As Dubai continues to transform into a hub for the ultra-wealthy, it is gradually pricing out the very expatriates it once sought to attract. At the heart of Dubai’s allure has always been the predominantly tax-free lifestyle that many expats could only dream of in their home countries. However, the influx of crypto millionaires, bankers from Asia, and affluent Russians has driven up rental prices, making the city feel more exclusive and inaccessible for many residents.
Ghida’s eviction story is just one of many that highlight the city’s skyrocketing rents. After being told the owner wanted to move in with his family, she and her husband were asked to leave their home, only to find it advertised for double the rent they were paying. Ghida is now suing her landlord for breaking rental rules and joins a growing number of tenants facing similar situations.
The average annual rent for a villa in Dubai increased by 26% in the year leading up to February, reaching 295,436 dirhams ($80,436), while average apartment rents soared by 28%. These escalating costs are causing many expats to consider downsizing, moving to remote areas within Dubai, or relocating to neighboring emirates such as Sharjah.
In addition to housing costs, other expenses such as private school fees, grocery prices, and transportation costs are also climbing. Private schools, mandatory for expatriate children, have seen fee hikes, while the cost of groceries from upscale British supermarket chain Waitrose is on the rise. Meanwhile, an Uber ride during rush hour can now be as expensive as a New York taxi.
Around 90% of Dubai’s residents are foreigners, with residency mainly dependent on employment. Although the United Arab Emirates (UAE) has started offering long-term visas to a select few, most foreign workers lack a clear pathway to permanent residency or citizenship.
In 2018, many residents left due to increased living and business costs, followed by thousands more departing in the wake of pandemic-related job losses. Squeezed families are now exploring opportunities in markets like neighboring Saudi Arabia, which is competing with Dubai for talent and business and plans to attract tourists as well.
Consumer prices in Dubai increased by an annual 7.1% last summer, easing down to 5% in February. However, experts suggest that the real rate could be much higher. Housing prices constitute more than 40% of Dubai’s consumer price inflation, and wage increases haven’t kept up with the rising cost pressures.
The cost of living in Dubai is becoming so high that some expats, like Homam, have found London to be a more cost-effective option. He moved to the UK in late 2021 and discovered that, despite soaring inflation, London’s prices were still cheaper than Dubai’s.
Dubai and the UAE may not have a systemized income tax, but implicit fees are abundant. For instance, obtaining a driver’s license can cost thousands of dollars, electricity bills include a ‘housing fee’ that can constitute nearly 80% of a monthly account, and ‘knowledge’ and ‘innovation’ fees are levied on government services.
Dubai’s rise in living expenses is reflected in its ranking as the 31st most expensive city for expatriates, according to New York-based consultant Mercer. Only a decade ago, Dubai ranked 90th. This shift in affordability has led to a significant change in the lifestyle of expat families, with both parents often needing to work to make ends meet.
James Mullen, co-founder of WhichSchoolAdvisor.com, says the average tuition is more than $10,000 per year, leading some families to move back to their home countries as fees increase with their children’s age. “Certainly, 10 years ago, it was a different situation because companies were still giving family allowances and school fee allowances. That sort of thing has practically disappeared.”
Although Dubai officials argue that the city’s price increases are more modest than those in other global cities and that it continues to offer job opportunities and advantages over other emerging markets, the reality is that Dubai’s selling point was never about being “less worse.” The city’s appeal was its unique blend of luxury, opportunity, and affordability, which seems to be fading with the rising cost of living.
As Dubai evolves into a playground for the super-rich, the expats who once thrived in this vibrant city are left to reconsider their options. While some may choose to downsize, relocate to more remote areas, or move to neighboring emirates, others may ultimately decide to leave the region altogether.
Despite its dynamic economy and undeniable allure, Dubai’s shift towards catering exclusively to the affluent and high-net-worth individuals may come at the expense of its once diverse and thriving expatriate community. The city’s metamorphosis could serve as both a boon and a bane, potentially impacting its long-term attractiveness to expats seeking a balance between opportunity and affordability.
The rising cost of living in Dubai and its transformation into a playground for the super-rich may not necessarily spell the end for the city’s expatriate community. Cities and economies are constantly evolving, and Dubai has shown resilience and adaptability in the past.
While the current trend may be pricing out a significant portion of expats, it’s also possible that the city’s authorities could introduce measures to address these issues and maintain its appeal to a broader range of people. The UAE has already implemented long-term visas for select individuals, and it could potentially expand this initiative to accommodate more expats in the future.
Furthermore, economic forces and global trends can be unpredictable. A shift in the global economic climate, the introduction of new industries, or changes in policies could all influence Dubai’s cost of living and overall attractiveness to expats. Ultimately, whether this is the end for Dubai’s expatriate community or merely a phase in its evolution remains to be seen.
It’s essential to keep in mind that cities and economies are always in flux, and the future of Dubai’s expat community will depend on various factors, such as global economic trends, local policies, and the city’s ability to adapt to changing circumstances.
While it’s impossible to predict with certainty how these factors will play out in the coming years, it’s clear that Dubai’s rising cost of living and shift towards catering to the super-rich have raised concerns among expats. How the city responds to these challenges will ultimately determine its long-term attractiveness to a diverse range of residents.
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