The astonishing rise in property prices during 2008 in the Emirates certainly shocked many residents and investors alike. Like the Burj Dubai, no mean performer with price increases of around 80% since first offered for sale, the cost of any form of accommodation in the UAE seemed to defy gravity. Prices just kept going up and up, apparently with no limit. It is hard to believe that in a space of just over 5 years, property prices in Dubai have risen four if not five-fold. It has been without doubt the strongest performing property market in the world.

In previous reports we have tended to make light of small increases in day to day shopping items. An increase of 5% in the price of yeast in Ras Al Khaimah or the price of a dry cleaning bill going up by 10% seemed somehow irrelevant against the 40 or 50% increases in accommodation costs. But 2008 was no joke, and the increases were anything but little. What’s more, the increases in day-to-day consumer items are part of a wider global trend of rising commodity prices, which not only started to affect all UAE residents, but looks set to continue for some time to come. We are witnessing the end of cheap food, a new age of oil prices, and a dramatic shift in consumption from West to east. IN more ways than one the UAE finds itself right in the middle of this changing world.

In the first Cost Of Living Report in 2004, we wrote “In a city where almost everything has a price, education has a particularly high one”. It is important to remember that schooling is compulsory in the UAE and for the vast majority of expatriates, considering the limited appeal of Government schools, this means paying for private schooling. It is a massive and growing market, accounting for more than 40% of the total student population with more than 117 private schools in Dubai alone, offering 12 different national curricula. But despite this massive growth in providers, the sector is still struggling to keep up and waiting lists are common. The net result is boom time for educators and an increasing burden for families.

Medical care remains big business in the Emirates and a business it certainly is, with different parts of the country’s demographics carefully targeted according to location, cultural background and affordability. The UAE makes up a significant part of the regions healthcare market which is estimated by Arab Health to be worth US$10 billion and growing at a rate of 16% annually, but at the same time there is an acute shortage of beds placing a massive strain of the facilities in the UAE. This supply shortage is compounded by lifestyle issues. The sedentary lifestyle inherent in the city’s planning and climate, and poor dietary habits across large sectors of the population create high levels of chronic medical conditions requiring long term medical treatment. The WHO estimates that the UAE has the 2nd highest prevalence of diabetes in the world, with 20% of the total population affected with type 2 diabetes.

A Report was also carried out amongst Kershaw Leonard clients on how they were responding to the changes in cost of living. The Report found that 60% of companies had changed their terms and conditions in the previous year as a direct response to increases in cost of living. The majority of these changes were in terms of salary and housing allowance, with a smaller number increasing their education allowance. SALIK has largely been ignored by employers, with very few companies making any direct adjustment for the road toll: of companies Report, only one provided an allowance for those employees who had to cross the toll gate to and from work.

During the past 12 months we have continued to see tremendous activity in the recruitment market across all sectors but the requirements for suitable qualified people particularly in the construction sector coupled with the shortage of talent has seen significant rises in the salaries being demanded by candidates. Some companies have been missing out on securing the most suitable candidates because their recruitment process has been too slow, and in 2008 it is definitely a candidate driven recruitment environment. A further major issue for both candidates and employers alike has been the No Objection Certificate. There are a number of employers who have been hard to recommend to potential employees due to their clearly stated policy of never providing NOC’s.