A recent report highlights a significant shift in Dubai Real Estate market, with many tenants looking to transition to homeownership. The anticipation of rising property prices in Dubai has become a key motivator, prompting renters to consider buying properties sooner rather than later.
Developers in Dubai are expected to see a sharp increase in demand, with 66% of tenant respondents in a market survey expressing plans to purchase homes within the next six months. Investors are also eyeing the market, aiming to acquire additional properties for capital growth.
Rising rental costs and the desire for property ownership are strong incentives for low- to middle-income tenants, while high-income investors are motivated primarily by the potential for capital appreciation.
Millennials Leading the Homebuyer Wave
A notable portion of prospective buyers comprises millennials, with 56% of respondents aged 28 to 43 planning to purchase homes. They are followed by 29% of Generation X buyers, aged 44 to 59. This younger demographic is driving demand, influenced by a desire for tenure security, larger living spaces, and shorter commuting times.
Popular Neighborhoods for Buyers and Investors
Dubai Hills Estate, Dubai Marina, and Downtown Dubai have emerged as the top choices for investors and prospective homeowners, with Business Bay and Arabian Ranches also attracting significant interest. These areas are favored for their amenities and proximity to key locations within the city.
Income Insights: Buyers and Investors
Interestingly, 66% of prospective buyers, including both investors and tenants, have monthly earnings below AED 50,000. The average household income for investors is around AED 45,616, while tenants report an average of AED 32,303. Despite not being top earners, these individuals are motivated by the fear of rising prices and the need for more space.
Rising Prices Fuel Urgency Among Buyers
A key finding of the study is the widespread concern over increasing property prices. Around 42% of tenants expect a 5-10% rise in property prices over the next year, while 30% fear that prices could surge by more than 10%. Only 10% of respondents believe prices may decrease marginally.
This price anticipation, coupled with a desire for larger homes and better living conditions, is driving tenants to pursue homeownership sooner.
Security, Space, and Speed: Key Motivations for Buyers
Security of tenure, the need for more space, and quicker commute times are the primary reasons tenants are seeking to purchase their own homes. Many are looking for properties with additional bedrooms, guest rooms, and maid quarters, along with amenities such as fitness centers, swimming pools, and children’s play areas.
Commuting Concerns Drive Homebuying Decisions
Another factor influencing tenant-buyers is the desire for shorter commutes. The study revealed that 60% of prospective buyers are seeking homes within a 15-30 minute travel distance from their workplaces. On average, these individuals are hoping to keep their daily commute to 23 minutes, although this may be challenging given Dubai’s layout.
Long-term Residents Set to Stay
The study found that 72% of prospective buyers have been living in Dubai for more than five years, and an even higher percentage—89%—plan to remain in the city for at least another five years. This long-term commitment reflects confidence in Dubai’s real estate market and a desire for stability.
Published On : 15 Oct 2024
Source: https://www.arabianbusiness.com/industries/real-estate/dubai-real-estate-demand-expected-to-spike-as-renters-look-to-buy-report