Dubai residents are showing confidence in the future of the economy despite the rising cost of living and inflation, says a report.

The city shows indications of very strong future growth and sustainability and residents are prepared to ride out financial pressures to reap the benefits of long term growth, the study by DSL Exhibitions said.

DSL Exhibitions is the organiser of the Resale & Rental Property Show due to be held on September 7 and 8 at the Crowne Plaza Hotel, Dubai.

The cost of living survey was conducted to gauge the impact of inflation on the growth of the property market as well as on the quality of lifestyle and spending trends of Dubai residents.

“The UAE market has witnessed rising prices for everything – including real estate, whether for purchase or rental –continuously for the last three years,” said Tessa Morris, marketing director at DSL Exhibitions.

“While this is good for a large number of investors in the property business, it obviously begs the question – how is it impacting the purchase and lifestyle choices of the residents of Dubai in particular and the UAE at large?”

In an extensive exercise, the survey gathered opinions from Dubai residents in the Dh200,000+ per annum bracket (annual household income) who have lived in the city for the last three years or more and measured how costs of living have changed during this period.

Touching upon areas such as share of wallet taken up by key expense heads, impact of change in costs of living and residents’ preferences when it comes to real estate purchases, the opinion survey gathered responses from 431 people.

Key findings:

* Essential goods and services taking up the bulk of residents’ income: Items like housing, children’s education, transport and groceries are heads where cutting back is either difficult or impossible.

* Non-essential purchases being cut: Heads such as personal shopping, entertainment and leisure are where people are spending less and less of their total income, yet their overall expenses, even on these items, have gone up.

* Borrowings remain strong: Even though a majority of respondents see their savings going down, people are, on the whole, paying more interest on borrowings – which clearly indicates that sentiment is still riding high, as residents seem hopeful for an upturn in their overall financial future. There is, however, an increased risk of the city becoming an increasingly indebted society with banks aggressively selling loans to almost anyone who cares to ask for them.

* Good and bad news: While there is no denying that people’s lifestyles are being squeezed as incomes do not keep pace with rising costs, a significant portion of the people are still looking forward to make long term investment in the UAE, in terms of buying property. There is confidence in the market and a strong desire to invest

* Mid-market real estate demanded: A majority of respondents are looking to invest under Dh2 million on their property purchase. This clearly indicates that the middle segment of the market is where the future of Dubai’s property market lies.

“Looking at what this opinion survey has revealed, it is clear that Dubai is going through the throes of growth,” said Tessa. “The city is showing signs of quickly moving into a mature growth phase and while cost of living issues present a complex problem for a number of residents at present – as is normal in periods of growth and change – Dubaiites are demonstrating remarkable resilience and confidence in the future of UAE’s economy by remaining optimistic and upbeat,” she said. – TradeArabia News Service