Buying Vs Renting: What Is Better?

Factors to Consider: Buying Versus Renting in the UAE

From your finances and budget to your long-term residency plans, there are several facets that you must plan out before taking the big step of either renting or buying a property in the UAE. Here are a few factors to consider before deciding whether you will be a property renter or a buyer.

Duration of Stay in the UAE

The duration of your stay in the UAE can help you decide whether a mortgage or purchased property is cheaper than renting, or vice versa. 

If a person is planning to live in the UAE for the long term (e.g. at least five years), they can consider buying a property (e.g. apartment/villa) to save on the amount of rent they would have to pay. It will also give you potential perks like the option to get a long term investor visa in the UAE.

If the plans to reside in the UAE are not absolute, renting a property might be a more suitable option. This will give you flexibility in terms of moving around and retaining your freedom without too many consequences. 

Financial Position Assessment

Determining one’s budget for living in the UAE is an extremely important step, as it will help you select the correct property and opt for a suitable option. 

If a person has the capacity to make the down payment on a property (the amount for expats is at least 20% of the property value) while being able to pay off the equated monthly installments (EMI) - buying a property might be a better option for them. It must be noted that the down payment of a property will be one of the biggest upfront costs to a potential buyer/mortgage buyer in the UAE. 

As for potential renters who plan to reside in the UAE long-term, they can consider buying a property if they have a stable fixed income. Investing in a property in the UAE can have long-term perks; buyers can put their property up for rent and earn extra income.

If someone has taken a mortgage to purchase their property in the UAE as an investment, they can utilize the rent they receive to cover monthly mortgage payments.

Market Analysis

Depending on the emirate one wishes to reside in, conducting simple market research is a good idea. While Abu Dhabi and Ras Al Khaimah are attracting investors for their off-plan island developments, Dubai’s popularity is being boosted by an increasing population of both high-net-worth individuals and skilled workers.

According to Bloomberg, property prices are set to increase by 8% in 2025, driven by increased demand, limited supply, and a robust economy. While rising rental prices is likely to be a negative for impact tenants, those who buy property in Dubai using a mortgage could greatly benefit from the higher rent prices going forward if they choose to rent out their property.

But like all real estate markets, the one in the UAE is also prone to fluctuations. Keeping up to date with the latest trends is advisable for potential buyers/renters, which is something an experienced real estate agent can help you with.  

Control Over Property: Renting Versus Ownership

The UAE has strict laws and legal frameworks about property and ownership.

For example, owning a property in the UAE will give owners higher control over their property when it comes to factors such as renovations, modifications, and customizations. Renters, on the other hand, may have to face several restrictions throughout their contract’s validity and may even require an NOC from their landlord for minor changes. 

Even in property ownership, there are two kinds; freehold and leasehold. Freehold property owners have perks such as passing on their property to an heir, complete ownership of their property and the land it is built upon, and freedom to make changes to their property - it may be an expensive investment. 

Leasehold owners will have limited control over their property as they are technically leasing the property from the actual freehold owner. But, such properties are relatively more affordable. 

It is to be noted that landlords and owners have to pay annual maintenance fees, service charges, and any repairs or renovations. Whilst tenants are typically liable for the cost of minor repairs and maintenance, they will not be responsible for major expenses like service charges.

Researching and Finding a Reliable Agent

A reliable real estate agent will make your property search much more streamlined and straightforward. Consulting with an agent who is accredited and an expert in the property type and location you are considering can be an enormous asset in your real estate journey. 

New buyers often completely rely on their real estate agent to source suitable options and share market information. Therefore, it is important to spend time with the agent to understand their expertise and whether they can align with your wishes for a property. 

Crunching the Numbers: Renting Versus Mortgaging Properties in the UAE

Let’s get down to the numbers and understand the approximate costs of renting versus mortgaging a property in the UAE. 

If one crunches the numbers factoring in their annual rent within a specific period and how much their monthly mortgage payments would be - they will get a clear picture of whether renting is a better option or buying a property. 

Initial Costs for Renting a Property

While a security deposit and rent are the two primary costs of renting a property in the UAE, there are certain costs a renter will initially have to bear. 

• Security deposit: 5% of the annual rent for an unfurnished property, 10% if it is furnished

• Agency fees: 5% of the annual rent for a residential property

• DEWA charges: Paid to the Dubai Electricity and Water Authority, the DEWA charges will be

• AED 2,000 for apartments (refundable upon leaving) 

• AED 100 for apartments (non-refundable connection fee) 

• AED 4,000 for villas (refundable upon leaving) 

• AED 300 for villas (non-refundable connection fee) 

• Dubai Municipality fees: 5% of the annual rent paid in 12 installments, added onto the DEWA bills 

• Ejari fees: 

• Trustee centers: 

• AED 120 for registration 

• AED 95 + VAT for service partners 

• Through the mobile app or system:

• AED 100 for registration 

• AED 10 for the knowledge fee 

• AED 10 for innovation fee 

Cost Analysis: Renting a Property Over Five Years

Let’s take an example to simplify this cost analysis.

Let’s assume a person rents a property in Dubai Marina, one of the the emirate's most desirable apartment communities. If we assume that the renter pays AED 90,500 annually for a 1 bedroom apartment, they will pay over the next 5 years:

• Total rent over 5 years: AED 475,000

• Agency commission (5% × AED 95,000 × 5 years): AED 23,750

• Ejari fees (5 years): AED 630

• Dubai Municipality housing fee (5% × AED 95,000) = AED 4,750/year or AED 23,750 over 5 years

• DEWA deposit and fees (AED 2,000 refundable + AED 100)

The total cost for renting over five years will be AED 525,230, assuming no annual increase in rent.

Cost Analysis: Mortgaging a Property Over Five Years

If we consider a similar 1 bedroom apartment in Dubai Marina. As of August 2025, the average price of such a unit in Dubai Marina is approximately AED 1.95 million.

If a person is mortgaging a property, they will be paying mortgage costs along with several upfront costs:

• Down payment (20%): AED 390,000

  DLD fees (4%): AED 78,000

  Real estate agent fees (2%): AED 39,000

  Property valuation fees: AED 2,500

  Mortgage registration fees (0.25% + admin): AED 4,875

  Property registration fee: AED 2,000

  Loan establishment fee (1%): AED 15,600

Thereby, the buyer’s total upfront costs will be approximately AED 531,975.

Now, we will determine how much the buyer will probably pay for the apartment over a five-year period:

• Loan amount (80%): AED 1,560,000

• Monthly EMI (3.99% fixed): ~AED 8,230/month

• Total over 5 years (60 months): AED 493,800

• Service Charges: AED 15.03/sq.ft. × 850 sq.ft. = AED 12,775/year. Over 5 years: AED 63,875

It is important to note that:

• The calculations provided above are based on a standard fixed mortgage interest rate of 4.8% - this may vary from bank to bank. 

• The average size for a 1BHK in Dubai Marina is estimated to be 850 sq. ft. 

• The RERA Service Charge Index 2023 for Dubai Marina is AED 15.03 per sq. ft. 

Total 5-year cost of mortgaging =
Upfront (AED 531,975) + Repayments (AED 493,800) + Service charges (AED 63,875)
= AED 1,089,650

Approx. AED 560K of that goes toward equity.

Cost Analysis: A Comparison

In the example above, the total cost of renting over 5 years is approximately AED 525,230, and this does not account for potential rent increases, which are likely given Dubai’s rising population and constrained supply in popular areas like Dubai Marina.

By comparison, the total cost of buying the same property with a mortgage is around AED 1,089,650 over 5 years. This figure includes both upfront fees and monthly repayments.

While buying requires significantly more capital in the short term, it’s important to note that around AED 560,000 of that amount goes toward building equity in the property, something that boosts your net worth, unlike rental payments which are non-recoverable.

If property values and rental prices continue to rise, as many analysts project for 2025 and beyond, the long-term financial advantages of buying become even more compelling, especially for those planning to stay in Dubai for several years.

Down Payment Considerations

A down payment for mortgage buyers is the initial payment made to purchase a property. It is a requirement when buying any property using a mortgage that this downpayment be made.

According to the UAE Central Bank, any down payment made for a property that is being mortgaged must be at least 20% of the property value for residents and 15% for UAE nationals. Personal loans cannot be used to finance down payments for property investments. 

Mortgage Repayment Details

This is important for mortgage buyers wondering if a mortgage is cheaper than renting an apartment in the UAE.

Mortgages are monthly installments paid to the bank towards the property's loan amount. In the UAE, the loan-to-loan-value ratio/mortgage amount caps at 80% if a property is valued at less than AED 5 million. For properties valued over AED 5 million, the cap is set at 70% of the property value. 

Typically, mortgage repayments will be less than the monthly rental payment that would be incurred on a like-for-like property, however this isn't always the case.

Initial Costs for Property Mortgaging in the UAE

Buyers looking to obtain a mortgage property in the UAE will have to bear several costs and fees when purchasing their property. These costs are approximately 6-7% of the property's value in upfront costs. Whilst this might sound high, it is actually much lower than the upfront costs in many other major cities globally.

Here is a list of other upfront costs for buying a mortgage property in the UAE:

• Real estate agent fee: 2% of the property value plus 5% VAT 

• DLD transfer fee: 4% of the property value and administrative charges 

• Mortgage registration fee: 0.25% of loan value and administrative charges 

• Property registration fee: AED 2,000 and 5% VAT 

• Property valuation fee: AED 2,500-AED 3,500 

• Bank mortgage loan establishment fee: 1% of the loan amount and 5% VAT

Conclusion

In this article, we have outlined the key considerations and potential costs of both buying and renting a property in the UAE. Whilst we’ve addressed the question: 'is a mortgage cheaper than rent?', the answer is that this will depend heavily on your circumstances.

Our aim with this detailed information is to help you decide which path to take, but consulting a real estate professional is recommended to help you truly gauge your circumstances and the right approach for you.

While renting, buying, or mortgaging a property in the UAE all come with potential costs, long-term residents in Dubai often prefer buying a property. This provides long term stability, the ability to avoid rising rental prices, the potential for capital appreciation and the greater potential to build your net worth. However, buying a property is not suitable for everyone. For those looking to reside in the UAE for a short period of time only, or those looking for lots of flexibility, renting could be the preferred option.