Employers across the UAE are raising housing allowances to keep pace with surging residential rents, according to the 2025 Middle East Housing and Schooling Report released by Mercer. The report shows an average increase of 4 percent this year compared to 2024.
The hike comes as rents in Dubai, Abu Dhabi, and other emirates have risen steadily over the past four years, fueled by population growth that has now crossed 11 million. In many areas, rent adjustments have ranged from high single digits to double digits annually.
Mercer’s findings reveal that 70 percent of UAE companies provide a separate housing allowance, while 25 percent roll it into a consolidated allowance, and the rest offer a total cash package. Notably, more than half of employers (52 percent) give housing allowances in advance rather than monthly—a crucial practice in a market where landlords often demand lump-sum rent cheques.
“This can matter in a market where large upfront rent cheques are common,” Mercer said in the report.
Aleksei Kolesnik, career products manager at Mercer Middle East, highlighted the role of competitive benefits in talent retention. “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,” he said.
Andrew El Zein, Mercer’s UAE career products leader, stressed that top-tier professionals weigh allowances heavily when making career choices. “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,” he explained.
Schooling benefits also remain a key offering, with 89 percent of UAE employers covering education costs for employees’ children. Among them, 36 percent apply equal policies for all eligible staff, while 64 percent vary benefits by seniority or other factors.
Housing, schooling, and healthcare continue to account for the largest share of household expenses in the UAE, making company-backed support a decisive factor in the job market.
