# To buy or not to buy



## pamela0810 (Apr 5, 2010)

I'm been looking online and can see that house prices have reduced considerably. Everyone's talking about the oversupply and how it's currently a buyer's market. 

So my question, dear EF members is, would you take the risk and buy property out here in this current time?

Also, does anyone have one reference point where I can get details of all of my additional fees, etc that I would be paying every month on top of the mortgage and loan payments, should I decide to take the plunge? 

I'm trying to figure out if a single mum like me can afford to buy her own place, pay all of the required payments and have enough left on the side for monthly expenses, bills etc and also save for the not so little one's future college fees.


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## twowheelsgood (Feb 21, 2013)

I thnk the most important factor is how you view your own employability now and in the future.

If you can be sure you will be always employed and earning, then why not, but i suspect the bottom of the market is some way off yet.

One just has to look at the construction of residential property around Dubai to see there's a lot more coming online and a lot of buyers pre-2008 who are well underwater but havent gone down for the last time.


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## Shamsiddin (Oct 12, 2018)

Hi there. I think people always fear when it comes to buying property. They consider that just keep renting no matter of market condition is better decision, they assume it is safe. The reason, i believe, is it is the biggest decision in life, maybe bigger than deciding to get married or having kids 😀💍. Lets me start with broad overview and get back to your question. If you see current scenario in the market or what is happening in Dubai, UAE it seems to many people as crazy, but it is not. We talk much about over supply these days. Question is, what do you think is over supply?🏘 Currently only Dubai's permanent population is 3.1 mln people in 2018 + add 16 mln tourists visiting Dubai yearly which is planned to double (both population and tourists) by 2027. Now there are only 500k residential units to accomodate these 3.1 mln people which is 6.2 persons per unit. Which is higher than in London for 3 times. Growth of Dubai population is 10.7% yearly, highest in the world. Residential supply is 34-40k per year if developers complete on time. So residential units growth is 7-8% ,lower than what is required by population growth. These stats and data is from trusted organizations as JLL and Knight & Frank. Now there is another side of the coin. Current trend is, the supply of apartments mostly in distant areas where public transport, metro did not reach "yet". For this reason most people prefer to stay in developed area. Metro extention to those distant areas would increase interest to the area. which is definate to happen, construction is on.
Back to your question. Currently Central Bank has set a clear picture about loan tenure. Depending on your age you may take up to 25 years of mortgage repayment. If you calculate it for long term investment your monthly payment could be even less then your monthly current rent payment. In case if you lose your employment then the exit strategy is very simple an clear, it is a different story, but shortly you can sell unit and get some part of money, can you do it by keep renting?🤑 . You may raise funds even for your kids education by topping up your mortgage. One thing is for sure, current resale market prices sometimes less than cost of construction, rebuilding cost. This I believe is not for long as in some areas prices for rent already started rising. If rent starts rising then sell will rise as well. This is what happened in 2013-2014 post crisis of 2008.


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## Stevesolar (Dec 21, 2012)

Shamsiddin said:


> Hi there. I think people always fear when it comes to buying property. They consider that just keep renting no matter of market condition is better decision, they assume it is safe. The reason, i believe, is it is the biggest decision in life, maybe bigger than deciding to get married or having kids 😀💍. Lets me start with broad overview and get back to your question. If you see current scenario in the market or what is happening in Dubai, UAE it seems to many people as crazy, but it is not. We talk much about over supply these days. Question is, what do you think is over supply?🏘 Currently only Dubai's permanent population is 3.1 mln people in 2018 + add 16 mln tourists visiting Dubai yearly which is planned to double (both population and tourists) by 2027. Now there are only 500k residential units to accomodate these 3.1 mln people which is 6.2 persons per unit. Which is higher than in London for 3 times. Growth of Dubai population is 10.7% yearly, highest in the world. Residential supply is 34-40k per year if developers complete on time. So residential units growth is 7-8% ,lower than what is required by population growth. These stats and data is from trusted organizations as JLL and Knight & Frank. Now there is another side of the coin. Current trend is, the supply of apartments mostly in distant areas where public transport, metro did not reach "yet". For this reason most people prefer to stay in developed area. Metro extention to those distant areas would increase interest to the area. which is definate to happen, construction is on.
> Back to your question. Currently Central Bank has set a clear picture about loan tenure. Depending on your age you may take up to 25 years of mortgage repayment. If you calculate it for long term investment your monthly payment could be even less then your monthly current rent payment. In case if you lose your employment then the exit strategy is very simple an clear, it is a different story, but shortly you can sell unit and get some part of money, can you do it by keep renting?🤑 . You may raise funds even for your kids education by topping up your mortgage. One thing is for sure, current resale market prices sometimes less than cost of construction, rebuilding cost. This I believe is not for long as in some areas prices for rent already started rising. If rent starts rising then sell will rise as well. This is what happened in 2013-2014 post crisis of 2008.


Interesting rant - but you failed to answer the OP’s specific questions!


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## Andy Cap (Sep 6, 2018)

You do realise that if you buy a villa, even a freehold villa, you don't own the land don't you?

You've been here long enough Pammy, I'd prefer to live in Disco Gardens (for example) and save each month rather than buy here, and then buy somewhere you really want to live.

Probably why i now live in RAK.

Hello Steve btw.


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## Shamsiddin (Oct 12, 2018)

After reading what is mentioned above person can make a decision based on the facts and numbers provided rather than just polling for yes or no.


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## XDoodlebugger (Jan 24, 2012)

I think that property here is way overpriced for what you get, basically it is a house of cards that could come tumbling down after 2020. Your results may vary.

Of course if I was smart I would have purchased something on a 15 year loan 7 years ago when I came and it would be 50% paid off today.


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## pamela0810 (Apr 5, 2010)

XDoodle****** said:


> I think that property here is way overpriced for what you get, basically it is a house of cards that could come tumbling down after 2020. Your results may vary.
> 
> Of course if I was smart I would have purchased something on a 15 year loan 7 years ago when I came and it would be 50% paid off today.


This is what I keep saying to myself.....if I had bought a house 15 years ago, it would have been paid off by now. But I kind of like the idea of not having anything tying me down to this place...no loans, no mortgages. Unfortunately, real estate in Mumbai is way to expensive and not worth the investment. So the question then is, where should I invest?

I just turned 41 and had hoped that I would have a house in my name by now. I do not want to retire back in India so I guess the only other option for me is to research which other countries actually allow Indians to invest in residential property. 

Thanks for the input guys! 

Andy Cap, I thought you'd left this place a long time ago!


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## Sheray (Jul 29, 2014)

pamela0810 said:


> This is what I keep saying to myself.....if I had bought a house 15 years ago, it would have been paid off by now. But I kind of like the idea of not having anything tying me down to this place...no loans, no mortgages. Unfortunately, real estate in Mumbai is way to expensive and not worth the investment. So the question then is, where should I invest?
> 
> I just turned 41 and had hoped that I would have a house in my name by now. I do not want to retire back in India so I guess the only other option for me is to research which other countries actually allow Indians to invest in residential property.
> 
> ...




Retire in Dubai? Very expensive option even if you own a house! 
Retire in India! Own an investment property in Dubai? Why so much risk?


Ideally, expat ppl in Dubai one way or another going back to their original country.


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## John-AD (Feb 13, 2017)

pamela0810 said:


> I'm been looking online and can see that house prices have reduced considerably. Everyone's talking about the oversupply and how it's currently a buyer's market.
> 
> So my question, dear EF members is, would you take the risk and buy property out here in this current time?
> 
> ...


Personally no, for the following reasons:
1. I have an "expanding" family. It is difficult to get the right house size.
2. I prefer the piece of mind of not having a mortgage. I do not mind paying a bit extra in rent for this piece of mind.
3. In case of a recession, my capability to earn income will be substantially reduced. At the same time, it is very likely that the house price will go down and I'll be selling at a loss.


Notes:
a. I do not see a house as an investment. I see it as a necessity: you will always need a house to live in. In this sense, the risk of buying a house today, 10 years ago or in the next 10 years is the same. 
b. You can do an analysis of the costs to see if buying is more economical than renting. But don't buy it simply because it is cheap now; it can easily get cheaper in the future (nobody can predict this one).
c. Although difficult to put a dirham amount, at the end of the cost comparison, factor in the piece of mind of somebody without a mortgage vs the stress of somebody with one.

Sorry, I cannot help with the actual cost of the loan and any other fees.


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## Jynxgirl (Nov 27, 2009)

Pammy.... Belize. That is where we are retiring.

(Hello old timers.... see many are still kicking about)


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## pamela0810 (Apr 5, 2010)

Jynxgirl said:


> Pammy.... Belize. That is where we are retiring.
> 
> (Hello old timers.... see many are still kicking about)


I'm starting to think that this might really happen!


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## Felixtoo2 (Jan 16, 2009)

Wow, this is a real "old timers" thread.

We've also looked at Belize for retirement, the murder rate is a bit of a down side but we'll probably go check it out next year. 
As regards buying property here we own two places, the house we live in and an apt that we rent out. For us it was a fairly simple decision as the mortgage on the house was cheaper than the rent we were paying and we were able to buy the apartment without a mortgage. Basically you'll need about 32% of the purchase price up front, 25% to be able to get a mortgage and 7% for fees.


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## Andy Cap (Sep 6, 2018)

Mate of mine has a place in belize, has done for many years
Google belize Jungle Dome


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## Andy Cap (Sep 6, 2018)

Also on Trip Advisor as ranked #1


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## Andy Cap (Sep 6, 2018)

https://www.tripadvisor.co.uk/Hotel...Reviews-Belize_Jungle_Dome-Belmopan_Cayo.html

or

Belize Jungle Dome - Belmopan Hotel Jungle Lodge


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## pamela0810 (Apr 5, 2010)

Felixtoo2 said:


> Wow, this is a real "old timers" thread.
> 
> We've also looked at Belize for retirement, the murder rate is a bit of a down side but we'll probably go check it out next year.
> As regards buying property here we own two places, the house we live in and an apt that we rent out. For us it was a fairly simple decision as the mortgage on the house was cheaper than the rent we were paying and we were able to buy the apartment without a mortgage. Basically you'll need about 32% of the purchase price up front, 25% to be able to get a mortgage and 7% for fees.


I have none of this so I'm guessing it's a no


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## Jynxgirl (Nov 27, 2009)

:cool2: Find a rich Arab and have him buy you a house. :cool2:

:brick:


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## nonoa (Jan 9, 2014)

John-AD said:


> Personally no, for the following reasons:
> 1. I have an "expanding" family. It is difficult to get the right house size.
> 2. I prefer the piece of mind of not having a mortgage. I do not mind paying a bit extra in rent for this piece of mind.
> 3. In case of a recession, my capability to earn income will be substantially reduced. At the same time, it is very likely that the house price will go down and I'll be selling at a loss.
> ...



The decision to buy is definitely up to your personal needs, budget, lifestyle, future plans, etc. as pointed out already. The best time to buy is when you are ready.
Definitely do a benefit/cost analysis.

You will need 25% downpayment and a local bank can mortgage the remaining value.

I can best explain fees like this - If you are buying a ready property owned by someone who also has a mortgage. In other scenarios (from developer where some fees are waived or without mortgage where the fees will be less since you are not buying out the seller)

*Broker Fees*
These are generally around 2%. Some ask for more but that must be agreed upon between you and the broker.
If you do not need full services (you found a property but need the conveyance fees for paperwork) you can negotiate to pay less.
So fees are calculated as 2% of the value of the property + 5% VAT

*Bank Fees*
1. Application processing fee: For mortgages, you will first need a pre-approval. To get this, you will need to pay the fee of 1% of the loan amount.
Meaning, if you want to get a pre-approval to buy a property worth 1 million, they can loan you 75% = 750,000 and will calculate 1% of that amount as a processing fee + 5% VAT
2. Valuation fee: varies Maybe up to 5k or so + 5% VAT
3. Mortgage insurance payments - varies but these are smaller amounts. depends on certain factors but maybe 300 - 500 per month.
4. Life insurance payments - similar to mortgage insurance
5. Interest - other than the interest on the principal after your full loan is disbursed, they will charge you interest on the initial buyout cost of the property if it is also mortgaged, and until closing.

*Municipality Fees*
1. Transfer fees: 2% (Abu Dhabi) and 4% (Dubai) of the property valuation
2. Property registration fees: this also varies.


I don't think I missed any, but if I did, the above should give you a good idea of what you need to factor in.


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## Horus_88 (Mar 11, 2014)

the fact that expats can't own the land of a "landed property" in Dubai came to me as a surprise!!!


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## nachobueno (Jul 29, 2020)

Hi there. Just just saw your post and was just wondering if you did eventually take the plunge after all and how you feel about it , worth it ? Would be interesting to know . Cheers


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