UAE employers are responding to the rise in housing rents by boosting housing allowances, with an anticipated four per cent increase in 2025 compared to last year, according to global HR and investment consulting firm Mercer.
Over the past four years, all major emirates in the UAE have seen rent increases due to a growing population, now exceeding 11 million. In most communities in Dubai and Abu Dhabi, rents have risen from high single-digit to double-digit percentages in recent years.
The 2025 Middle East Housing and Schooling Report by Mercer, released on Tuesday, indicates that over half – 52 per cent – of employers provide housing allowance upfront rather than monthly, while the remaining 48 per cent do not offer advance housing payments.
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“This is significant in a market where large upfront rent payments are typical,” stated Mercer.
According to the study, 70 per cent of UAE companies offer a separate housing allowance, 25 per cent include housing in a consolidated allowance, and the rest provide total cash packages.
Aleksei Kolesnik, career products manager at Mercer Middle East, emphasized that regular benchmarking and the use of practical solutions like advanced housing payments can give companies a competitive advantage in attracting and retaining talent. “As the competition for talent intensifies across the region, employers need to ensure a robust employee value proposition, including competitive allowances and benefits,” noted Kolesnik.
Andrew El Zein, UAE career products leader at Mercer Middle East, highlighted that top talent is highly sought after in the UAE, and allowances and benefits are crucial at every stage of hiring and retention.
Schooling Benefits
With increasing competition for talent, UAE and regional employers are reevaluating their housing allowances and schooling benefits to maintain competitiveness.
Housing, schooling, and healthcare rank among the top expenses for UAE residents, consuming a significant portion of their monthly income.
The 2025 Middle East Housing and Schooling Report revealed that nearly 89 per cent of UAE employers provide schooling coverage. Of these, 36 per cent apply uniform policies to all eligible employees, while 64 per cent differentiate by seniority or other criteria in the GCC, excluding Saudi Arabia.
“When housing and schooling policies are aligned with the market and clearly communicated, they offer organizations a strategic advantage in talent attraction and retention. This helps in crafting a compelling employee value proposition, crucial for acquiring the talent needed to achieve growth goals, especially when securing top talent is essential,” said Andrew El Zein.
