UAE Employers Increase Housing Allowance By 4% Amid Soaring Residential Rents

UAE employers are adjusting to rising residential rents by increasing housing allowances, with an average hike of four per cent in 2025 compared to last year, according to global HR and investment consulting firm Mercer.

Rents in all the major emirates in the UAE have been rising over the past four years due to an increasing population, surpassing 11 million. Rents in most of the communities in Dubai and Abu Dhabi have been rising in the range of high single-digit to double-digit over the past few years.

The 2025 Middle East Housing and Schooling Report released by Mercer on Tuesday revealed that more than half – 52 per cent – of employers have a policy to provide the housing allowance in advance rather than monthly, while the remaining 48 per cent do not provide housing advance to employees.

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“This can matter in a market where large upfront rent cheques are common,” said Mercer.

The study found that 70 per cent of UAE firms provide a separate housing allowance, 25 per cent include housing within a consolidated allowance, with the remainder providing total cash packages.

Aleksei Kolesnik, career products manager at Mercer Middle East, noted that regular benchmarking and reviews, combined with practical measures such as advanced housing payments, can give firms a competitive edge in their talent attraction and retention efforts.“As competition for talent continues across the region, employers must ensure they have a strong employee value proposition, which includes market-competitive allowances and benefits to remain competitive,” said Kolesnik.

Andrew El Zein, UAE career products leader at Mercer Middle East, said top talent is at a premium in the UAE, and allowances and benefits now influence outcomes at every stage of hiring and retention.

Amidst growing competition to hire talent, employers in the UAE and region are re-examining their housing allowances and schooling benefits to ensure they remain competitive.

Housing, schooling, and healthcare are among the top expenditures of the UAE residents, accounting for a large chunk of their monthly income.

The 2025 Middle East Housing and Schooling Report found that nearly nine out of 10 (89%) UAE employers provide schooling coverage. As many as 36 per cent apply equal policies across all eligible employees, and 64 per cent differentiate by seniority or other criteria in GCC, excluding Saudi Arabia.

“When housing and schooling policies are market-aligned, clear and communicated well, it provides organisations with an advantage in their talent attraction and retention strategies. This is about building a sharper employee value proposition that enables organisations to acquire the right talent for their growth ambitions at a time when attracting top talent is a business imperative,” said Andrew El Zein.

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