The UAE government is on a mission to diversify the country’s economy beyond oil. Through strategic investments in technology, education, and infrastructure, the UAE is transforming itself into a global hub for commerce, tourism, and innovation – attracting businesses and investors from all over the world. For many investors looking to leap, understanding the cost of living in the UAE is important, as it could affect the long-term returns of your investments.
- UAE's economy is diversifying beyond oil, with significant growth in non-hydrocarbon sectors like tourism and real estate, supported by low inflation and favorable banking conditions.
- Living costs depend on housing type, lifestyle, and location – Dubai and Abu Dhabi are the most expensive emirates, while Sharjah and Ajman offer affordable alternatives, for example.
- Real estate in Dubai's city center averages $5,000 per square meter, with affordable options in Jumeirah Village Circle. Ajman offers the lowest costs, with property prices starting at $1,000 per square meter.
- Public transport fares range from $1 to $2 per trip, and while car ownership is also common (supported by low fuel prices), additional costs to consider include insurance and maintenance.
- Expats benefit from tax-free income, high salaries, and business-friendly free zones, with international schools and private healthcare offering premium options.
Overview of the Cost of Living in the UAE
Because of its strong economy, the average cost of living in the UAE is lower than in the United States. It ranges between $1,000 per month for an individual and $4,000 per month for a family (including rent, groceries, transport, and leisure activities). This price varies based on the emirates you reside in, your commuting habits, accommodation type (apartment, villa, or shared), or lifestyle choices.
Economic landscape
Recent data from the International Monetary Fund (IMF) reveals that the UAE’s real GDP is projected to remain at 4% in 2024, and increase to 6% in 2025. This growth is largely driven by non-hydrocarbon sectors (such as tourism, construction, manufacturing, and financial services), which brought in over $1.8 billion – equivalent to 141% of the country’s GDP.
The real estate sector has also seen a significant boom since the introduction of the UAE Golden Visa program, which grants investors residency and citizenship opportunities in the country through purchasing properties:
- In Abu Dhabi, real estate sales transactions in the first half of 2024 increased by 2.3% year-on-year, while apartment and villa sales price index increased by 6.2% and 3.9% year-on-year, respectively.
- In Dubai, residential sales transactions in the first half of 2024 increased by 34.8% year-on-year, while apartment and villa sales price index increased by 14.3% and 25.3% year-on-year, respectively.
The banking sector has also shown significant improvement in the last year with the Central Bank of the UAE (CBUAE) revising its inflation forecast from 2.3% to 2.2% for 2024 due to global and domestic commodity prices, wages, and rents. This could be revised again if disinflationary trends in food, beverages, and major non-tradable components continue.The bank also reduced its key policy rate to 4.9% in September, in line with the US Federal Reserve’s Interest Rate on Reserve Balances (IORB). Other notable highlights in the banking sector include:
- Sustained excess reserves – the Dirham Overnight Interest Average (DONIA) rate remains around 30 basis points below the key policy rate.
- Favorable funding and liquidity conditions – the banking sector saw 13% year-on-year deposit growth in Q2.
- Expanding loan portfolios – increased retail and private corporate loans have resulted in an 8% year-on-year loan portfolio growth.
CDS premiums for Abu Dhabi and Dubai remain low, reflecting the UAE’s strong fiscal position and substantial sovereign wealth funds.
Expatriate-Friendly Environment
The UAE was ranked in the top 10 for this year’s Expat Essentials Index, excelling in categories such as language and administrative topics, where expats find minimal bureaucratic hurdles and straightforward immigration procedures. This follows Sheikh Mohammed bin Rashid Al Maktoum initiating the “Zero Government Bureaucracy Programme” earlier this year – yet another initiative to boost economic activity in the country.
Despite the high cost of living, expat salaries in the UAE are among the highest globally. Some expat packages often cover basic living costs as well, so workers can sustain a high standard of living. Foreigners don’t have to pay any tax on their income, and there are several free zones that offer business-friendly environments, with benefits like 100% foreign ownership, simplified company setup processes, and further tax exemption.
Variations by Emirates
Your expenses can vary significantly based on which Emirates you live in the UAE. Dubai and Abu Dhabi are the most expensive, with higher housing and service costs, while Sharjah and Ajman offer more affordable options. For example, for a single person living in the UAE, it could cost more than $2,500 per month, while the same lifestyle might cost $2,000 in Sharjah.
Here’s a quick breakdown of what you can expect in which Emirate:
Dubai
Dubai is the most expensive city to live in the UAE, with an individual’s monthly expenses around $1,100, excluding rent. A family of four would spend around $3,800 monthly. The city is home to famous landmarks like the Burj Khalifa, Burj Al Arab, and Palm Jumeirah, as well as many luxury amenities to enjoy.
Abu Dhabi
The cost of living in Abu Dhabi, the capital of the UAE, is slightly lower than in Dubai, around $950 without rent. Abu Dhabi is one of the most family-friendly emirates and offers both luxurious residential areas as well as medium-priced housing units.
Sharjah
Sharjah is the most populated and most affordable place to live in the UAE, costing around $850 per individual and around $2,900 for a family of four. Sharjah is known for being rich in history and culture because of its many residents.
Ajman
Compared to Dubai, the cost of living in Ajman is almost 50% lower, including both consumer and rental prices. Ajman is the smallest of the seven emirates, boasting beaches, peaceful environments, and clean water that provides various marine activities.
Housing and Rent Costs in the UAE
Investors can purchase property in freehold zones – special areas designed for foreign nationals, such as Arjan, Barsha Heights, Bluewaters Island, Business Bay, Culture Village, and more. You can rent property in any other area of the UAE.
Real estate prices vary significantly depending on which Emirate you choose to reside in:
Dubai
Buying property in the city center can set you back by about $5,000 per square meter. The further you move outside of the center, the more affordable it gets (around $3,400). Areas such as Business Bay and Burj Khalifa get the most attention from investors, costing over $680,800. Jumeirah Village Circle, on the other hand, is one of the most affordable areas in Dubai, with properties costing around $159,000 to purchase, or around $2,800 per month to rent. Basic utilities (including electricity, heating, cooling, water supply, and garbage collection) are around $200 per month.
Abu Dhabi
In Abu Dhabi, buying a property in the city center can cost you around $5,000 per square meter. Property outside the city center goes for around $4,300 per square meter. Rent usually starts at $1,000 per month. Basic utilities can cost around $300.
Sharjah
In Sharjah’s city center, it costs around $6,600 per square meter for property. Outside of the city center, it costs around $4,500 per square meter. Rent and utilities can cost around $1,000 per month or $1,500 for a family.
Ajman
Properties in Ajman can start at as little as $1,000 per square meter. Rent usually ranges from $950 per month for an apartment to $3,000 for a villa. Utilities can cost around $150.
The UAE’s strong economy, new innovations, expatriate-friendly environment, and world-class services make it one of the most sought-after places to stay and work for investors and their families. By understanding the cost of living and planning your budget carefully, you can enjoy the benefits of a high standard of living and a strong return on investment.
FAQ
The UAE has no personal income tax. However, there is a 9% corporate tax on business profits exceeding $102,000 and a 5% Value Added Tax (VAT) on goods and services. Certain free zones offer tax exemptions for businesses.
Yes. Banks typically offer mortgage loans covering up to 75% of the property value for residents and 50-60% for non-residents. Interest rates range from 3% to 5%, with loan tenures of up to 25 years.
Healthcare costs for expats depend on the level of coverage. Mandatory health insurance premiums range from $1,400 to $4,000 annually. Doctor consultations typically cost $80 to $140, with specialist visits and hospital stays being higher. For families of four, packages range from $4,000 for basic health insurance and $9,000 for comprehensive cover.
Rental costs vary significantly by emirate. In Dubai, apartment rents range from $2,800 monthly in affordable areas like Jumeirah Village Circle to over $6,000 in prime locations like Downtown Dubai. In Sharjah and Ajman, apartments cost around $950 to $1,500 monthly.
The UAE Golden Visa requires a minimum property investment of about $545,000. This investment grants long-term residency of up to 10 years, renewable as long as the property is retained. Through the UAE Golden Visa, you are also eligible for the Esaad privilege card issued by the Dubai Police, which offers discounts on education, health, housing, restaurants, theme parks, hotels, in-stores, and more. There are exclusive discounts across 7,237 brands and businesses in the country, as well as 92 other countries worldwide.
