Cooper Fitch’s 2025 UAE Salary Guide, surveying 1,000+ organizations and 400,000 employees, projected an average salary increase of 0%, the first flat year in 13 years. Meanwhile, Mercer ranked Dubai the 15th most expensive city globally (up from 18th) and the most expensive in the Middle East. With 3.5% inflation against zero salary growth, middle-class expats face a real-terms pay cut for the first time in over a decade.
CEO Trefor Murphy of Cooper Fitch noted, “People are looking at doing anything to get gainful employment. We’ve had dentists come to the UAE to work as real estate agents.” Employers now receive over 2,000 applications for single job postings.
Rent Is The Biggest Line Item
Residential rents rose 18-22% in 2024 and a further 13% in 2025 before moderating to a projected 4-6% in 2026. Specific benchmarks like a 1-bedroom in Downtown/Business Bay runs AED 105,000-115,000/year, in Dubai Marina AED 90,000+, in JVC (the “affordable” option) AED 60,000-100,000. Average studio rent sits at AED 5,000/month ($1,360). Dubai adds 470 new residents daily versus only 150 new homes delivered, sustaining the supply-demand imbalance.
The RERA Smart Rental Index, introduced January 2025, caps renewal increases at 5-20% depending on how far below market the current rent falls.
School Fees And Utilities Compound The Pressure
International school fees range from AED 12,723 (budget Indian curricula) to AED 130,000+ (premium IB schools) per child annually. KHDA approved a 2.35% increase for 2025-2026. Prominent Emirati lawyer Habib Al Mulla told AGBI that “ridiculously, ridiculously high” school fees are prompting some expats to leave. Education and housing together consume 60% of a typical family’s monthly budget.
DEWA bills can double or triple in summer, jumping from AED 400 to over AED 1,000 during June-September. The Dubai Municipality Housing Fee, 5% of annual rent billed monthly through DEWA, means utility bills rise automatically as rents climb.
Emiratisation Adds Job Insecurity
Companies with 50+ employees must hit 10% Emirati hires by 2026, with non-compliance penalties of AED 108,000 per unfilled position per year. As of mid-2025, 152,000+ Emiratis are employed across 29,000+ private-sector companies, exceeding the original 75,000 target. The policy directly pressures companies to limit expat hires in skilled positions.
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Consumer Behavior Shift
Despite low official food inflation (0.36% in 2025), a Blue Yonder survey of 6,000+ respondents found 85% remain worried about grocery costs. Some 65% are buying fewer grocery items, 56% have cut clothing spending, 43% reduced streaming subscriptions. Only 40% of UAE professionals received a raise in 2025, typically 5-10%, “often not enough to keep up with the rising cost of living,” per Halian CEO Stuart Fry.
Population Keeps Growing
Dubai crossed 4 million residents in September 2025. An expected 9,800 relocating millionaires are arriving across 2025. The city isn’t shrinking, the demographic composition is shifting. Wealthier newcomers like crypto millionaires, bankers from Asia, wealthy Russians, push the cost base higher, while middle-income professionals face diminishing returns. Tellimer managing director Hasnain Malik warned, “Deteriorating affordability is a risk for medium-term population growth.”
FAQs
Why are middle-class expats struggling in Dubai in 2026?
ANS: Because salaries have stagnated while living costs, especially rent, schooling, and utilities, have increased. This creates a real drop in purchasing power.
How much have rents increased in Dubai recently?
ANS: Rents rose 18-22% in 2024 and about 13% in 2025, with further increases expected, though slower, in 2026.
What role does Emiratisation play in expat job insecurity?
ANS: Emiratisation policies require companies to hire more UAE nationals, which reduces opportunities and increases competition for expats.
How expensive is education for expat families in Dubai?
ANS: School fees range from around AED 12,700 to over AED 130,000 per year per child, making education one of the biggest expenses.
Is Dubai still attracting expats despite rising costs?
ANS: Yes, but the demographic is shifting. Wealthier individuals are moving in, while middle-income expats are finding it harder to sustain their lifestyle.
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