Significant drop in cost of labor accommodation

The cost of labor accommodation in Dubai has reduced significantly in the past year.

The average price for a 4-person capacity room in Al Quoz has been steadily rising over the previous 6 years. However, 2018 has seen a dramatic change with prices plummeting by approximately 45%, from AED 1,250 per person to AED 700 per person in early 2017 and 2018 respectively.

Changes in price per person YoY in Al Quoz

 

Following stricter regulations by the ministry of labor, demand for labor accommodation across the UAE continued to rise. However, these regulations left many companies struggling to find suitable accommodation for their workers.

The new regulations limit the number of workers that are allowed to share a room, with each individual requiring 3m2 of personal space. Rooms are restricted to no more than 10 workers per room, no matter the size.

The Dubai Municipality are conducting regular checks to ensure companies aren’t falling back into their old ways of housing 10 to 12 workers in small rooms.

Because of these changes, many contracting companies decided to build their own labor accommodation across the Emirates to counteract the rising cost of leasing.

Additionally, the high return-on-investment (ROI) beginning achieved by labor accommodation lead to an increase in investors flooding the market.

The pricing power has shifted from the supplier to the buyer, with so many unoccupied rooms currently available in the market.

However, with no signs of the construction industry slowing down in the UAE, there will continue to be a demand for labor camp accommodation.

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