In my experience most companies will review these elements separately. The housing market particularly has been particularly volatile (up and down) these last 10 years so it would be crazy to simply add a vanilla cost of living increase to housing allowances for instance...
for Dubai market practice and HR issues it's worth looking at the Compensation Insider site of Sandrine Bardot - feel free to contact her with questions and say hello from me, Ray NAYLOR, as the chairman of the Magellan Network's Comp & Ben Club

compensationinsider.com/.../

In UAE, the best practice in salary split is Basic 60%; Allowance 40% basis.

Organizations tend to apply an increase to the total package including allowance.

Nellaiappan (Raja) Pillai
Dubai

Thanks Ray and Kabir for your responses - really appreciate you both taking the time to share your insights!

From my experience of working in the UAE, any increases such as an annual increase, would typically only be applied to the basic salary and not housing elements. In fact, as per what Ray stated, organisations are now reviewing housing allowances on offer to their employees and actually decreasing these based on the current rental market in the UAE, particularly in Dubai which has seen a significant drop in rent values over the last 18 months or so.

Hi Sarah, it generally depends on how the package is structured. Companies who provide basic salary plus separate allowances that are not calculated as a % of basic (e.g. housing) would apply an increase to basic salary but not allowances. Companies who provide total cash with a % allocation between basic and allowances tend to apply changes to the total (unless they change the % allocated). We quote housing and transport as separate amounts that aren't linked to basic, which means we can adjust housing up and down in line with market conditions. As Katie mentioned, housing costs have decreased in Dubai.

Hi,
Companies in general apply the increase on Gross as well as Basic Salaries. However, if it is applied on the Gross Salaries, it may turn out to be discriminatory for those employees who are availing Company Accommodation & Transportation, since their increase will be based on their cash in hand salary per month. (Please note that most of the companies do not assign a cost related to the Accommodation & Transportation provided to the employees), while the living out employees will get a bigger increase based on their Gross Salaries, which includes House Rent Allowance and Transportation Allowance.