UAE COST OF LIVING

The Cost of Living in the UAE
What You Can Expect

In a recent survey looking at the most expensive expat cities in the world, Dubai held the 89th position. This doesn’t sound too bad at face value but the problem UAE expats are currently facing is the exorbitant and continual rise in living costs, forcing many to leave the UAE as incomes simply don’t rise in relation and property rental prices, in particular, just become unaffordable. In fact, many companies have kept housing allowances constant since 2008. Whilst this benefited employees at the bottom of the real estate crash, it often now means they’re being forced to down size altogether.

In a 2014 Expat Explorer survey, involving over 9,000 respondents from over 100 countries and 963 people in the UAE, the results clearly showed that expats are struggling to cope. 60% stated they would consider moving because it’s simply too expensive. yallacompare.com has also run several surveys which shone light on the growing number of UAE residents struggling to keep up debt repayments such as credit cards and personal loans.

Why? Inflation was at its highest in five years in September 2014, driven in particular by rising housing, food and utility costs. It is the rental prices, as the biggest monthly cost for most people, that poses the greatest threat. Property prices in some areas have risen over 60% in the last year with 75% of expats having to spend more on accommodation year on year. Inflation is expected to continue to rise into 2015.

Raising and educating children is another area of great concern with 85% of respondents stating that the cost of bringing up a child in the UAE is higher than their home countries. School fees tend to increase dramatically at secondary school level, driven mostly by the salaries needed to attract the quality of teachers required.

The effects of these rising costs are often made worse by the fact that many people in the UAE are tempted to spend beyond their means. Instead of tightening the purse strings during financially challenging times, many expats continually strive for better cars, higher quality accommodation and flashier lifestyles.

The consequences don’t end there. Small businesses are feeling the pinch. SME’s can’t hire the fresh talent they so much need. Essential workers will be priced of the market. Dubai could become a city with an even greater diversity between the poor and the rich. The rich would get richer as only top executives are entirely insulated from the effects of higher rents whilst at the other end, candidates will still flock to jobs in the food and beverage, retail and hospitality industry.
One clear trend is that expats view their stay in the UAE as short term. They can never gain citizenship after all and resident visas are linked to employment. The majority will therefore return home or elsewhere and only 13% as a result, choose to keep their retirement provisions in the UAE. Perhaps this results in expats feeling more confident about putting off savings during their years in the UAE?

All this aside, in the same aforementioned Expat Explorer survey, results showed that expats with aspirations of boosting their earning potential and job prospects are still flocking to the emirate, regarding it as a place with a buoyant economy and high potential for financial gain.

71% said that they would earn more in the UAE than in their home country, 58% associate the UAE with high salaries and 66% associate the country with a lower tax system. This may be true but given the costs, to consider only these points would be to look at only one side of the story. Those who really do wish to move would be advised to look carefully at all their expected outgoings to carefully assess whether they really will be better off. They should also practice their negotiating skills, in preparation for negotiating the best salary package they can secure.

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