Now in its fifth year, the report covers all aspects of local cost of living indices across Abu Dhabi, Dubai and the Northern Emirates.
The topics studied are those affecting day-to-day life in the UAE; including accommodation, travel, education, healthcare and lifestyle – as well as financial issues facing both employers and employees, and the state of the current job market across industries.
The report is unambiguous in its assessment of the financial side of the property sector.
Accommodation costs in the UAE are continuing to rise across the spectrum, seemingly with no upper limit.
Nor are rental caps or other price control initiatives having a noticeable effect on prices for those looking to enter new rental agreements.
The UAE has a continuing appeal to incoming residents; the attractive salaries and good standard of living – although somewhat offset by the rising rate of inflation – mean that ever larger numbers are choosing to move to the country.
This, and the continuing investment successes, has meant that there is unlikely to be any downturn in housing costs in the UAE in the short or medium term.
With average prices going up five-fold in as many years, Dubai is the strongest performing property market in the world, according to the report.
Demand continues to propel the market upwards.
Approximately 400,000 new residents have arrived in Dubai over the past 12 months, and demand continues to outstrip supply.
Developments in high-profile locations such as the Burj Dubai/Business Bay district have increased the most in value over the past year, although existing communities, such as Mirdif, have also gone up steadily as new amenities are provided.
Deira remains the cheapest location to set up home in for newcomers to the city, with costs for studios ranging between Dhs35,000 to Dhs50,000 per year, two-bedroom apartments going for Dhs65,000 to Dhs100,000 and three-bedrooms for Dhs105,000 to Dhs170,000.
Similar properties in the Burj Dubai Residences are going for between Dhs170,000 to Dhs250,000 for two bedrooms and Dhs250,000 to Dhs400,000 per year for three.
Percentage increases for new rental contracts have shown double-digit growth in all areas in the past 12 months, save for certain parts of International City and the Green Community, perhaps due to negative press coverage.
Rental prices for villas have shown similar rates of increase, with the leading area being Mirdif, where a new rental contract for a four bedroom house has increased an average of 77% on the same period in 2007.
Rents in Abu Dhabi have followed the upward surge of neighbouring Dubai.
The UAE’s capital has shown an average rental increase of 22% on last year according to figures published by HSBC bank.
The demand, which previously relied on the government sector personnel, has been amplified by the growing number of private sector employees setting up in the city.
Ongoing development work in the emirate’s Western Region, and the additional workforce that has brought, has also further heightened the competition for accommodation.
The highest discrepancies between the minimum and maximum asking price of apartments have been noted among properties on the Airport Road and Muroor Road locations. The cost of a new tenancy contract for a one bedroom flat can vary from Dhs45,000 to Dhs90,000 and from Dhs55,000 to Dhs100,000 respectively.
This pattern of increase is one that can be seen in every emirate in the UAE.
Sharjah is, unsurprisingly, the third most expensive city in which to rent. The Northern Emirates all show comparable increases – although increased development is likely to bring with it increased costs.
In a comparison of rental prices for new contracts across the country, the starting figures for one bedroom apartments are all within touching distance. Dubai begins at Dhs40,000, Abu Dhabi at Dhs35,000, Ajman and Fujairah at Dhs30,000 and Sharjah, RAK and UAQ at Dhs25,000.
The discrepancy at the top end of the market is stellar in comparison. Dubai and Abu Dhabi pull away from the pack, with asking prices of Dhs180,000 and Dhs160,000 respectively. Prices in Sharjah are a much more affordable Dhs50,000, while the other emirates hover around Dhs30,000.
According to the report property prices in the freehold market have recovered from the slight slowdown in the last half of 2007 to pick up even stronger than before.
This has been fuelled by the fact that predictions of oversupply failed to materialise.
In Dubai, apartments have seen the biggest increases – with the freehold value of studios in some areas, such as Dubai Sports City, going up 100%.
Villa prices have also risen, but at a more stable (but still staggering) rate of between 10% and 40% – albeit from a much higher starting point.
Abu Dhabi has also witnessed a steady growth rate, and the report predicts that it may be the ‘next big thing’ for canny investors looking to get in at ground level. According to HSBC, market prices increased an average of 30% across the board in the period leading up to January 2008.
Monday, July 14- 2008 @ 13:59 UAE local time (GMT+4) Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Mediaquest FZ LLC.