Recent fires at a villa in Dubai and at apartments in the capital have highlighted the dangers of rampant overcrowding in the housing sector.
Recent fires at a villa in Dubai and at apartments in the capital have highlighted the dangers of rampant overcrowding in the housing sector.
Recent fires at a villa in Dubai and at apartments in the capital have highlighted the dangers of rampant overcrowding in the housing sector.
Recent fires at a villa in Dubai and at apartments in the capital have highlighted the dangers of rampant overcrowding in the housing sector.

Driven into kerbside bedrooms


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SHARJAH // Every evening, "Shafiq", a Pakistani driving instructor, searches for a parking space in the crowded streets of Abu Shagara, tilts his car seat back as far as it will go and, leaving the engine and the air-conditioning running, does his best to get a decent night's sleep. Luckily for him, petrol is still a lot cheaper than rent. As Sharjah, Ajman and Ras al Khaimah absorb the ever-increasing exodus of house-hunters from Dubai, migrating along the coast in search of affordable rents, it is the working poor in those emirates who are paying the price.

Shafiq is one of a growing number of people being driven out of homes and into cars by rising rents and increasing living costs. A year ago, he was sharing one room with three friends in the Ghaefiya area until the municipality demolished the old building to make way for a new development. Since then, he says, he has had no choice but to use his company Toyota Corolla as a kerbside bedroom. "At first I thought I would find another house," he says. "I looked for one for about a week and all the deposits, real-estate commission and rent itself was too much for me and my colleagues.

"After staying in the car for a week I thought it was normal and I am pushing on with it." His family in Pakistan knows he is now homeless. Whenever he calls home his eldest daughter, aged 10, cries and says: "Dad, I just can't stand it that you are living in a car." He does his best to reassure the family: "I'll say, 'You know what? This is OK for now because I'm safe, healthy and have a job; things will get better with time.' But I don't think so."

There are now several areas in Sharjah where, late at night or early in the morning, people can be seen sleeping in cars. Although it provides no figures, the municipality says it has come across an increasing number of people like Shafiq. Guilty of a bylaw offence, for some of them a Dh500 fine has been added to the burden of homelessness. In one case, "We also found someone who had also stocked a lot of alcohol in his car," said Hareeb al Tunaiji, the head of the municipality's inspection team. In addition to receiving the standard fine, this man was also referred to the public prosecution office.

In another case, he said, inspectors discovered that mechanics working at a large garage were sleeping in customers' cars left in the workshop overnight, apparently with their employer's consent. The garage owner had accepted the situation could not continue, but said most of his workers could no longer afford to rent anywhere to live. Mr Tunaiji said the man had told officials: "Most of the old cars we have here have no air-conditioning, and since it's the hot season we allowed them to use the customers' cars at night and clean them in the morning before the owner comes."

Discomfort is not the only risk faced by the "car people". In February last year a 58-year-old jobless Palestinian was found dead in a broken-down car in which he had been living on Al Wahda Street. Residents told police that Bassam Shariff, who had been in the UAE for 20 years, was unable to afford rent and had been living in the vehicle for two years, relying on the bathrooms in mosques. In Dubai, the municipality said it had not had any reports of people living in cars in the city, but that it would take action against anyone who did.

"Of course this is unhealthy," said Redha Salman, the director of the Public Health and Safety Department, "but the main issue in such cases is of security as people risk their lives and spoil the environment." Many expatriates who work in Dubai say they are now forced to live in Sharjah, Ajman and Ras al Khaimah as rents in Dubai have become unaffordable. "When I was a bachelor I lived in Dubai and paid just for a bed space," said Narayan Kutty, a sales representative who now lives with his family in Rolla. "However, when I decided to bring my family here, I had to move to Sharjah because I can't afford even a small room in Dubai."

Other complications are putting further strain on housing stock. In May, officials proposed an amendment to labour laws that would prevent companies that were not licensed to operate in the emirate from using Sharjah as a dormitory in which to house workers cheaply. The move, which followed a series of protests and violent skirmishes over the rising cost of living among workers whose jobs were in Dubai or Abu Dhabi but whose quarters were in Sharjah, is also expected to complicate life further for workers who commute from Sharjah to escape Dubai's high rents.

In Abu Dhabi, where municipal officials also say they have not heard of people living in cars, the pressures of high rents and low supply have created a different problem: the illegal partitioning of villas and apartments. This in turn is putting further pressure on housing stock. Since March, the municipality has been waging a campaign against violators, many of whom are what Salem al Maameri, the municipality's director of municipal services, describes as "investors" who rent properties and then modify them into separate apartments, which they then sublet.

"Any building modification has to be approved," he said. "Sometimes it is external modification, sometimes internal, but it is against the law. This is a big problem and we are fighting it." Following a fire that started in a makeshift rooftop development in Abu Dhabi this month, the municipality is also conducting inspections of all high-rise apartment blocks, with the intention of removing such "penthouses", often home to many workers.

Over the past two years the tide of workers seeking an affordable lifestyle has created a shortage of housing and driven up rents in Ras al Khaimah. The situation is exacerbated by the emirate's electricity shortage; new houses are being built but, without power, remain empty, leaving more people to squeeze into existing properties. Ahmad, a driver for a local company, shares two rooms in a partitioned villa with eight men from Peshawar, Pakistan. The rent is Dh1,100 per month, excluding electricity and water. Although they like RAK and count their blessings - they can still afford to send some money home - when Ahmad moved to the emirate 10 years ago four rooms cost him Dh250. His cousin, uncle and son have all returned to Pakistan because of the rising costs and he plans to follow them soon.

Though the room already looks overcrowded, they have a plan in place for the next rent increase - they will replace their mattresses with bunk beds to accommodate yet more people in their room. In another area of the city, old houses that were abandoned 20 years ago have been converted into small compounds, where each room is shared by up to 10 men. Five or six years ago, rooms that today cost between Dh1,000 and Dh1,500 would have fetched only Dh300.

However, the population explosion in RAK is now making it increasingly profitable for owners to rent these villas to middle-income families, whose companies will offer Dh40,000 or more. In one such building, 13 men who work as labourers, repair men and drivers are facing eviction from their two-bedroom villa within two months. Some hope to stay with friends and commute to work in RAK. Others are unsure of their future.

The RAK authorities are aware of the problem, says engineer Majid Awwad, a technical adviser to the municipality. The municipality has plans to build low-income housing for labourers and others, but this is not a short-term solution; it will not be ready for at least another two years. * With additional reporting by Praveen Menon, Zoi Constantine, Anna Zacharias

Bio:

Favourite Quote: Prophet Mohammad's quotes There is reward for kindness to every living thing and A good man treats women with honour

Favourite Hobby: Serving poor people 

Favourite Book: The Alchemist by Paulo Coelho

Favourite food: Fish and vegetables

Favourite place to visit: London

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1. Domestic VAT refund amendments: request your refund within five years

If a business does not apply for the refund on time, they lose their credit.

2. E-invoicing in the UAE

Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption. 

3. More tax audits

Tax authorities are increasingly using data already available across multiple filings to identify audit risks. 

4. More beneficial VAT and excise tax penalty regime

Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.

5. Greater emphasis on statutory audit

There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.

6. Further transfer pricing enforcement

Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes. 

7. Limited time periods for audits

Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion. 

8. Pillar 2 implementation 

Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.

9. Reduced compliance obligations for imported goods and services

Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations. 

10. Substance and CbC reporting focus

Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity. 

Contributed by Thomas Vanhee and Hend Rashwan, Aurifer

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Name: HyperSpace
 
Started: 2020
 
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
 
Based: Dubai, UAE
 
Sector: Entertainment 
 
Number of staff: 210 
 
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
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