Nearly 30 per cent of those who took mortgages last year in Dubai decided to become homeowners after receiving rental eviction notices from their landlords, a new report has found. Instead of looking for another apartment or villa to rent, these tenants decided that buying was more viable.
In Dubai, homeowners can issue eviction notices to their tenants if they wish to sell their property or decide to move in themselves.
“Our survey reveals that 29 per cent of buyers were prompted to purchase after receiving a rental eviction notice, often due to landlords selling their properties. With rents significantly rising, many tenants opted for home ownership as a more secure and financially viable solution,” the 2024 Mortgage Finder Report said.
About 65 per cent of buyers cited long-term plans to stay in the UAE as their primary motivation. “A key driver of this trend is the unique economic advantage of buying over renting in the UAE. While mortgage rates average around four per cent, rental yields exceed six per cent, creating a compelling financial case for ownership. This dynamic means that monthly mortgage payments are often lower than equivalent rental costs, allowing buyers to build equity rather than pay rising rents. Coupled with stable financing options, this makes buying not just an emotional decision but a long-term strategy for financial security,” the report said.
First-time home buyers make up 74 per cent of borrowers, the Mortgage Finder Report said, citing its own research and Dubai Land Department (DLD) records. “First-time buyers make up a significant portion of mortgage borrowers, with 94 per cent purchasing for personal use. Experienced buyers, accounting for 26 per cent, are primarily investing.”
Key insights
Majority of the borrowers (41 per cent) earn between Dh30,000 and 60,000 while 26 per cent earn up to Dh30,000. More than half (53 per cent) are in the 31-40 age group.
The mortgage market is predominantly driven by residents (95 per cent). The average loan amount is Dh1.7 million, and the typical repayment term being 21 years.
“Over the past three years, mortgage transactions have consistently outpaced the growth of ready sales transactions. In 2023, mortgage transactions grew by 29 per cent, while ready sales transactions increased by 21 per cent,” the report said. “In 2024, mortgage transaction growth outpaced ready sales transactions by … 3.5 times with a 39 per cent growth in mortgage transactions versus 11 per cent growth in ready sales transactions,” the report said.
Getting a mortgage
According to an expert, home ownership is a “wise choice” as it allows one to build equity rather than just paying rent, which doesn’t contribute to ownership. “Over time, the money spent on rent could be used towards a mortgage, eventually leading to full ownership of the property,” said Ayman Youssef, managing director, Coldwell Banker.
As a new property owner, one needs to make an initial investment, typically around 26 per cent. “This includes a 20 per cent down payment and around six per cent for transaction fees.”
As reported by Khaleej Times, banks have stopped financing DLD and brokers’ fees.
Youssef also advised prospective buyers to research the property’s true value before purchasing. Community service charges and utility costs are other factors that a buyer must keep in mind. “Generally, apartment maintenance costs tend to be higher than for villa properties.”
The process of obtaining a mortgage in Dubai is relatively straightforward, though the specific requirements can vary depending on the bank and one’s financial profile. “Generally, most banks in Dubai require a minimum monthly salary of Dh15,000 to qualify for a mortgage, though some banks may accept a lower salary … depending on factors such as your credit score and overall financial stability.
“Once you meet the salary criteria and provide the necessary documentation, many banks offer same-day pre-approval for mortgages, allowing you to quickly move forward in the home-buying process. It’s important to note that each bank may have different criteria beyond salary, such as the length of employment or the amount of debt you already have. Therefore, it’s advisable to compare offers from various banks to find the best fit for your needs.”
