UAE Cost of Living in UAE | Are Life Expenses Increasing?

Starting with Abu Dhabi residents will have to pay a municipality fee starting January this year.

The fee will amount to 3 percent of the annual rent and is being collected starting this month by ADWEA. The charge will be applicable to tenancy contracts in the emirate including Al Ain and in the Western Region. Property owners, however, do not have to pay the fee.

The municipal fee in Abu Dhabi mirrors the 5 percent municipality charge collected in Dubai by the Dubai Electricity and Water Authority and the 2.5 percent fee collected in Sharjah at the time of the rental contract renewal.

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UAE Cost of Living in the UAE

The United Arab Emirates (UAE) is a thriving economic hub in the Middle East, attracting businesses and individuals from around the world. However, the living cost in the UAE can vary significantly based on factors such as location, lifestyle choices, and family size. In this section, we’ll break down the major expenses associated with living in the UAE so you can guess the average cost of living.

Housing Cost:

One of the most significant expenses in the UAE is housing. The cost of renting or purchasing a property in the best places can differ substantially depending on the emirate, area, and type of accommodation. In Dubai, for example, the average annual rent for a one-bedroom apartment in a prime location can range from AED 60,000 to AED 100,000 (approximately $16,300 to $27,200). Villas and larger apartments in upscale neighborhoods can cost significantly more. On the other hand, areas further from the city center or less desirable locations offer more affordable options.

Transportation:

Transportation costs in the UAE can vary based on your preference for public or private modes of transportation. Major cities like Dubai and Abu Dhabi have efficient public transportation systems, including metros, buses, and taxis, which can be cost-effective for daily commutes. However, many residents opt for private vehicles due to the convenience and flexibility they offer. The cost of fuel in the UAE is relatively low compared to other parts of the world, but the initial purchase price and maintenance of a private vehicle can add up.

Groceries and Dining Out:

The cost of groceries and dining out in the UAE can vary depending on your eating habits and preferences. Grocery prices for basic items like fruits, vegetables, and staple foods are generally reasonable, but imported goods and specialty items can be more expensive. Dining out can be costly, especially at high-end restaurants or hotels, but there are also numerous affordable options available.

Utilities:

Utility costs in the UAE, including electricity, water, and internet, are generally reasonable. However, these costs can increase during the summer months due to higher electricity consumption for air conditioning.

Healthcare:

The UAE and Dubai health authority offers both public and private healthcare options. While basic healthcare services are available through the public system at subsidized rates, many residents opt for private healthcare insurance or pay out-of-pocket for private healthcare due to the generally higher quality of care and shorter wait times. The cost of private and international health insurance can be substantial, so it’s essential to factor this into your budget.

Entertainment:

The UAE offers a wide range of entertainment options, from outdoor activities and cultural events to shopping malls and fine dining. The cost of entertainment can vary significantly based on your preferences and lifestyle choices. While some activities, such as visiting public beaches or parks, are relatively inexpensive or free, others, like attending concerts or high-end events, can be quite costly.

Cost Considerations You Can Not Avoid

Your overall cost of living in the UAE will depend on various factors, including your lifestyle choices, family size, and the fluctuations in currency exchange rates. Education is another factor you can not avoid. School fees are around 35,000 to 120,000 AED per year, depending on international school and government school.

Those who prioritize a luxury lifestyle, with high-end accommodations, private transportation, and frequent dining out, can expect to incur substantially higher costs than those who opt for more budget-friendly options.

Dubai vs. Abu Dhabi Cost of Living Comparison:

While both Dubai and Abu Dhabi are part of the UAE, there is a notable difference in the living expense between the two emirate.

Housing Options:

Dubai property is generally more expensive than Abu Dhabi in terms of housing costs. The Dubai real estate market is much more promising than other parts of the country. The average annual rent for a one-bedroom apartment in a prime location in Dubai can range from AED 60,000 to AED 100,000 (approximately $16,300 to $27,200) or monthly cost of rent 5000-8500 AED, 

while in Abu Dhabi, the range is typically lower, around AED 50,000 to AED 80,000 (approximately $13,600 to $21,800). However, it’s important to note that location plays a significant role in determining rental prices within each emirate.

Transportation:

Both Dubai and Abu Dhabi offer efficient public transportation systems, including dubai metro, bus, and tax. The costs for public transport are generally comparable between the two cities. However, fuel prices can vary slightly, with Abu Dhabi typically being slightly cheaper than Dubai.

Groceries and Dining Out:

While there may be some variations in grocery and restaurant prices between Dubai and Abu Dhabi, overall these living expenses are relatively similar. However, it’s worth noting that Dubai may offer a wider range of high-end dining options, which can be more expensive than those in Abu Dhabi.

Entertainment:

Dubai is often considered the entertainment hub of the UAE, offering a vast array of activities, events, and attractions. As a result, entertainment costs in Dubai can be higher than in Abu Dhabi, particularly for activities like concerts, shows, and high-end dining experiences.

The new fee part of several recent hikes

In January 2016, Abu Dhabi hiked water and electricity tariffs, to encourage UAE residents to rationalise their energy consumption. While the water tariff for expats remains unchanged at AED 5.95 for 1,000 liters, those who exceed the daily limit of 700 liters in flats and 5,000 liters in villas will be charged AED 10.55 per 1,000 liters. The figure is an increase from the AED 9.9 rate last year.

How off-putting is this for residents?

• Just recently, the emirate re-instituted a 5 percent rental cap, in order to ease the cost of living for residents. However, reports suggest that the new municipality fee could get people thinking whether they can afford to rent in Abu Dhabi or not.
• Official sources have said that the calculation of the fee will apply – not from January 2017 – but from February 2016. Hence, the main challenge with the fee is that it is backdated to February 2016, implying that tenants will have to pay a lump sum this month.

Will this fee have a negative impact on the Abu Dhabi real estate market?

• Real estate analysts opine that it is insufficient to have a particularly negative impact on the property market and point out that Dubai levies a similar municipality fee, albeit slightly higher at 5 percent, which has not been detrimental for investors or tenants.
• Property experts also say that the fee is a necessity for the government in order to increase and diversify its revenue sources amid a decline in oil prices.

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