Consider this: An average Indian with an average annual income of $1,503 (Dh5,520) per annum will need to work for a staggering 580 years to be able to afford a flat in central Mumbai. This is according to calculations made by Sanjoy Chakraborty, a US-based academic who studies land issues in India, and we believe it doesn’t taking into account the rate of inflation and property price increases, which would have pushed the house prices another 500 years away from their reach.
The good news here is that it will not take you 500 years of average income to buy a house in Dubai or Abu Dhabi even as property prices have grown at world beating rates for the past 18 months.
A report by property research firm Knight Frank published earlier this year shows that the average global house prices reached a new peak in the most recent quarter, surpassing their previous peak in the second quarter of 2008, after which the subprime crisis led to a worldwide decline in property and asset prices.
Dubai housing’s meteoric rise of 28.5 per cent year-on-year is followed by China’s 21.6 per cent and Hong Kong’s 16.1 per cent.
According to PropertyFinder.ae, an online real estate classifieds website, the average price of an apartment in Dubai currently stands at Dh2,720,078 and a villa in the emirate will set you back by an average Dh6,540,723.
Now, most banks in the country offer mortgages at about 70 multiples to your monthly salary, provided you don’t have any other debt (car loans, credit card outstanding, etc.). Also keep in mind that you will need to cough up at least 25 per cent of the property value upfront to be eligible for a mortgage.
Assuming you have a nest egg that will shoulder the 25 per cent down payment along with property registration fees, brokerage and other sundry expenditure, rough back-of-the-envelope calculations, therefore, reveal that you’ll need to earn about Dh30,000 per month to be able to afford an average apartment in Dubai.
But that doesn’t mean that you can’t own one if you don’t earn Dh30,000 – this is what you must earn to be able to afford an average apartment. With apartment prices ranging between Dh361,799 and (hold your breath) Dh130 million (propertyfinder.ae data), the minimum salary one must technically earn to afford the least expensive Dubai apartment is about Dh3,900 per month. However, most banks have a minimum monthly salary requirement of between Dh10,000 and Dh15,000 per month.
On the other hand, if you wish to buy an average Dubai villa, your monthly income will need to be north of Dh70,000. Again, you’ll need to put up the down payment etc. from your kitty, and there shouldn’t be any other outstanding debt.
According to the PropertyFinder.ae blog, Dubailand, Jumeirah Village Circle and Dubai Sports City are some of the cheapest areas to buy a property in Dubai. These communities are the best bet for anyone looking to live in a good-sized pad that’s also home to sporting, shopping and entertainment developments, with an average price of Dh1 million, its blog states.
On the other hand, the site’s stats show that the average price per sq. ft. for an apartment in Downtown Dubai is almost 50 per cent higher than the average apartment price per sq. ft. in Palm Jumeirah islands.
While buying an apartment in Downtown will set you back by Dh2,987 per sq. ft., the blog states that grabbing one in the Palm will cost Dh2,008 per sq. ft. Downtown Dubai and Palm Jumeirah remain two of the most searched communities on the site, it adds.
In Abu Dhabi, where prices remain below the Dubai threshold, the average apartment costs Dh1,851,625 while the average price of a villa is Dh5,282,983. This works out to a minimum salary of about Dh20,000 per month if you’re in the market for an average Abu Dhabi apartment, and about Dh57,000 per month if you’re looking to buy the average villa.
Apartment prices in the UAE capital range between Dh451,600 and Dh5,717,800, while for villas, the range is between Dh1,100,000 and Dh65,000,000.
Source: Emirates 247