The latest UBS Global Cost of Living Survey shows a big jump in Dubai, particularly when the surging cost of rents is included. This is encouraging many expats to look again at buying an apartment or villa for the first time since the real estate crash four years ago.
Dubai is now the 12th most expensive city to live in when housing costs are factored into the domestic budget. That is on a parr with Frankfurt, and higher than both Rome and Chicago. Dubai is by far the most pricey city to live in the Middle East as you might expect for the commercial hub city of the region.
UBS found average hourly pay in Dubai was $16.30, the 33rd highest city in the world in terms of gross earnings, about half the New York average. But when tax-free status was taken into consideration this was above 60 per cent of New York salary levels.
Taking both salaries and price levels together, the report cited Dubai residents as having the 27th highest purchasing power in the world, ahead of European cities like Barcelona and Brussels but considerably behind the top cities like Zurich and Sydney.
Housing is usually the biggest item in any family budget whether that be mortgage or rental payments. Therefore not surprisingly this is the main reason for the sudden uplift in the cost of living in Dubai. Landlords are demanding and getting 10-20 per cent rises in rents this year, and this seems to be the start of an upward trend that could last for some years.
Rising house prices
Dubai house prices and rents fell by more than half in the great real estate crash of 2008-9 but bounced off the bottom late last year. Since then they have been benefiting from strong growth in the local trade, transportation and tourism sectors and a massive influx of new residents and visitors due to the Arab Spring.
As house prices rise so will the rents that landlords charge their tenants. Buying a home today effectively locks payments at current levels unless mortgage rates rise and they have been falling, not rising, making property ownership an even better deal.
For the moment then the cost equation looking forward favours buying rather than renting residential real estate in Dubai.