UAE becomes more affordable as stimulus cuts cost of living

Dubai - Fall in rents and decline in costs of education, transport etc. made UAE more affordable in the year of the pandemic

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The UAE dropped from 32nd place in 2020 to 37th this year in the Cost of Living Index 2021 released by global data service provider Numbeo. — File photo
The UAE dropped from 32nd place in 2020 to 37th this year in the Cost of Living Index 2021 released by global data service provider Numbeo. — File photo

By Waheed Abbas

Published: Sun 24 Jan 2021, 4:50 PM

Last updated: Sun 24 Jan 2021, 9:27 PM

The UAE has become more affordable in 2021 due to consistent decline in rent, property prices and cost of education, transportation and dining out, among others.

The UAE dropped from 32nd place in 2020 to 37th this year in the Cost of Living Index 2021 released by global data service provider Numbeo.

The rental index score fell from 41.07 points in 2020 to 40.62 points this year while restaurant index dropped from 61.32 points to 61.25 points. But cost of groceries rose from 47.63 points to 48.84 points due to the impact of lockdown on imports and trade during the second quarter of 2020.

Anurag Chaturvedi, CEO of Chartered House, attributed decline in the cost of living to the impact of stimulus boost provided by the UAE government to Covid-19-hit economy through various relief packages.

“The core reason behind this is the decline in inflation through second quarter 2020 till end of 2020. With weak domestic price pressures because of the restrictions placed on the economy since the end of March have also had an impact on inflation, which fell for nine months in a row,” he said.

“Furthermore, during the last 10 months, consumers were only able to buy online, where prices of commodities, essentials and clothing and household dropped as retailers sought to shift stocks of unsold merchandise. Modest increase in food and drink prices provided the only significant upward effect on inflation last year,” added Charurvedi.

He said residents were relatively less burdened due to online education where they saved on transport and discounts on fee. Also, most of people saved on deferring optional medical treatment because of Covid-19.

Ambareen Musa, founder and CEO of, said looking at the latest Consumer Price Index (CPI) statistics in the UAE, retail inflation declined 3.8 per cent during the 2020.

“The housing and utilities category, which constitutes the highest relative weightage of 43 per cent in the CPI, dropped by 7.9 per cent during this one-year period, declining steadily month-on-month. This fall has been the result of rents witnessing a downward trend across the residential property market in the country.”

“Following the lockdown and other restrictions that came with the Covid-19 pandemic, recreation and transport were the other two major CPI categories to witness a significant decline during 2020. As financially impacted residents continue to struggle with the realities of the current crisis, non-essential expenditures may remain low, thereby putting further downward pressure on retail prices,” she added.

“A lower cost of living within popular expat hubs — Dubai and Abu Dhabi, is likely to ease pressure on residents’ finances and also make these cities more attractive for potential expats looking to move here,” she added.

Given the falling house rents and new residential supply entering the market, Musa said expats can pick and choose where they want to live, making upgrades feasible. “Especially crucial at a time like this, the lower expenses could translate into higher savings for many people, opening up more opportunities to save, invest and grow their wealth.”

Numbeo data showed that, regionally, Israel is the costliest city in the Middle East and North Africa region which is ranked ninth globally followed by Lebanon (ranked 24th), Qatar (35th), the UAE (37th), Bahrain (41st), Palestine (44th), Jordan (55th), Yemen (58th), Saudi Arabia (62nd), Kuwait (63rd), Iran (83rd), Iraq (112th), Egypt (123rd) and Syria (129th).

Globally, Jersey and Bermuda took the first two spots for the most expensive countries to live in, dethroning Switzerland from the top position to third in 2021. Other countries in the top 10 include Norway, Iceland, Denmark, Luxembourg, Japan, Israel and Bahamas. While Pakistan is the most economical country rated by Numbeo at 139th followed by Libya, Kyrgyzstan, India, Afghanistan, Uzbekistan, Georgia, Zambia, Algeria and Nepal.


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