Dubai is still in the top 10 most expensive cities in the world to live and work, according to a new study.
The Savills Live/Work Index placed Dubai in eighth, despite a fall in property and office rents in the past year amid weakened oil prices, which has affected occupier demand.
“We attribute this to the perception by corporate occupiers and employees alike that the market has matured and is more resilient to external macroeconomic shocks than in the past,” said David Godchaux, the chief executive of Core, UAE associate of Savills.
He said that demand is “steady” for residential and office space with long-term confidence remaining strong.
The study found that Dubai’s total annual cost per employee of living and working accommodation stood at US$53,913, a decrease of 7 per cent since December.
This is less than half the amount of first-placed New York, at $114,009, a rise of 2 per cent. The US city replaces London at the top after a two-and-a-half year stint.
“One may have expected that Dubai would have become less expensive in comparison to other cities, but even with this decrease of 7 per cent over the past 12 months, it is still able to maintain its position in the top 10, showing the confidence of corporate occupiers and employees in the long term for this market,” Mr Godchaux said.
Online classifieds site dubizzle yesterday suggested that Dubai’s property market is showing signs of bottoming out.
Its second-quarter report said that residential rents were generally down by 2 per cent over the three months. Data from ReidIn last month said that sales prices were 4 per cent lower than they had been a year earlier and 12 per cent lower than they were during the market peak in 2014.
Office rents, meanwhile, have also been falling, with plenty of new supply arriving.
Rents for offices in Downtown Dubai and along Sheikh Zayed Road fell by 6 per cent in the second quarter compared with the same period last year, Core said last month. Rents in Jumeirah Lakes Towers fell the most, with a 10 per cent drop.
The Savills report found that currency swings since Britain’s decision to leave the European Union in June have changed the cost dynamic in a number of cities around the world.
“Weakening financial sector office rents are behind local currency live-work costs levelling out in London during the first half of the year but this translates into an 11 per cent reduction in total occupation costs when dollar-sterling currency movements are taken into account since December 2015,” the report said.
Tokyo had the biggest increase in dollar terms (22 per cent) as rent increases, particularly in prime residential and creative office sectors, were amplified by significant strengthening in the yen.
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