They emphasized that it enables consumers to diversify spending and investment, thus enhancing market demand
Experts: Declining housing costs boosts business performance in Dubai
Experts: Housing, transportation, education, and government fees are among the factors that affect the cost of starting a business the most. Photography: Patrick Castillo
Economists said that the low cost of housing enhances business performance in Dubai, pointing out that housing, transportation, education, and government fees are among the factors that most affect the cost of establishing and starting a business, and the ability of companies and private sector institutions to sustain activity, especially during the current time it is facing The global economy has challenges related to the outbreak of the Corona virus.
Experts explained to "Emirates Today" that the low cost of housing gives a large segment of consumers a financial margin, enabling them to diversify spending or saving and investing in a way that enhances market demand, calling for a review of the cost of government fees and fines, in addition to the cost of education and transportation. In order to enhance individuals' consumption capabilities.
The annual general index of consumer prices in Dubai decreased by 3.12% last July, compared to the same month of 2019. A report issued by the Dubai Statistics Center indicated that this came as a result of a decrease in the prices of each of: the housing, water, electricity, gas and fuel section by 5.41%. Which reduced inflation by 2.23 points, in addition to a decrease in the transportation department's prices by 10.69%, which reduced inflation by 1.20 points, in addition to a 13.62% drop in the prices of the entertainment and culture department, which reduced inflation by 0.29 points, in addition to a decrease in the prices of the clothing and footwear section. By 1.42%, which lowered inflation by 0.03 points, and the telecommunications division by 0.03%.
The financial advisor, Salah Al-Halian, said that the decline in the cost of housing, which includes monthly rent payments or even mortgages for some groups, is very beneficial to the cost of living, which is an integral part of the cost of business, explaining that housing sometimes consumes up to about 35 % Of the budget of individuals and families, especially for expatriate families, and thus this reduces other spending allocations that raise the rate of consumption and lead to growth.
Al-Helyan added that the cost of rents is not only related to housing, but also to commercial office rents, and this is also very positive, as it enhances the ability of companies - especially in the current situation - to face the challenges resulting from the outbreak of the Corona pandemic.
He mentioned that the freedom of the market is a positive thing at the present time, as the availability of housing units is forcing owners to offer reasonable prices for rents, indicating that the cost of life, living and business is also related to the cost of transportation and the purchase of food and government fees, which the initiatives to reduce will have a significant impact on the ability of companies. And individuals to face current challenges.
He called for reconsidering the fines imposed on renewing various licenses, in response to the situation of some individuals and institutions to facilitate them, and to support their ability to manage their financial situation.
Moving the markets
For his part, the economic advisor, Rabih Atatreh, said that the low cost of rents enhances the performance of business in Dubai, indicating that housing, transportation, education, health, and government fees also affect the cost of establishing and starting a business, and the ability of companies and private sector institutions to sustain activity, especially At the present time, when the global economy is facing challenges related to the outbreak of the Corona virus.
Atatreh explained that the largest segment of consumers that can move the markets is the average income, and therefore their ability to continue consumption must be strengthened to move the wheel of the economy, pointing out that there is a need to reconsider government fees, by reducing commercial license fees, compared to China and countries. The European Union, where the validity of the commercial license is five years at nominal prices, as well as the abolition of fines that do not harm others, such as the expiration of the license or the renewal of subscriptions of various kinds.
Atatreh pointed to the need to reduce the cost of education, after the adoption of distance teaching, as the family incurs additional costs in providing space, follow-up and household consumption expenditures.
In turn, the economist, Rida Muslim, believed that the inflation index consists of several groups, which include varying elements for consumption, but it is clear that the cost of rent is a key element in determining the level of inflation in the Emirates, explaining that the cost of housing may reach, sometimes, 50% of Income, as the level of rents rises.
Muslim said that the decline in rents affects everyone positively, as business owners themselves take into account the levels of rent when determining the wages of employees, and the decline in the rent ratio in individuals ’spending gives them the ability to diversify consumption and not focus it on one side, which stimulates the economy and the movement of the market in general, indicating that Rents are a very crucial factor in determining the standard of living.
Lower monthly index
The general monthly consumer price index in Dubai decreased in July 2020, compared to June 2020, by 0.11%, due to the decrease in housing, water, electricity, gas and fuel prices by 0.28%, which reduced inflation by 0.11 points, and food and beverages. By 0.50%, which lowered inflation by 0.07 points. On the other hand, the prices of the transportation sector increased by 0.82%, which pushed inflation by 0.08 points, and the miscellaneous goods and services division by 0.28%, which pushed inflation by 0.02 points, and the health department by 0.04%.
The Dubai Statistics Center reported an increase in the consumer price index, last July, compared to the same month of 2019, for: the food and beverage division by 2.5%, which pushed inflation by 0.33 points, and the education section by 1.87%, which raised inflation by 0.17 points. And the tobacco division by 15.96%, which increased inflation by 0.09 points, the miscellaneous goods and services division by 0.61%, which pushed inflation by 0.04 points, and the furniture, furnishing, and household appliances division by 0.16%, which raised inflation by 0.01 points, and the health department by 0.06% While the prices of the restaurants and hotels section stabilized at their previous levels, during the comparison period.