At the beginning of 2017, having analyzed the cost of living within the Emirates, there were well over 9 million people residing in the UAE, of which 7.8 million are expatriates. Expatriates and nationals interact with the private sector market as both employees (households) and employers. As households, individuals will naturally react to the cost of living within the Emirates, and endogenously select occupations and firms that best suit their ability and those which maximize their salary earning potential. As employers, these individuals seek to minimize their overheads, whilst attracting suitable levels of talent.
The task of measuring changes in the cost of living every year is precisely the purpose of our Cost of Living UAE Report. We measure various changes in the cost of living across education, healthcare, accommodation, lifestyle, household goods, commercial property and transport. This year’s report reflects data obtained in Q4 2016 and Q1 2017. We have therefore calculated a year-on-year comparison, using our Q4 2015 data throughout. In many case, we have also presented data for 2014, and in instances, up to a decade of historical data.
In, what is typically the most demanded section of our report, accommodation; we report the cost of rentals for apartments and villas in over 100 neighbourhoods in Abu Dhabi, Dubai, Sharjah and the Northern Emirates. As always, this year our accommodation section has attracted the biggest buzz, as the rental market in the UAE witness’s further declines in average rental rates across major parts of all of the Emirates. This is consistent with the trend we reported in 2015, where Dubai and Abu Dhabi had shown the biggest decline in rentals. In 2016, the market rental rates for apartments declined by double digits (-16% in Abu Dhabi and -11% in Dubai) and this trend was consistent throughout the country; not just the two most populated Emirates.
Rentals rates across the entire UAE market have declined. This is evident across both small properties, such as studios and 1-bed apartments, as well as larger properties, such as 4-bedroom villas. In Abu Dhabi, the aggregate change in rental rates for studios, 1 and 2-bedroom apartments was calculated to be -16%. This is based on Q4 2016 rates vs Q4 2015 rates. Villas in Abu Dhabi also witnessed a similar decline in rental rates. Q4 2016 rates were -4% below that of Q4 2015 rates. The rare exception to the deflation in rental prices in Abu Dhabi, were 3-bedroom apartments, which witnessed a slight increase in rental rates.
In Dubai, the average change in rental rates across studios, 1, 2 and 3-bedroom apartments was -11%. 3-bedroom apartments in Dubai were also the only property size that did not witness a decline. The average rents for 3-bedroom apartments in Dubai plateaued and showed an approximate 0-1% increase from their 2015 levels.
Sharjah and the northern emirates follow the two main cities closely and have also shown a decline in rents. In Sharjah, apartments are 10% more affordable, whereas villas are 3% down.
In the full Cost of Living UAE Report, we present the average rental price by property size and neighbourhood. The data reports rents from various neighbourhoods in each Emirate. Rental rates from previous years are also shown for contrasts and comparison.