The Cost of Living in Dubai

The rising cost of living in Dubai is fueled by economic expansion, high housing demand, global supply chain disruptions, and fluctuating currency rates. Yet, Dubai still offers more affordable living compared to major global expat hubs like Hong Kong, Singapore, Zurich, and New York.

By Giorgia Sgueglia

Dubai has long established itself as a key global hub for commerce, investment, and innovation. As the city continues to grow and modernize, the cost of living has evolved alongside its economic transformation. While the cost of living in Dubai has seen a slight rise since 2023, it remains significantly more affordable than other leading financial centers such as Hong Kong and Singapore. This affordability, combined with Dubai’s strategic position in global trade and its robust business environment, continues to make it an attractive destination for businesses and investors.

In the first half of 2024, Dubai experienced a notable increase in living expenses, driven by factors such as higher housing costs, inflationary pressures, and growing demand for goods and services. According to global data provider Numbeo, Dubai’s position on the cost of living index rose from 138th place at the beginning of the year to 70th by mid-2024. Despite these increases, Dubai’s cost of living remains competitive, positioning the city as a strong contender among other global business centers.

The cost of living in Dubai

The cost of living in Dubai began to rise significantly in 2023, reflecting broader economic trends in the UAE. According to Mercer’s Cost of Living 2023 survey, released on June 6, 2023, Dubai saw a notable increase in its ranking, moving up to 18th place globally. A key factor behind this rise was a sharp increase in rental prices. The survey identified Dubai as the second most affected city in terms of rental cost increases, with average rents rising by approximately 25 percent.

This surge in rental costs was not the only factor contributing to the rising living expenses. The Mercer survey also identified significant price increases in other essential areas, including a 11 percent jump in supermarket goods, a 4 percent rise in transportation costs, and a 5 percent increase in sports and leisure expenses. These broader price hikes collectively added to the overall increase in living costs for Dubai residents.

As Dubai moved into 2024, the cost of living continued its upward trajectory, driven by ongoing economic expansion, increased demand, and the city’s role as a global business hub. Housing costs remained a major contributor, with rising demand for both residential and commercial properties in key areas of the city. In addition, inflationary pressures from global supply chain disruptions and fluctuating currency exchange rates also played a role in elevating prices across various sectors.

Even with the rising cost of living, Dubai remains one of the most appealing cities in the world. While rent is certainly a major factor, when excluded from the overall cost considerations, Dubai actually ranks as the best city to move to in 2024, according to experts at Deluxe Holiday Homes. This ranking takes into account a range of factors that make Dubai so appealing, from safety and infrastructure to average salary, healthcare, and overall quality of life. Hence, when it comes to earning potential, Dubai stands out with salaries ranging from around 4,810 AED (approx. US$1,310) to 99,000 AED (approx. US$26,900) per month. The median salary is about 13,800 AED (approx. US$3,750), and the average monthly salary for residents is approximately 15,800 AED (approx. US$4,300) or 190,000 AED annually (approx. US$51,800). With a composite score of 73.2, Dubai comfortably takes the top spot.

The sharp rise in real estate prices has been a major factor in Dubai’s growing cost of living. With high demand and limited supply, particularly in the luxury market, property prices have surged. Attractive tax policies, including the absence of personal income tax, Dubai’s global business hub status, and real estate’s reputation as a safe investment have all fueled this growth. As a result, rental rates have increased significantly, adding financial pressure on residents.

In 2024, the average cost of living for a single person in Dubai increased by 2.5 percent compared to the previous year, with the same rise seen for a family of four. A significant driver behind this uptick has been the sharp increase in rental prices, which surged by up to 20 percent. This can be attributed to a growing population, including an influx of professionals and investors, which has put pressure on the housing market.

According to the latest update from May 2024 by Numbeo, the average monthly living cost for a single person, excluding rent, is AED 4,064.9 (US$1,106.7). Rent for a one-bedroom apartment in the city center averages AED 7,959.76 (US$2,167.19), while transportation costs like a taxi fare are AED 3.00 (US$ 0.82) per kilometer, and petrol costs AED 3.05 (US$0.83) per liter. When comparing this to 2023, it’s clear that housing is a major part of the budget, accounting for about 30 percent of living expenses. Transportation and food each take up around 15 percent. For example, in 2023, the monthly cost for a single person was AED 3,965.3 (US$1,079.73), which has increased to AED 4,064.9 (US$1,106.7) in 2024.

Residential costs will depend on where you choose to live, and where you choose to live in Dubai will be highly dependent on where you will do business.

According to Numbeo, The Jumeirah Lakes Tower (JLT) is one of the best areas in Dubai to live for singles and families. It is among the most popular districts for expats, alongside Dubai Marina, Jumeirah Beach Residence (JBR), and Dubai’s Old Town, which all have relatively similar rental prices. The average rental price for a one-bedroom apartment in JLT is around AED 74,522 (US$20,298) per year or AED 6,210.2 (US$1,691.5) per month.

As we move into the latter part of 2024, the cost of living in Dubai has continued to climb, according to an update from October 2024. The average monthly living expenses are now around US$2,309, placing Dubai among the top 12 percent of the most expensive cities in the world. It ranks 1,098th out of 9,294 cities globally and takes the top spot in the UAE. With a median after-tax salary of US$3,493, residents can cover their living expenses for roughly 1.5 months.

Despite these increases, Dubai still offers more affordable living compared to major global expat hubs like Hong Kong, Singapore, Zurich, and New York. According to Numbeo’s cost of living index, Dubai is 41.8 percent cheaper than New York (excluding rent), and rent in Dubai is, on average, 48.4 percent lower than in New York.

Government efforts at addressing inflationary pressures

The increase of housing costs, along with increases in utilities such as water, electricity, and gas, are also the main factor behind the rise of inflation. According to data from the Dubai Statistics Centre, inflation in the Emirates increased from 109.91 in January to 111.34 in May 2024. This represents a rise of approximately 1.3 percent during that period. However, the inflation rate in Dubai has recently decreased. In October 2024, the annual inflation rate dropped to 2.38 percent, down from 2.50 percent in September 2024.

In 2024, despite the rising cost of living in Dubai, the city has made strides in addressing inflationary pressures, particularly in the areas most impacting residents. For example, in response to rising costs, the UAE government has continued to enforce and strengthen price control policies implemented in 2022, like the price cap policy. These measures include requiring suppliers to justify any price increases, as well as actively monitoring prices at retail outlets. This oversight ensures that basic goods like cooking oil, eggs, dairy, and bread remain affordable, protecting consumers from inflationary shocks and preventing unnecessary price hikes.

This proactive approach to managing inflation is not only crucial for residents but also positions Dubai as an attractive place to invest and live. With inflation in check and consumer costs controlled, Dubai offers a promising environment for businesses and individuals alike. The government’s commitment to market stability – particularly in controlling essential goods pricing – signals its determination to maintain Dubai’s competitiveness as a global financial center.

For investors, the stability in Dubai’s economy offers reassurance. While rising rents are a factor, Dubai’s real estate market remains resilient, underpinned by strong government regulation. The city continues to attract both property buyers and renters, thanks to government measures that help keep key costs manageable. Initiatives such as mandatory healthcare insurance, that will start form January 1, 2025, housing support for citizens, and job loss insurance schemes ensure that residents’ quality of life is prioritized. These efforts, alongside ongoing government interventions, strengthen Dubai’s position as a promising, long-term investment destination.

Overall, Dubai’s quality of life continues to improve. The first half of 2024 saw a notable boost in the city’s quality of life ranking, driven by higher purchasing power, along with improvements in healthcare, education, and other public services. According to Numbeo, Dubai’s ranking jumped from 57th to 49th among 178 cities, reflecting these positive developments. Furthermore, the UAE’s inclusion among high-income countries by the World Bank strengthens its position as a leading global destination for both residents and expatriates.

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