Rents eat into regional paychecks

• UAE residents dedicate upwards of 30 per cent of their monthly salary on rent
• 53 per cent of UAE residents own their own car
• 80 per cent of Qatari residents opt for car finance

51 per cent of Qataris reported similar rates of expenditure, confirming the recent upward trend in that country's housing market.

Over 8,500 respondents from across the region participated in the online survey, which was conducted by market research leader YouGovSiraj in association with Bayt.com, throughout September. The survey also examined the financial implications of utilities, car financing and company benefits. Across the region the research findings consistently show that housing expenses continue to make the largest dent in regional salaries.

When it comes to rent increases, Oman, Qatar and the UAE experienced the largest hikes, with 42 per cent, 32 per cent and 23 per cent of tenants, respectively, shouldering increases of 20 per cent or more.

Elsewhere in the GCC, just nine per cent of Bahraini residents have witnessed a 20 per cent increase or more, with the majority of respondents reporting no increase at all. Some 34 per cent of Saudis say they experienced no increase in their rent either.

The survey shows Qatar and UAE as the countries with the highest rent. Compared to other countries where around 60 per cent pay rent less than USD750 a month, in Qatar and UAE, a majority of 66 per cent and 58 per cent pay rent higher than USD750. 26 per cent of UAE residents pay rents above USD1,250 a month while this figure rises to 40 per cent in Qatar.

Bayt.com CEO, Rabea Ataya said, "Housing expenses have a huge bearing on the job market, particularly when it comes to salary requirements and relocation decisions. This survey reveals that rents are eating up ever-larger portions of people's pay checks, a trend that could have implications for the economy as a whole."

Increases in rents, Ataya continued, are forcing more and more people to share accommodation to make ends meet. Around a third of people in Qatar and the UAE said they shared accommodation with another family or individuals not from the same family. This figure dropped in Kuwait, Bahrain and Oman to 27 per cent, 21 per cent and 17 per cent, respectively.

"This continued rise in the cost of living creates added pressure for smaller businesses and start-ups. It makes it much harder for companies to set up without significant capital which is detrimental to entrepreneurship, a key cornerstone to growth in the region. Small companies will also take the hit, making them less competitive and the ultimate conclusion of that is cash flow problems", said Nassim Ghrayeb, CEO of YouGovSiraj.

Despite rising rents, the vast majority of respondents have not bought property, this is particularly true in the smaller Gulf countries. Some 88 per cent of UAE respondents say they live in rented accommodation, compared to just three per cent who owned their own homes. This is identical to the situation in Qatar and similar to the situation in Kuwait where three per cent own and 90 per cent rent.

The largest number of buyers in the GCC is seen in Bahrain, where 11 per cent owned homes. This is closely followed by Oman at 10 per cent and Saudi Arabia at 7 per cent. Outside of the GCC, Lebanon and Egypt show a higher incidence of home ownership at 32 per cent and 30 per cent respectively.

A degree of uncertainty is being felt in the UAE concerning the hot topic of home ownership. Though 24 per cent of UAE residents are planning to invest in property in the country, about a third of UAE residents believe property investment is a good idea but not currently affordable. Another 27 per cent do not think property is an attractive investment at current prices and prefer to rent.

The greatest confidence in the property market is being seen in the Levant markets of Lebanon, Syria and Jordan where 34 per cent, 44 per cent and 38 per cent of respondents respectively plan to buy property. In fact, Syria and Jordan recorded the highest percentage of residents who intend to buy despite the fact that they don't believe property is a good investment at current prices at 34 per cent and 33 per cent respectively. Another appealing market was Egypt where the desire to buy property was expressed by 40 per cent of respondents.

Though Oman and Bahrain also seem like attractive markets, they were the most expensive. 41 per cent and 31 per cent of the respective residents feel it is a good time to buy property, however, at current prices, property is unaffordable. There is also a degree of polarisation in these markets as a further 17 per cent in Oman and 25 per cent in Bahrain plan to buy property but another 26 per cent and 28 per cent respectively believe it is not a good time to purchase and prefer to rent.

The highest uncertainty regarding the property market and aversion to purchasing at current prices is seen in Kuwait. 57 per cent of Kuwaiti residents prefer to rent or simply don't know whether the property market is a good investment at current prices.

In Kuwait and Oman, 30 per cent of those surveyed reported owning a property outside of their country of residence.

When it comes to expenditure on utilities, 20 per cent of UAE residents spend more than nine per cent of their salary. This was the lowest among all GCC countries, in Oman this figure rose to 27 per cent. The greatest pinch is felt by residents of Lebanon and Syria, where a high of 44 per cent and 46 per cent respectively, pay more than nine per cent of their salary in monthly utilities.

The cost of driving is not a major drain on income in the region, particularly in GCC countries. It is relatively high in the UAE, although, it could be a function of commuting distances rather than cost of fuel. 58 per cent in the UAE spent less than USD125 on monthly fuel. In the other GCC countries, expenditure is even lower. In Kuwait, the corresponding figure is 88 per cent. In comparison, people in Lebanon pay more - 67 per cent spent more than USD125 on fuel every month.

Vehicle ownership is high across all countries except Syria where only 24 per cent owned a vehicle. All other countries registered an ownership between 50 and 70 per cent. 53 per cent of respondents in the UAE own their own vehicle while in Kuwait and Saudi Arabia this figure rose to 63 per cent and 69 per cent respectively. Public transport is most commonly used in Syria at 48 per cent followed by Jordan at 33 per cent and Egypt at 26 per cent. It is least common in Saudi Arabia where only 7 per cent of respondents indicate they use public transport compared to 10 per cent in Bahrain, 11 per cent in Oman and 12 per cent in Kuwait and Qatar. The highest use of public transport in a GCC country was found in the UAE among 18 per cent of the population.

Car financing plays a prominent role with 80 per cent of Qatari residents choosing this option versus 76 per cent in the UAE and 73 per cent in Kuwait. Financing is much less prevalent in KSA and Bahrain at 48 per cent and 51 per cent of surveyed respondents respectively.

The repayment rate for car financing is relatively low across the region with most respondents paying less than US$500 per month. Fuel expenses are also low with most respondents paying less than US$75 per month.

Company transport allowance is not enough to cover costs in most of the GCC countries however, 38 per cent of those surveyed in Oman said the allowance covered the entire cost.

Other company benefits cited in the survey beyond rental and transport allowances include medical expenses. While for most surveyed professionals these are covered partially or fully, the benefits do not normally extend to family medical. In addition, children's schooling is rarely covered.