Wednesday, October 14, 2015

Which areas are cheaper to rent: freehold or leasehold?

According to recent reports, leasehold areas in Dubai are far cheaper to rent than freehold communities. Why? Because while Dubai freehold rental property caters to the affordable segment of the population, Dubai leasehold rental property is mostly for the affluent market segment.

Data on rental comparisons between Dubai freehold rental property and Dubai leasehold rental property indicates that on an average, apartments are cheaper by close to 50 percent and villas by just over 30 percent in the emirate’s leasehold areas. Further, latest reports show that while villas experienced higher rental growth rates of 20 percent when compared to apartments in the last five years, rates have been on the decline in the last year.

Studies are also attributing the rental value differences between Dubai freehold rental property and Dubai leasehold rental property to the fact that freehold ownership is still a relatively new phenomena and the need for income distribution levels to be more equal in order to extend home ownership base to a wider segment of the population. Figures indicate that 38 percent of the working class could afford to rent individual units while 17 and 13 percent could afford to rent one- and two-bedroom apartments in freehold communities.

Moreover, recent reports reveal that prime villa communities performed quite poorly amongst property types for rent in Dubai, followed closely by regular villa communities. Prime properties haven’t been performing to their full potential in contrast to the affordable market segment – leasehold – where there has been a retaining of robust demand.

So, which one is for you? Dubai freehold rental property or Dubai leasehold rental property? Purchasing a property is a huge financial commitment and the key difference between the two is control.

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