Developers in Dubai could expect a spike in demand for properties soon, with as high as 66 per cent of tenant respondents in a market study indicating their plans to buy houses in the city in the next six months.
Additionally, a large number of investors are also looking to acquire additional houses in the emirate for capital growth.
The rise in rents and desire to own a house are the key motivations for low- to middle-income tenants to buy houses, while capital appreciation is the sole motive of high-income investors, according to a market survey by Betterhomes.
Significantly, millennials form the largest group of new potential home buyers, with as high as 56 per cent falling in the age group of 28 to 43 looking to own houses, followed by 29 per cent of Gen X, falling in the age bracket of 44 to 59.
A strong desire for security of tenure, wanting more spaces and the requirement of shorter commuting time are driving tenants in Dubai to look to move to their own ‘dream homes’ at the earliest.
Dubai Hill Estate, Dubai Marina and Downtown Dubai are the top preferred Dubai neighbourhoods for investors and tenants, followed by Business Bay and Arabian Ranches.
Interestingly, the majority of the prospective property buyers (66 per cent) – both investors and tenants who participated in the Betterhomes study – are not top-dollar earners – as their monthly earnings are below AED 50,000.
While the average monthly household incomes of investors are to the tune of AED 45,616, that of the tenants is AED 32,303.
Price fears, space, security lead to ownership
The study revealed that anticipation of further firming up of property prices in Dubai is a major reason for tenants to buy houses as early as possible.
A significant number of tenants – 42 per cent – expect house prices in the city to see a 5-10 per cent rise in the next 12-month period, while 30 per cent of them are apprehensive of more than 10 per cent increase in prices in this period.
Only 10 per cent of the prospective investors think prices could come down marginally or even by more than 10 per cent over the next one year.
Betterhomes said their study showed that security of tenures and more living and storage rooms are among the prime drivers for those who have been living on rented accommodations to look to purchase houses.
“Security, space and speed are the three major reasons cited by the prospective buyers who live in rented accommodations currently,” said Richard Waind, CEO of Betterhomes.
The desired space requirements by the prospective buyers include more bedrooms, including a guest bedroom and a maid room, walk-in closets and dedicated work or study areas within their properties, gym and fitness facilities, swimming pools, children’s play area and green spaces are among the sought after ones within the community.
Quick commutes in Dubai prompt home purchases
The study also cited shorter commuting time to offices and other locations for day-to-day requirements such as children’s school, and shopping, as another major reason compelling prospective tenant-buyers to look for buying their own houses.
As high as 60 per cent of the tenant-prospective buyers are looking to own properties which fall within a 15–30-minute travel distance to their offices.
“Twenty-three minutes is the average time these prospective buyers are wishing to commute to their offices or other areas,” Waind said.
“It may not be often possible in a city like Dubai, though,” he said.
Millennials also cite the need for more storage space for wanting to purchase their own houses, as they find quite constrained storage spaces in their rented accommodations.
Betterhomes said an overwhelming majority of the prospective buyers – 72 per cent of the respondents – have been living in Dubai for over five years now, and even a higher percentage – 89 per cent – intend to live for more than five years from now.
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