A Betterhomes report
Text By: Lisa Amnegard
Rising rental prices and cheaper mortgage rates are quickly reshaping Dubai’s property landscape. Over the past year, there has been a drastic increase in mortgage enquiries as tenants seek cost-effective alternatives to escalating rents. Betterhomes’ latest data reveals mortgage-financed purchases now constitute 60% of transactions, nearly doubling from 35% in early 2024. Mortgage affordability continues to support the market, with rates holding between 4% and 4.5%. The Emirates Interbank Offered Rate has maintained stability at 5% over the past year. Commenting on this, Richard Waind, Chief Executive Officer of Betterhomes said: “Mortgage buyers received a welcome boost in September with an interest rate drop of 0.5%, the first cut in rates in over 4 years. Cheaper mortgages in the face o frising rents have understandably resulted in an influx of new buyer enquires from tenants.” The accessibility of mortgages has opened doors for middle-income residents, with most prospective buyers earning under AED50,000 monthly. Average household incomes stand at AED45,616 for current investors and AED32,303 for tenants, reflecting a broadening market reach.
Price fears, space, security prompt homeownership
The Betterhomes Future of Living report reveals mounting pressure on Dubai tenants to enter the property market. Seven in ten tenants now plan to buy a property within three years. This comes as the majority of tenants fear rental increases during their next lease renewal. According to Cushman & Wakefield Core, city-wide rents have increased by 18% year-on-year, marking the 15th consecutive quarter of significant growth. Villa rents have shown some stabilisation, with a 13% year-on-year increase, while apartment rents have seen a sharper rise of 19% over the same period. According to industry estimates, these upward trends will continue into next year.
While rising rents may trigger the initial interest in buying, the report reveals deeper motivations driving Dubai’s tenants toward homeownership. Long-term stability emerges as a key factor, with residents seeking to establish permanent roots in the emirate. The desire for larger living spaces also plays a crucial role, as buyers look for homes that can accommodate growing families and changing lifestyle needs.
Intrestingly, millennials form the largest group of new potential home buyers, with as high as 56% falling in the age group of 28 to 43 looking to own houses, followed by 29% of Gen X, falling in the age bracket of 44 to 59.
What Buyers Want, Where They’re Looking
The Future of Living survey reveals a clear shift in buyer priorities, with emphasis on properties offering dedicated home offices, additional bedrooms, and comprehensive community facilities. Premium locations continue to dominate buyer interest, with Dubai Hills Estate emerging as the most sought-after area. Dubai Marina and Downtown Dubai maintain their appeal, while Business Bay and Arabian Ranches round out buyers’ top choices. “This transformation reflects Dubai’s maturing real estate market. The convergence of favorable mortgage rates and rising rents has created an environment where home ownership is increasingly attractive to long-term residents,” Richard stated.
The transition to mortgage-led purchases indicates a move toward a more stable and sustainable market, highlighting Dubai’s progression from being primarily investor-driven to an end-user-focused market. This shift may have long-term effects on the emirate’s property sector, fostering more balanced and sustainable growth trends.
