Dubai's appeal continues despite rising costs

December 2006


Spiralling living costs in the UAE fail to deter inflow of expats

Despite high inflation and the lowest savings rate in the region, the UAE remains the most popular Gulf destination for expatriates, according to the latest research released by GulfTalent.com.

The report entitled “Pay, Inflation and Mobility in the Gulf" analysed cost of living and employment patterns in the Gulf. It found that Qatar and the United Arab Emirates had experienced the highest inflation in the Gulf, particularly in housing. Average accommodation rentals increased by a total of 83% in Doha over the last two years and 60% in Dubai, compared to just 21% in Riyadh. An average two-bedroom apartment in Dubai now costs $1,850 per month, compared to $680 in Riyadh. [See full report ]

According to the report, rent as a proportion of total household income has reached 33% in Qatar and 30% in the UAE, compared to 19% in Saudi Arabia, the lowest in the region. Saving rates in the UAE are now the lowest in the region, with 43% of expatriates surveyed reporting zero or negative saving rates – due to high costs and abundance of spending opportunities.



Despite the deteriorating financial outlook for residents, the UAE and particularly Dubai continue to attract the bulk of expatriate talent. Based on GulfTalent.com's survey, 73% of expatriates moving into the Gulf prefer the UAE, while 62% of those relocating within the region also choose the UAE.

Survey respondents cited attractive career opportunities, good infrastructure and facilities, and a liberal society as the main reasons for choosing Dubai.

The Dubai government has been active in raising the profile of the city internationally, the report said. As well as investing in modern infrastructure, it has launched a stream of economic initiatives including the Dubai International Financial Centre.

With the economic boom causing staff shortages across the Gulf, the UAE's immense popularity is further straining the availability of expatriate talent for the rest of the region. According to GulfTalent.com's report, employers in Kuwait, Saudi Arabia, Bahrain and Oman have difficulty attracting professionals in sufficient numbers and many are losing existing staff to the UAE.

GulfTalent.com's survey also found that 6% of expatriates, including many Indian nationals, were leaving the region to return to their home countries. Many cited high cost of living in the Gulf and better opportunities back home as the main drivers of this decision.

A small proportion of European expatriates are also returning home, according to the report. With Gulf currencies pegged to the US dollar, the weakness of the US currency has sharply reduced the attractiveness of Gulf salaries in Euro and Sterling terms.

This research report was based on GulfTalent.com’s survey of 18,000 professionals – including 1,000 GCC nationals, 6,000 expatriates living in Gulf countries and a further 11,000 expatriates based outside the Gulf with an interest in relocating to the region.

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