UAE still retains its appeal
UAE, 20 Apr 2008
The rising cost of living, combined with the falling dollar, is diminishing the attractiveness of the UAE as a place to live and work in, economists and recruitment specialists said.
Industry insiders interviewed by Gulf News revealed that employers are now finding it difficult to attract skilled professionals to the UAE, with the majority of residents suffering soaring rents and food prices.
However, there are some things to be happy about: job applications from expatriates are pouring in, and rent, the biggest contributor to rising costs, started to level off this year.
"In terms of attracting talent, the UAE is an exciting destination to live and work in. It is cosmopolitan, safe and the economy is booming. However, the rising inflation and the weak currency are creating challenges, by making it far more expensive to attract talent. The competitiveness of the UAE is therefore being eroded," said Marios Maratheftis, regional head of research for Standard Chartered.
Maratheftis said it is hard to see how inflation in the UAE will ease because the country is awash with liquidity, the interest rates are low, there is rapid credit expansion and the growth in the money supply is extraordinary. All these, he said, will keep the pressure on rent and housing, even if new projects come to the market.
"Tomorrow's inflation depends on today's expectations. The numbers [mentioned in YouGov's survey] suggest that inflation expectations are out of control. Such expectations tend to be self-fulfilling," Maratheftis added.
According to GulfTalent, a Dubai-based online recruitment company, the UAE has the highest proportion of non-savers in the region, with 41 per cent of expatriates reporting that they are unable to make any savings on their incomes.
Amid the pressure of rising inflation and the falling dollar, employers were forced to increase salaries by an average of 10.7 per cent last year.
"But this still falls short of the increase in the cost of living experienced by most expatriates. As a result, employers are finding it somewhat more difficult to attract professionals to move to the UAE, with a higher percentage of job offers to international candidates being declined compared to a few years ago - particularly from India and the Euro zone," said Mahmoud Hatami, operations manager of GulfTalent.
Nonetheless, the UAE remains the destination of choice for younger and more ambitious professionals.
"We continue to receive a large volume of applications from candidates all over the world. We have seen some cases of candidates relocating from the UAE to other countries due to the rising cost of living.
"However, this is not a straightforward trend as we also see movement in the other direction, as candidates are attracted by lifestyle benefits, the booming economy and a perception that the UAE is the place to be," said Cliff Single, commercial manager of BAC Middle East.
Andrew Chambers, managing director of real estate firm Asteco, said rent increases in Dubai had actually levelled off to around 3 to 10 per cent in the first quarter of 2008, compared to 20 to 30 per cent in previous years.
He said prices have stabilised because there has been an increase in the supply of housing units and the government has been doing a lot to control the prices. "It's the first time we've seen [increases] levelling off ever. It's quite interesting," Chambers said.