Setting up a new business in the UAE looks set to become even easier in 2019, thanks to the continuing decline of inflation. This is being driven by lower oil prices, cheaper rents, less VAT impact and a stronger dirham. In real terms, inflation looks set to remain close to 1% for the next 12 months, which is a drop of over 2% from last year.
This is extremely positive news for companies looking to set up operations in the UAE. Attracting highly-skilled employees to work in the region will become even easier with a number of important factors contributing to the downturn in inflation. School fees in Dubai are being frozen, ensuring education costs remain at an affordable level for the foreseeable future.
The government’s willingness to reduce and wipe out fines for small and medium-sized businesses is also making it much more cost effective for organisations to maximise their resources. Start-ups are able to get off the ground without being weighed down by heavy fines, giving them a much stronger chance of becoming a successful enterprise.
Property costs remain low
According to the MENA International Institute of Finance, residential rent is set to continue falling. This has been the case since mid-2014, and combined with the development of a number of large housing developments, this allows workers and their families to settle into an affordable and comfortable way of life in key business districts.
In 2018, 21,700 homes were built in Dubai, which is the highest number since 2011. A further 28,500 are expected to be delivered in 2019, setting a new precedent for the emirate. With so many new properties entering into the market, it is predicted that residential property prices will continue to fall as the year goes on.
This tenant friendly market will allow new businesses in the UAE to offer competitive employee packages that will prove enticing to new staff members. The cost of living also continues fall, with Dubai now rated as the 217th costliest city in the word, a drop of seven places from 2018. Resident’s purchasing power, a stronger currency and a considerable drop in inflation have partly been responsible for this change.