From Sharing to Owning

Many people aspire to have their own space in the UAE, transitioning from shared accommodations to renting a place of their own. This shift is often seen as a step towards independence and personal fulfillment, promising a sense of privacy and comfort.

To achieve this goal, most people typically prioritize finding a rental property that meets their needs and preferences as soon as they get an increase in their income. They may view having their own space as a symbol of adulthood and success, eagerly pursuing this milestone.

However, the transition to renting a place of their own can bring unforeseen financial challenges. While having personal space can improve quality of life initially, these individuals may underestimate the financial responsibilities that come with renting independently. They may overlook the true cost of living alone, including rent, utilities, and other expenses.

True Story

Maria (not her real name) quickly rented her own apartment in the UAE after a significant raise but regretted it due to the financial strain, emphasizing the need for careful planning before such decisions. When considering the transition to independent living, it's crucial to prioritize financial planning over the desire for personal space to ensure long-term stability.

Other Considerations Before You Finally Have A Space of Your Own

Be clear with the reason why you want to own a flat. Self-reflect. Do you want to upgrade because you really need to or because your officemates live in their own flats? Some just do this to show off and tell others that 'they've made it'.
Have an Emergency Fund and adequate insurance to protect your income. This ensures that you'll be able to pay your checks if you lose your job, or get temporarily ill.
Have a separate savings account for your specific goal of owning your flat. You may compromise your other goals if you mix them all together in one account.
Pay off debts with high interest rates first. If you wait until you're paying higher rent, it becomes even tougher to tackle these debts. Over time, the interest on debts can pile up, especially if you're only making minimum monthly payments. Additionally, some landlords may check your credit score to ensure prompt payment.
Run your numbers. In addition to the annual rent, consider these additional costs when renting in Dubai:

EXPENSE	AMOUNT
Security Deposit	- 5% of Annual Rent (Unfurnished) - 10% of Annual Rent (Furnished)
Housing Fee (Dubai Municipality Fee)	5% of annual rent paid in 12 parts, added to DEWA bills
Agency Fee	5% of annual rent for residential property
Ejari Registration Fee	120 AED
DEWA Security Deposit and Connection Fee	2,130 AED
Chiller	Varies
Maintenance	1% of Rent Cost (Recommended Budget)

Below is a sample computation for a 41 sqm Unfurnished Studio Discovery Gardens as of March 4, 2024:

EXPENSE	AMOUNT
Annual Rent	40,000 AED
Security Deposit	2,000 AED
Housing Fee	2,000 AED
Agency Fee	2,000 AED
Ejari Registration Fee	120 AED
DEWA Security Deposit and Connection Fee	2,130 AED
Chiller	Included
Maintenance (1% of Annual Rent)	400 AED
TOTAL	48,650 AED

Recognize the trade-offs. When you spend money today, you're potentially sacrificing future investments. For instance, if you could save an additional 2,000 AED each month by sharing instead of owning, that amount could accumulate to 360,000 AED over 10 years with an 8% annual return on investment. Alternatively, you could use those extra savings to purchase a home in the Philippines.
Know your priorities. For example, I have clients who only spend 8% of their income on housing. They live in a studio apartment in Discovery Gardens with their two children. They aim to go back to the Philippines permanently in 5 years to prioritize spending more time with family. Despite being under 40 years old, their combined wealth is nearly 1 million AED. A significant portion of their savings comes from minimizing housing costs, allowing them to invest more towards their financial objectives.

I happily lived in a tent.

Final Thoughts..

Don't rush into renting a one-bedroom apartment just because you can afford it now. Take your time to make the right decision.

Having lived in Dubai for nearly 9 years, I've experienced various living arrangements. Initially, I lived with over 20 people. Over time, I gradually reduced this to sharing with eight, then down to three last year. If I were still single, I'd consider sharing with four to six people due to the rising cost of rent.

While I'm aware of the challenges of sharing space with many people, such as crowding and lack of privacy, there are also benefits to living in a smaller space. It can lead to less clutter and fewer items to manage, giving you more time for important things. Personally, it even helped me overcome my addiction to shoes.

It doesn't make you a 'failure' if you don't own your place. However, if you have a family living with you in Dubai, owning a place might be worth considering.

Approach the decision to rent your own place with careful planning and consideration of the financial implications. By doing so, you can avoid financial pitfalls and achieve long-term stability without sacrificing comfort.

Kuya Jay

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