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Five reasons why Dubai living costs are falling
It’s still not the cheapest city in the world, but with inflation at a five-year low, many essential items are becoming more affordable.
February 16, 2010 4:02 by Aarti Nagraj
Dubai’s inflation rate sunk to a five-year low in 2009 – something that was, for many residents, a relief after enduring years of spiraling living costs.
According to the Dubai Chamber of Commerce and Industry (DCCI), quoting figures from the Dubai Statistics Centre, the cost of living rose by just 4.1 percent last year – far less than the 11.3 percent increase in 2008, the highest inflation rate in over 20 years.
“This trend has clearly reversed in 2009 due to the resurgence in the US dollar, falling commodity prices, a correction in the real estate sector and weakening domestic demand,” a statement from DCCI said.
This drop in inflation will have “positive implications for doing business in Dubai in 2010,” the body said. Here are a few reasons why you may have more money in your pocket than you did two years back.
The real estate sector in Dubai was hit hard by the financial crisis, and analysts predict that this year, the power is moving from the landlords to the tenants. And as property prices fell, rents followed suit.
Residential rental rates in Dubai slumped 41 percent in 2009, according to real estate consultants CB Richard Ellis (CBRE). The report further noted that landlords are now offering “rent free periods, inclusion of service charges, and multiple cheques”. Commercial rents in the emirate also dropped 34 percent last year, according to a recent DTZ research report, and retail rents too have fallen.
A report by Jones Lang Lasalle said that rents in all three sectors plummeted around 40 percent last year.
“This strong drop in rental accommodation, commercial real estate and warehousing, will certainly have further positive implications for doing business in Dubai in 2010,” said the DCCI report.