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At a Tikki-themed bar in Dubai early last year, a man claiming to be a Scandinavian real estate millionaire ordered a round of tequila cocktails while yelling his formula for success in my ear (“fame, power and money”). His companion, a blonde air hostess, fell off her stool.
This absurd moment has come to feel like something of an omen. Bona fide millionaires — possibly possessing some fame and power, but definitely a lot of money — have flocked to the Middle East’s commercial hub in the past year. Wealth advisory firm Henley & Partners estimated that 6,700 millionaires would arrive in the United Arab Emirates in 2024, more than any other global destination.
For Dubai, whose boom and bust property market is in an unprecedented rally, this is a victory. Long pitching itself as a luxury lifestyle destination, Dubai has “always wanted to be Monaco and Singapore”, said one banker, “and that’s the direction it’s headed in”. Business owners say the city, once awash with chancers and dodgy cash, now has plenty of real talent and legitimate money.
Dubai has cracked the millionaire market, then. But the Monaco of the Middle East may now have to turn its attention to the middle class.
“The arrival of the ultra-wealthy has created more options for people to spend large amounts of money,” said one expat who recently left for Europe after nearly two decades. “But it’s also made people feel much poorer.”
The moneyed global citizens filling expensive restaurants and buying beachside villas, plus a rush of workers wanting to cash in on Dubai’s boom, have put a strain on the city’s housing market, causing problems for families with lower incomes.
Dubai is now the world’s 15th most expensive city to live in, according to a global ranking by consultancy Mercer, and has the region’s highest cost of living. In 2020, it ranked at number 22 globally. British Mums, an online expat community, estimated last year that a family needed a monthly income of AED50,000 (around $13,600) to live comfortably here.
The costs are not yet putting people off. Dubai remains a magnet for migrants drawn by the glamour, absence of income tax, glorious winter weather and stability of the UAE’s 10-year “golden visa” programme.
But rising rents are biting. Property laws shield tenants from price-gouging to a certain extent, but rents have climbed so much overall — on average, over 20 per cent per year for the last two, according to Mercer — that many long-term residents face trading down. A friend who used to live in a villa with a garden has moved to a one-bedroom flat.
Dubai Land Department acknowledged the rise in housing demand but said it monitored real estate to ensure a balanced housing supply and had taken steps to help residents “across diverse income groups”.
There is unlikely to be much sympathy for white-collar workers who profited handsomely in the past. Renting in Dubai may be more expensive than, say, Paris or Frankfurt, but Mercer’s data shows it is still broadly cheaper than the financial hubs of London and Singapore.
“Not everyone can afford to live in Chelsea,” said Dubai-based real estate agent Barnaby Crompton, citing the London market. “You have other areas where the diaspora are moving because they’re being priced out of the more centrally located places.”
Lower-paid employees — the drivers, waiters, cleaners and other vital workers who keep the sparkling city running — are squeezed into ever tighter accommodation further out or have less money to send to families.
Expat message boards show plenty of debate over whether it still pays to stay in Dubai. “Rent and costs of education, health etc are making us believe that London might be better,” wrote one. “Financially it might be breaking even due to tax, but we’d be with our families and old friends.”
Many come to Dubai in the expectation of finding fame, power or money. The reality, as the recently departed expat complained, can be different. “Beyond the glitz and glamour, there’s a lot of tears and sorrow in Dubai.”
