Dubai becomes more affordable now
Restaurant and grocery prices in Dubai are substantially cheaper when compared to Basel by 53 per cent 70 per cent, respectively. However, rentals in Dubai are cheaper by just five per cent. But if cost of living index is combined with rental index, the emirate becomes much cheaper at 45 per cent.
Among the other top cities, Dubai is overall 45 per cent cheaper when compared to New York because rents in the emirate lower by 57 per cent, groceries by 38.4 per cent and restaurant prices by 41 per cent when compared to the Wall Street city. While Dubai is 33 per cent more economical than London because rents, groceries and restaurants costs are less by 38 per cent, 37 per cent and 10 per cent, respectively, against The City – which was rated 26th costliest city in the world.
Monica Malik, Chief Economist, Abu Dhabi Commercial Bank, said the fall in property prices across Dubai has been a central factor behind the marked moderation in headline inflation, with other causes such as the drop in the oil price also contributing.
“The soft inflation rate reflects a number of headwinds facing the economy, such as the correction in the real estate market and the weak domestic demand. Moreover, the strong US dollar is helping to contain imported inflation, but is also impacting the competitiveness of key non-oil sectors externally,” she said.
Ahmed Shaikhani, managing director, Shaikhani Group, attributed lower commercial rentals, reduction in fees by economic department and lower costs for imports and exports of goods from the emirate made it more economical.
“Commercials rentals have fallen consistently over the last few quarters. The economic department has reduced charges as part of ease of doing business so initial capital required to start a business has also declined substantially in Dubai. In addition, the cost of imports and exports goods are also very low,” said Shaikhani, an expresident of Pakistan Business Council. Highlighting the cost of start a business in Dubai, he pointed out that investors can obtain offshore licence for less than $1,000 and can start a trading company for $2,000. While commercial rents are also very attractive at less than Dh40 per square in JLT and Business Bay.
“When we compare Dubai to other global cities such London and New York, Dubai is certainly among the top for ease of doing business, low cost for investments and to start new business,” Shaikhani added.
“The main reason for the reduction in cost of living is the decline in rents. Also some government fees have declined or stopped increasing. School fees last year were also frozen,” said Anita Yadav, senior director and head of fixed income research at Emirates NBD.
She noted that reduction in cost of living is attractive for the foreign labour, does not really increase return on investment.
Sheikh Najm-us-Saqib, a Dubai resident for over 10 years, said the biggest relief for residents came from the fall in rentals. “I was paying 30,000 dirhams rent but now it has gone down to 26,000 – which was the biggest relief for us. We have also witnessed retailers resorting to more promotions and discounts which benefitted to a large extent to people like us from the lower middle income group,” he said.
Among sub-indices, rental index of Dubai dropped 35 per cent, groceries index fell 37.7 per cent and restaurant prices were lower by 12 per cent year-on-year.
In another important note, according to Numbeo, the local purchasing power of Dubai’s residents substantially improved from 123.7 points in 2018 to 133.5 in 2019, at par with the world’s costliest cities – Basel, Zurich and Lausanne which scored 132.5, 140 and 127.4, respectively.
In Abu Dhabi, according to Numbeo statistics, the cost of living increased as the emirate’s ranking jumped from 299 in 2018 to 185 in 2019 in the costliest cities. Though, the overall cost of living index and other sub-indices such as rents, groceries and restaurant prices dropped, but the local purchasing power of the emirate’s residents also plunged substantially from 131 to 106.6 year-onyear.
Data showed that decline in inflation in the UAE capital was small. Rentals in the UAE capital fell 3.6 per cent, groceries were down 2.2 per cent and cost for dining out dipped just over 2 per cent.
In the GCC region, Bahraini capital Doha, Manama, Riyadh and Muscat were 203rd, 214th, 246th and 249th– respectively.
Among the top 10 costliest worldwide, top 6 slots went to Swiss cities followed by Stavanger (Norway), Reykjavik (Iceland), Oslo (Norway) and New York. In the list of 433 cities ranked by Numbeo, Indian and Pakistani cities were the most economical. Rawalpindi (Pakistan) was rated the most economical followed by Thiruvananthapuram, Vijayawada, Visakhapatnam, Kochi, Karachi, Navi Mumbai, Vadodara, Coimbatore and Bhopal.