Companies in the UAE are adjusting to rising residential rents by increasing housing allowances, with an average hike of four percent in 2025 compared to the previous year, according to global HR and investment consulting firm Mercer.
Rents across the UAE’s major emirates have been climbing for the past four years, driven by an increasing population that has now surpassed 11 million. In particular, rental prices in many communities in Dubai and Abu Dhabi have risen at high single-digit to double-digit rates over the last few years.
Mercer’s 2025 Middle East Housing and Schooling Report, released on Tuesday, revealed that more than half of employers (52 percent) now offer housing allowances in advance, while 48 percent still provide it on a monthly basis.
“This is important in markets where large upfront rent cheques are common,” said Mercer.
The study also found that 70 percent of UAE firms offer a separate housing allowance, 25 percent include housing within a consolidated allowance, and the remainder provide total cash packages.
Aleksei Kolesnik, career products manager at Mercer Middle East, highlighted that regular benchmarking and adjustments, combined with practical measures like advanced housing payments, can give companies a competitive advantage in attracting and retaining talent. “As competition for talent intensifies in the region, employers must ensure they have a strong employee value proposition, including market-competitive allowances and benefits,” Kolesnik said.
Andrew El Zein, UAE career products leader at Mercer Middle East, noted that top talent is in high demand in the UAE, and allowances and benefits play a significant role in the hiring and retention process.
As employers continue to compete for talent, many are also reassessing their housing and schooling benefits to remain competitive. Housing, schooling, and healthcare are among the largest expenses for UAE residents, representing a significant portion of their monthly income.
The Mercer report found that nearly 90 percent (89%) of UAE employers provide schooling coverage, with 36 percent offering equal policies across all eligible employees and 64 percent differentiating based on seniority or other criteria, excluding Saudi Arabia.
“When housing and schooling policies are aligned with market standards, clearly defined, and well communicated, organizations gain a competitive edge in attracting and retaining talent,” said El Zein. “This enhances the employee value proposition and helps organizations acquire the right talent to fuel their growth ambitions, especially at a time when attracting top talent is crucial for business success.”
