhabi Housing Authority that can help you when purchasing a property on a mortgage.
Financial Feasibility
Buying a property in Abu Dhabi offers long-term financial stability, as you are investing in an appreciating asset. This appreciating asset also provides a sense of security and stability to the buyers.
Aside from security, the purchased property offers a stable monthly income when rented out. The rental yield of properties in Abu Dhabi is significantly higher, nearly 6% to 8%. The regular income from the property can significantly enhance your financial status.
In comparison, tenants will have to pay monthly rent with a low sense of security. Although the rights of tenants are protected by authorities like the Rental Dispute Settlement Committees in Abu Dhabi, the sensor of security is still low.
Other Incentives
Owning a property in Abu Dhabi offers multiple other benefits including higher investment returns. Aside from return, property owners can also get UAE residence through a property visa. However, expat tenants are required to renew their visas prior to expiry.
FAQs
Can expats buy apartments in Abu Dhabi?
Yes, expats can buy properties in Abu Dhabi in the freehold property areas.
Are there any rent-to-own properties in Abu Dhabi?
Yes, there are multiple rent-to-own properties available in Abu Dhabi.
Do tenants need to pay a down payment in Abu Dhabi?
No, instead of a down payment, tenants are required to pay a security deposit.
These were all the financial considerations when buying vs renting a property in Abu Dhabi. The real estate market of the capital city has shown positive growth trends in previous years, making it an ideal investment option. Aside from positive growth, investor-friendly policies, law and order situation and world-class infrastructure are add-ons. If you are interested in availing these benefits, browse through these properties for sale in Abu Dhabi and invest in the real estate unit.
If you are an expat, here are some Abu Dhabi property buying and ownership laws for foreigners that you must be aware of.
Stay tuned to dubizzle’s property blog for more information on the pros and cons of buying vs renting in Abu Dhabi.
