Dubai had experienced the worst financial crisis and market slowdown in 2009 due to global economic recession in year 2008. After experiencing huge drop business and real estate sector moves towards stability and eventually started showing signs of recovery with gradual increases in property prices and rents in Dubai. Steep hikes in leasing rates have been observed over the past 18 months. Stable political conditions, rise in tourism, trade and business activities attracted people and investors across the world. Now the city has successfully regained its position and strong economic conditions have enabled this city to serve the region again as business and trade hub. The overall progress of business and trade sector pushed the property rents and prices in the city. Rises in accommodation cost significantly increases the cost of living in the city. It is expected that rising rents will be soon stabilized with fresh supply of units after restarting of projects that were paused due to lack of funds.
Rising cost of living in Dubai and Abu Dhabi
Significant surges in leasing prices have significantly boosted the cost of living in Dubai and Abu Dhabi. Previously ranked on 90th and 79th position in Mercer Cost of Living Survey, Dubai and Abu Dhabi moved to 67th and 68th position respectively. The survey includes 211 top cities across the world and estimate the relative cost of more than 200 items for every location. Important items include housing, food, transportation, household goods, clothing and entertainment. Substantial changes have observed during March 2013 to March 2014. The huge rise in price of Mercer items pushed the capital city and trading hub of UAE ahead. Moreover, other Middle Eastern cities also faced notable escalations in their rankings due to price rises and cost decline in other locations. The robust increase in accommodation cost, especially in Dubai and Abu Dhabi is the key factor making these cities most expensive cities to live in. Furthermore, the recent win of Expo 2020 to become the host of this international event drag more investors towards this emirate and increase the rent rates the city.
Factors supporting rises in rents
Besides tourism and business, launch of mega real estate and infrastructure projects have also played great role in amplifying emirate economy. Furthermore, the successful bid to host world Expo 2020 also support the launch of several real estate projects. Despite its profits and progress, experts are showing their concerns for inflation and new bubble. Having considered such concerns, State authorities have implemented several regulations like mortgage caps and rental caps to control overheating of real estate sector again.
Being the major part of total cost of living anywhere accommodation expenses has great impact on total cost of living in the city. Accommodation expenses further subdivided into house rent, access to transport, retail and health. The economic progress in the region directly affected on accommodation cost in the city which escalates the cost of living in the city making Dubai an expensive place to live.