Dubai's crude figures still add up

Living in Dubai isn't quite as cost effective as it used to be, but it's still a lot cheaper than, say, London.

The good news is that Gulf incomes are tax-free and an array of perks typically makes life that little bit easier to bear. The bad news is that perks aren't being doled out as liberally as they once were.

The bill for schooling the children of the region's army of expats is typically picked up by employers. But - shock horror - employees are increasingly having to pay their own housing bills.

And housing is becoming more and more expensive. According to Mercer, the price of a three-bedroomed apartment in Dubai has nearly doubled over the past three years. Rents rose from US$2.6k a month in 2004 to US$5k a month this year.

As Dubai grows as a financial centre, accommodation costs look set to keep on rising. Government attempts to get a handle on rocketing accommodation costs earlier this year backfired after a cap of 7% on rocketing rents simply inspired all landlords put their rents up by 7% exactly.

Spiralling living costs are said to be encouraging some firms to locate in cheaper Bahrain. But if you're obliged to base yourself in Dubai, Gareth Clayton, director of search firm Charterhouse Partnership, says strong candidates can increasingly push for inflation-linked packages.

It's also worth bearing in mind that while Dubai is certainly more costly than it used to be, it still makes financial sense to live and work here. Rents haven't risen sufficiently to erode the financial advantages of a tax-free income. Executive apartments in London now cost US$7.6k per month and fees at international schools in the UK are a whopping US$27k.