19 April 2017 By Cleofe Maceda, Senior Web Reporter
Dubai: Expatriates in Dubai are reputed to earn more than their peers back in their home country, but do they make enough money to afford living overseas?
Various market research data suggest that while foreigners in the Gulf may enjoy tax-free salaries, high accommodation costs remain out of reach among the working class, especially low-income professionals.
In fact, researchers have consistently ranked Dubai in the top priciest markets.
Studies have shown that a single tenant needs to earn more than Dh16,000 monthly or Dh200,000 a year to afford housing costs in the emirate, much higher than in other destinations popular among expatriates.
Nested, a UK-based startup that helps landlords sell their property, has reviewed the rents in 72 cities around the world for 2017. It said that single residents require an annual income of Dh231,736 (£49,204.56) a year to be able to afford living in a 420-square-foot room, while a family of four needs to have a yearly paycheque worth Dh439,704(£93,362.52) to rent an 800-square-foot place.
Dubai did not show up as the priciest residential leasing market for 2017, but came out more expensive than most of its peers.
The cost of renting an accommodation in the emirate, estimated to be around Dh13.18 per square foot, is the fourth-highest in the world, knocking off rents in Zurich, which has a reputation for having high living costs, as well as in London, Miami, Tokyo, Amsterdam, Paris and Melbourne.
The rental costs in the emirate are also more than twice the average lease rates in Madrid, Barcelona, Milan, Frankfurt, Vienna and Brussels, among other destinations.
Researchers at Savills also found that an expatriate needs to earn Dh214,141 ($58,300) a year, the ninth highest in the world, in order to afford the housing and other living costs in Dubai. Estimated annual spending in Dubai was ranked higher than in Sydney, Miami, Los Angeles and Chicago.
In Mercer’s 2016 Cost of Living Survey, Dubai was ranked 21st most expensive out of the 209 cities surveyed, ahead of San Francisco, Paris, Miami, Los Angeles, Chicago and Sydney, among many other popular destinations.
Analysts have acknowledged that high accommodation costs in Dubai continue to price residents out and many have no recourse but to share accommodations with non-family members or move out of the city centre.
“There is a large and critical portion of the workforce that remains priced out of the market,” Jesse Downs, managing director of Phidar Advisory, told Gulf News.
There’s an ongoing effort to introduce more affordable housing units to the market, but to date, the supply is apparently lacking.
According to JLL Middle East and North Africa, 22 per cent of residential units launched in 2015 were affordable, while 18 per cent of those unveiled last year were in the same category.
“Governments have recognised the need to regulate the market to require developers to provide an agreed percentage of affordable units but more work remains to be done,” said Asma Dakkak, research manager at JLL Middle East and North Africa. Monthly rental rates in ten priciest cities and annual income required for single tenants:
1. San Francisco, USA
Monthly rent: Dh7,859
Income required: Dh325,144
2. New York City, USA
Monthly rent: Dh7,531.92
Income required: Dh311,703.46
Monthly rent: Dh6,082.76
Income required: Dh251,794.46
4. Dubai, UAE
Monthly rent: Dh5,596.36
Income required: Dh231,631.39
Monthly rent: Dh5,295.82
Income required: Dh219,137.22
6. Washington DC, USA
Monthly rent: Dh5,275.62
Income required: Dh218,287.67
7. Geneva, Switzerland
Monthly rent: Dh4,895.20
Income required: Dh202,572.88
8. Sydney, Australia
Monthly rent: Dh4,645.48
Income required: Dh192,254.65
9. Zurich, Switzerland
Monthly rent: Dh4,625
Income required: Dh191,403.24
10. Los Angeles, USA
Monthly rent: Dh4,545.16
Income required: Dh188,060.83 Note: Figures are based on data published by Nested and April 19, 2017 conversion rates.
© Gulf News 2017