At first glance, the situation in the Middle East, particularly in the United Arab Emirates and Qatar, appears stable and far from critical. Describing it as a crisis, like the international media, might even seem excessive. Dubai continues to attract expatriates worldwide. Nonetheless, a closer examination of long-term trends indicates a subtle but significant shift. Let's delve into this.
Expats departing Qatar and the UAE
Dubai's allure has diminished slightly. It's a significant change from its modest population of 40,000 in the 1960s. Dubai garnered attention during the early months of the pandemic for maintaining normalcy while other cities halted. Influencers extol its virtues, and investors and entrepreneurs benefit from its favorable tax environment. After experiencing an 8.4% drop in its foreign population in 2020, Dubai quickly rebounded. With the reopening of borders that year, the expat population surged by 100,000 between the end of 2020 and April 2022. The city recently surpassed the 3.5 million population mark and is on track to reach 5.8 million by 2040.
Despite these positive statistics, the explosive population growth seen in 2018 has tapered off. Dubai's population continues to grow, albeit at a slower rate. From 2012 to 2018, the increase was +700,000 residents, predominantly expatriates. Since 2018, the growth has been a more modest +300,000, still primarily expats. The real estate crisis has made an impact. Some expatriates long for 鈥渢he old days鈥� when their salaries stretched further. Today, as living costs soar, driven by wealthy individuals, Dubai is becoming more upscale and losing some of its charm in the eyes of expats.
Is job Qatarization driving expats away?
Demographic expansion is also decelerating in Qatar. From 2012 to 2018, the population rose from 1.9 million to 2.8 million. However, the subsequent six years witnessed a marked slowdown, with an increase of only 200,000 inhabitants. This deceleration in Qatar, like in Dubai, was partially triggered by the health crisis, although borders were reopened relatively quickly in both places.
Analysts believe that the reduced pace of Qatar's population growth can partly be attributed to job Qatarization. Just like Kuwait, Saudi Arabia, Oman, Bahrain, and the UAE, Qatar is also promoting job nationalization. This policy, a key component of the state's socio-economic strategy, is designed to favor local employment over foreign labor. Kuwait has been particularly aggressive with this agenda, and Qatar is now taking similar steps, as demonstrated by the recognition given to Qatar Islamic Bank on September 7. During a ceremony organized by the Gulf Cooperation Council (GCC) focusing on employment, the Qatari Ministry of Labor awarded the bank for its strides in job nationalization.
A new law to boost job nationalization
On September 10, Qatar enacted a new law to accelerate job nationalization in the private sector. This legislation mandates that employers prioritize eligible local candidates for open positions. The law extends priority not only to Qataris but also to the children of Qatari women married to foreigners who are not considered Qatari citizens. The government heavily promoted the 鈥淥uqoul鈥� platform, which will also support the prioritization of local employment. These new mandates will affect public and private sectors, along with private non-profit organizations, except for private companies in the oil and petrochemical sector.
The law also offers financial incentives to companies actively participating in the Qatarization process, with benefits extending to Qatari employees. Additional details, including a new list of jobs reserved specifically for Qataris, are expected to be released soon. For expatriates, the message is clear: Qatar's job market is becoming increasingly exclusive. Currently, only the oil sector remains unaffected. Unskilled expatriates are particularly impacted by job Qatarization, facing both job scarcity and rising living costs. According to the International Monetary Fund (IMF), Qatar's population is projected to shrink from 3 million to 2.5 million by 2027.
The gradual transformation of Dubai
Immigrant workers in Dubai significantly bolster not only the UAE's economy but also that of the entire Middle East, contributing an estimated $115 billion to the regional economy. While the UAE has implemented a job nationalization policy, it is less stringent than Qatar's. Instead, the state leverages its strong international reputation to attract global talent. As the Middle East's flagship city, Dubai now faces a substantial challenge: the strain of an expanding expatriate population on its infrastructure. Over the past four years, approximately 400,000 foreigners have migrated to this vibrant city, drawn by its promising employment and career opportunities, high living standards, competitive salaries, thriving cryptocurrency market, and favorable tax policies.
The real estate challenge
A new wave of price increases has swept through Dubai, the most popular city in the UAE: rents have risen by an average of 20% in 2024, and villa prices have surged by up to 86% since 2021. However, this recent cost spike doesn't fully capture the demographic downturn. Analysts point to the gradual transformation of Dubai. As the city becomes more upscale and economically robust, it shifts its demographic profile. Some analysts even liken it to Monaco, branding it a 鈥渃ity for the wealthy,鈥� where other expatriates no longer feel at home. Many seek more affordable living in other cities or emirates.
This influx of expatriates has escalated costs across the board鈥攈ousing, insurance, schooling鈥攚idening the economic divide between the wealthiest foreigners and others. The most desirable neighborhoods are increasingly dominated by locals and wealthy residents. Expatriates who capitalized on the price declines during the COVID-19 pandemic to invest in real estate are now finding themselves indebted and displaced. Those on the lower end of the economic spectrum are being priced out of Dubai and are relocating to emirates like Sharjah, which remain relatively unaffected by the cost of living increases. Meanwhile, many middle-income foreigners who are earning well but are unable to afford the Dubai lifestyle are relocating to the outskirts or neighboring cities. Those who continue to work in Dubai face lengthy, congested commutes.
Expats' pressure on Dubai's market: Can infrastructure keep up?
On one hand, the financial sector in Dubai is booming. In just five years, the Dubai International Financial Center workforce has surged by 70%, with office occupancy rates now exceeding 91%.
However, the influx of foreigners has created significant strains, particularly in education. Excluded from public schools, expatriate families need to contend with overcrowded and costly private institutions. With about 220 schools already operating at capacity and waiting lists growing, the demand far exceeds the supply. Approximately 15 new schools are expected to open within the next three years as companies recognize the need to invest in educational facilities to retain expatriate talent.
The Dubai authorities view these pressures as significant challenges, particularly in public transportation. Roads are often congested, and public transit options are limited. The state has committed substantial investments鈥�$5 billion to extend the metro system and $8.2 billion to improve road conditions, alongside renovations for infrastructure damaged by severe rains in April. Despite these challenges, the Dubai government remains optimistic about the benefits of rapid immigration, aiming to draw more investors, skilled immigrants, and entrepreneurs. The city aspires to rank as the third global city in terms of quality of life by 2040.
