High rents spoiling the party for residents
Submitted by Mahesh Bhutani

In a country where a majority of the population is made up of expatriates who are here to make some money, 42 per cent are failing to do that.

In fact, 17 per cent are going into debt. Rents are a big factor, with the average rent increase over the past 12 months being 15 per cent.

Moreover, 28 per cent have sent their families out of the UAE because of the rent increases. This is more than three times the figure from 2006. That is one of the conclusions of our survey, undertaken by YouGov Siraj.

To begin with, rental property is by far the most common accommodation choice in the UAE, particularly among Asians.

A closer look reveals that 22 per cent of Western respondents live in accommodation supplied by their employers, which is double the number of Arab respondents (11 per cent) and Asian respondents (10 per cent).

Nearly one third of Emiratis rent their houses, while 27 per cent own them outright.

The overwhelming majority of people renting residential property in the UAE have experienced a rent increase in the past year; only 2 in 10 have not. Western respondents are the least likely to have experienced an increase.

On the other hand, Emiratis who are renting are split on this, with 48 per cent saying they have experienced a rent hike and 48 per cent saying they have not. Interestingly, age is a factor, with younger respondents (aged 30 and below) saying they have experienced it more than those aged 30 and above.

Ironically, the richer the respondent, the less likely he/she is to have experienced any rent increase. So while 83 per cent of respondents in the lowest salary bracket - below $2,665 (Dh9,788) - experienced a rent increase, 68 per cent in the highest category - $6,666 (Dh24,484) and above - did not.

We asked our respondents whether their landlords had complied with the government-imposed rent cap over the past year.

At a total level, more than 4 in 10 landlords had not complied. Our survey shows that Western respondents have been hardest hit in terms of non-compliance over the past two years.

Registering complaints

The average rent increase over the past 12 months was 15 per cent, according to data from our respondents. However, a significant minority experienced an increase of 30 per cent plus.

Among those whose landlords did not comply with the rent cap, 15 per cent registered complaints with the Rent Committee, which is an eight per cent increase from 2006. None of our Emirati respondents registered a complaint.

As for the outcome for those who complained, the reaction was mixed. While 20 per cent said their rent was revised down, 40 per cent said their complaints made no difference (which was especially the case amongst our Asian respondents, with 64 per cent saying this). One in four said their landlord/agent caused them problems as a result.

A total of 45 per cent have actually changed their accommodation because of the rising rents. Compared to 2006, this percentage has increased by 14 points. Western respondents are the least affected by this situation, with only 24 per cent saying they have had to switch homes.

Moreover, 28 per cent of UAE residents (other than Emiratis) have had to send their families home because of the high cost of living. This percentage is significantly higher than in 2006 (when only nine per cent said they have had to relocate their family).

We asked our respondents to peer into the future and tell us by how much they expected the value of their property to change in the next 12 months. The average expected increase for 2008 is 26 per cent.

Western respondents are the most unsure, with 50 per cent saying they don't know. Arab respondents (excluding Emiratis) are the most pessimistic, with 50 per cent saying they expect their rent to increase by anything between 20 and 39 per cent.

Job security

How secure do UAE residents feel in their jobs? The majority, 63 per cent, feel secure. A closer look shows that Western respondents enjoy the highest degree of job security and Arab respondents show the least.

On both job security and the ease of obtaining a UAE residence visa our respondents are split on whether or not it will improve. Their opinion is more pronounced when it comes to corruption, equality, and quality of housing, with the majority saying they do not see things improving.

Our respondents are most pessimistic about pollution. This is especially the case among Westerners. Traffic is also an area our respondents feel will continue to cause problems. On the other hand, UAE residents are most optimistic about improvements in the quality of the police service and in leisure activities.

Taking everything into account, more than 5 in 10 of UAE residents are happy with their present domestic accommodation.

At the other end of the spectrum, unhappiness is most pronounced among Arabs (excluding Emiratis). At 72 per cent, Western respondents are the happiest group in this respect.

Quality of life

Monthly income is obviously intrinsically linked to UAE residents' rent worries. For the majority of our respondents, more than one-thirds of their salary is spent on accommodation. A significant number of Arabs (excluding Emiratis) and Asians spend between 40 and 49 per cent of their salaries on rent.

On the other hand, our respondents' replies indicate that they save around nine per cent of their income on a monthly basis. However, 25 per cent of the total surveyed say they save nothing at all and are just breaking even.

Nearly one-thirds of those surveyed do not expect a change in their income (whether an increase or decrease). The average expected increase is estimated at 10 per cent.

We wanted to know the extent to which our respondents anticipated price increases in other aspects of life, not just rent. Rather predictably, and in line with the general global trend, UAE residents expect increases across the range in healthcare, education, food and transport costs - particularly the last two elements.

Almost 4 in 10 expect the UAE economy to grow by up to 10 per cent.

Based on all these considerations, are any of our respondents thinking of leaving the UAE in the near future? They in fact display a level of uncertainty; 23 per cent say they do not know.

Some 16 per cent of Arabs (excluding Emiratis) expect to leave in five to six years, and 14 per cent of Asian respondents say they anticipate living here for the next three to four years. Western respondents expect to spend the least amount of time in the UAE.