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Keeping up with accommodation costs in Dubai

Accommodation costs in Dubai

Accommodation costs in Dubai: If there’s one thing that sets the UAE apart from other cities with large expat populations, it’s the rate at which housing and accommodation costs rises. This is especially the case in Dubai, which saw sky-high rents just ahead of the 2009 crisis, and later witnessed a recovery in values. Prices have been on an upward trajectory since 2011 and have only recently shown some signs of stabilizing.

Are property prices on the rise?

A recent JLL report found that despite a slight drop in rents during the first three months of 2015 (compared to the previous quarter), rent values actually recorded seven percent year-on-year rise.

This presents a problem to many who find themselves stuck in a property they no longer can afford. As a result, some are forced to move to more affordable areas when their lease expires, while others are given notice from their landlords to vacate, only to be replaced by tenants willing to pay a higher price. This uncertainty can sometimes be very frustrating to expat families looking to settle down here, while others struggle to keep up with rising rents.

A recent Asteco report estimated the average two-bedroom apartment in Dubai at an annual cost of AED 122,000 last year. While this price tag is much higher than the AED 72,000 charged for an average unit in 2011, it still falls way below the 2008 level, when the average two-bedroom apartment went for AED 158,000.

 

Where do salary levels stand?

“Salary levels at a mid to senior level have not increased a great deal beyond inflation, but the return of variable pay has made a difference particularly at the more senior end of the spectrum,” says Toby Simpson, Managing Director of the Dubai-based Gulf Recruitment Group. He added that some employers have looked at significant adjustments to the housing portions of salaries, yet the brunt of rent and house price inflation is borne by employees, as the supply of talent remains high.

 

Salaries on offer can range greatly depending on the type of job, location of the company, and in some cases an employee’s nationality. Simpson estimates the standard pay range low-income workers starts from AED 3,000 to AED 6,000 and cover jobs such as receptionists, clerks and office assistants. White collar mid-level professionals, such as sales executives and brand managers, can earn between AED 16,000 to AED 40,000. At the director level and above, salaries can start at AED 55,000 to above AED 100,000 depending on the size of the company and the number of employees under management.

Salary vs. rent

If you compare these salary figures to current rent values, it’s apparent how it can put a severe strain on the average household budget (even without factoring in the cost of education in the UAE). The 2014 Cost of Living Middle East Survey found that Dubai and Abu Dhabi residents spend on average around 36 percent of their annual income on rent, compared to only 24 percent in London, 22 percent in Toronto and 33 percent in New York City. In Simpson’s view he estimates about a third of the average employee’s pay is spent on accommodation.

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