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Sun 8 Jul 2007 12:56 PM

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Can you afford it?

With the cost of living increasing all the time, how high a price are people paying to live in Dubai?

It's the big question on everybody's lips - just how expensive has life in Dubai become?

The signs of inflation are everywhere - from spiralling rents to the price of apples in the supermarket.

And if the cost of hamburgers is anything to go by then Dubai has become one of the most expensive cities in the world.

Buying could still be viewed as fairly significantly cheaper here in Dubai than it is in Geneva.

According to recruitment firm Kershaw Leonard's Cost of Living Dubai Report 2007-2008, the emirate is now the third most expensive place in the world to buy a Big Mac burger from McDonald's - US$2.72 compared to US$1.66 in the cheapest place, Hong Kong. And a recent study by consultancy firm ECA International ranked the emirate as being the 14th most expensive city to rent accommodation out of the 92 it surveyed.

The International Monetary Fund (IMF) estimates the rate of inflation in the UAE at around 10% across the UAE - but believes it could be much higher in Dubai. In this special report we reveal the true cost of your Dubai lifestyle - and ask, can you afford it?


Perhaps the biggest indication of just how high accommodation costs have risen in Dubai is the fact rental costs are now on a par with Geneva - one of the most expensive cities in Europe.

Kershaw Leonard's study compared the cost of renting a four-bedroom villa in the Meadows development with the cost of renting the same size of property in prestigious areas of Geneva and the similarities are staggering.

While the Dubai property costs US$6,000 a month to rent, the Geneva villa costs US$6,275.

Meanwhile a newly built three-bedroom apartment in the Burj Residences will cost occupants US$4,000 per month while a similar property in Geneva costs US$4,600 a month.

Mike Hynes, managing partner of Kershaw Leonard, admits he was surprised by the price parallels between the two cities.

"We chose to compare Dubai to Geneva because Dubai has moved from being a growing city to a world city, which begs a price comparison with other world cities.

"Geneva is generally regarded as one of the most expensive places to live in Europe so I honestly thought there would be a greater disparity between rents in the two places.

"But to all intents and purposes the rent is the same, which makes Dubai a very expensive place to live in world terms."

Experts agree that rocketing property prices are having the biggest impact on the cost of living in Dubai.

Ajit Karnik, professor of economics at the University of Wollongong, says: "The main driving force of inflation in Dubai is the cost of property. If that had remained stable then most people would have been able to absorb other increases in cost.

"But it is so significant that families in particular are really being squeezed."

He blames the steady rise in the cost of accommodation on the fact that demand for housing continues to outstrip supply.

"There is a continual influx of outsiders coming in and demand has shot up.

"And although there is talk about supply coming on stream in 2007 and 2008, that assumes that demand will not continue to rise even further."

According to Karnik, the estimated 65% rise in rental prices in Dubai is supported partly by the fact that many expatriates receive allowances for accommodation from their employers so they can afford the increases. "These people can afford to pay the rents being quoted and once demand starts to match whatever is being asked for there is unlikely to be a downward pressure on rent," he claims.

Meanwhile, he says, the price of freehold property in has received a big boost from the introduction of freehold property laws allowing expatriates to buy.

Property ownership

In the area of freehold property the price of villas has seen the biggest increase with the value of two, three and four-bedroom properties in the Springs, Meadows and Arabian Ranches developments shooting up by up to 50% in the past year alone.

Prices of four-bedroom villas have risen over 45% at Jumeirah Islands, 49% in parts of the Ranches and 35% at Green Community West.

Five bedroom villas rose around 43% in the Arabian Ranches, over 30% on the Palm Jumeirah and 18% in the Meadows between 2006 and 2007.

The price of freehold apartments in Dubai has also shot up with the biggest increase seen in the price of one-bedroom apartments at International City - the price of which have risen by 60% in the past year.

One-bedroom apartments in other areas have seen relatively small rises - 15% at Jumeirah Beach Residence, and Jumeirah Lake Towers and around 5% at Dubai Marina and Discovery Gardens.

However, two-bedroom apartments have rocketed by 50% at Dubai Marina, 40% at the Greens main buildings and around 28% on the Palm Jumeirah.

Alongside rising house prices, the associated costs of actually buying a property in the UAE have risen sharply, reflecting the boom in the country's property market. Mortgage interest rates have risen on average between 0.5% and 0.75% compared to this time last year, from 8% on average to 8.5% now.

This translates into an actual average increase in monthly mortgage repayments of around 15% for buyers.

An example of what this means in real terms is that the monthly repayments for a three-bedroom villa in The Springs have increased by around 55% - from AED13,380 one year ago to AED20,925 now.

Despite these increases however, buying a property in Dubai compared to in Geneva remains significantly cheaper.

While the cost of buying a four-bedroom semi-detached Type 1E villa in the Springs is between US$760,000 and US$890,000 the cost of a similar property in Geneva is between US$970,000 and US$1,300,000.

Similarly a four-bedroom detached villa in the Meadows costs up to US$1,450,000 compared to up to US$2,250,000 for a four-bedroom villa in Geneva.

"Buying could still be viewed as fairly significantly cheaper here in Dubai than it is in Geneva, despite the fact that renting is still very much on a par," says Hynes.

Despite stringent efforts on the part of the Dubai Government to curb the inflation in the rental market, prices have more than doubled in some areas since 2005.

Renting is still the preferred choice of many expats however it is becoming an increasingly expensive option with rises over the past year of between 20% to 36% to rent apartments in the Greens and increases of 20% to 50% for townhouses in the Springs, just two examples. The biggest rental increases for apartments can be seen in the Karama area of Burdubai, where the cost of renting a two-bedroom apartment has risen by around 47%.

Anything imported from Europe has suffered an inflationary effect and dairy products and juices have been particularly affected.

One-bedroom apartments in Sheikh Zayed Road experienced the second biggest hike, rising in price by 40%. To rent a four-bedroom villa in Springs 1E is now around 53% more expensive than a year ago, while the cost of renting a five-bedroom villa in Umm Sequim has risen by around 44% since last year.

Increases in rental prices for three-bedroom villas have risen from between 17% in Jumeirah to 47% at the Arabian Ranches.

The biggest move made by the government to curb rental inflation was to introduce the rental cap and Kershaw Leonard's study notes that this is having a real impact. Across the city, increases in existing tenancy contracts have been capped at around 7% with the result that many have stayed the same as they were in 2006. However according to the study this has created a situation where there are two parallel rent markets in Dubai - one for existing and one for new tenancies.

There is no cap on how much landlords can increase new tenancies so differences between these and previous agreements can be as high as 100%.

For example, existing tenancies for villas in the Springs may be capped at AED80,000 per annum under a rent committee ruling. However, identical new vacant villas are being leased out at between AED160,000 and AED170,000.

One impact of these rising rental costs, according to Kershaw Leonard's report, is that residents are turning their sights to areas outside Dubai, particularly Sharjah.

The impact of this has been a rise in rental costs in the emirate of between 20% to 30% in the past year.

Heading even further afield, the emirates of Ajman, Umm al-Quwain and Ras Al Khaimah all look set to become property hot spots having all launched real estate projects in recent years.

And judging by the phenomenal success of Dubai's property market it may not be long before residents there will also be feeling the pinch.


As the driving force behind Dubai's inflation, spiralling property prices have impacted every aspect of life in the emirate - including education, which Kershaw Leonard's report lists as second only in price inflation to accommodation.

According to Professor Karnik, it is the rising rental costs - in terms of school buildings and accommodation allowances for staff - that have led to steep increases in the cost of schooling for children in Dubai.

"One result of the rise in property costs is that education costs are also going up. Naturally because schools are having to pay higher rentals this has a spillover effect into the cost of education."

Dr Kenneth Wilson is professor of economics and director of the economic and policy research unit at Zayed University. He adds: "Part of the reason for the rise in education costs is related to rent and the fact that the schools often don't own the land that their buildings are on.

"They are paying rent like anybody else and their landlords are demanding increases. Schools can't just pack up and find another building because there is a big capital investment involved so they increase fees to cover the costs."

Up until 2007 schools in Dubai were only allowed to increase their fees by 20% over a three-year period. However, this cap was revised to allow local schools to raise their fees by 16% a year and 20% for internationally accredited schools.

As a result of these changes, fees have risen dramatically. In schools where the UK, US or European curriculum is taught by teachers from those countries, costs have risen from a minimum of AED21,600 in 2006 to AED26,100 in 2007 for primary level children, grades one to six. The cost for secondary level children, grades seven to 12 has shot up from a minimum of AED33,000 in 2006 to AED43,815 in 2007.

For schools teaching the UK, US or European curriculum but with non-western teaching staff, costs rose from a minimum of AED13,230 for primary level children in 2006 to AED15,367. The price for secondary level children increased from AED15,750 minimum to AED 18,270.

Schools teaching the Indian curriculum are the cheapest and saw the smallest increases between 2006 and 2007.

The price of education for primary level children increased from a minimum of AED6,300 in 2006 to AED6,900 in 2007, while the cost of educating secondary level children went from AED7,500 in 2006 to AED7,950 in 2007.

Kershaw Leonard's report points out that some schools structure their fees to also include heavy additional costs. For example, its research identified one school (unnamed) for which the joining fee was 130% of the tuition costs for that year.

Research by Gulf News in January this year revealed that a third of its readers - most of whom earn between AED6,000 and AED 15,000 a month - spend from AED6,000 per month on school fees.

This means that any increase in the cost of education in Dubai can have a huge impact on the finances of families in the emirate.

In Kershaw Leonard's case studies, the typical Asian expat family saw an increase of 17.95% in the amount they spent on educating their seven-year-old child at an English-speaking school in Sharjah between 2006 and 2007.

Meanwhile the Western expatriate family spent 11.78% more on educating their eight and four-year-old children at The Wellington School and the Dubai British School.

The cost of education for expatriate families is likely to continue rising and Kershaw Leonard's study predicts that with the arrival of elite international schools into Dubai - including the prestigious UK boarding school, Repton - new elite standards in pricing are likely to be set.
Groceries and utilities

Even apples and bananas are not immune from the effects of inflation in Dubai. Families already stretched by accommodation and education costs could see their household budgets hit by the rising price of fruit, vegetables and groceries in the emirate.

There is a perceived 12% gap between the rate at which salaries are increasing and the rise in the cost of living.

According to a study by the Gulf News earlier this year, some grocery items increased by up to AED2 between 2006 and 2007.

Cauliflower increased in price from AED3.95 to AED 5.25 in co-operative stores between 2006 and 2007, while supermarkets charged an additional AED2.94 for the vegetable in 2007.

Similarly, in co-operative stores lettuce increased by AED3.95 to AED5.25 per kilogramme and potatoes rose by AED1.95 to AED2.60 per kilogramme.

Meat experienced even greater increases - with the price of a whole chicken rising from AED6.10 to AED10.35 in supermarkets between 2006 and 2007. A kilogramme of Australian lamb rose from AED20.90 to AED34.9 in supermarkets and from AED22 to AED27 in co-operative stores.

According to professor Karnik the price of groceries increased by between 10% and 15% in the UAE overall between 2006 to 2007.

He says: "This calculation takes into account things like meat, vegetables, coffee, tea and other things, as well as household items for cleaning purposes.

"Lamb and chicken have gone up quite significantly as have fruit and vegetables. One reason for this is that much of this stuff in the UAE is imported from other countries and very little is manufactured domestically. And if this is coming from a country against which the dirham has depreciated then automatically one is going to find a price rise being reflected in the domestic markets."

Dr Williams claims that 40% of imported goods into the UAE come from Europe and that processed foods from the continent have seen particularly high increases.

"40% at least of all imports into the UAE come from Europe and if you look at how the US dollar has tanked against the euro in the last three years that's led to major imported inflation.
Anything imported from Europe has suffered from this inflationary effect and processed foods, including dairy products and juices have been particularly affected."

According to Kershaw Leonard's case studies, the typical Asian expat family's spending on household goods and utilities increased by 15.90% in the past year, the single male's by 19.52% and the western expat family's by 14.84%.

"Increases in grocery shopping mean that you end up spending more just on the day-to-day act of living," says Professor Karnik.

"The household budgets tend to get stretched and if you are living on really tight budget constraints you might start to economise on the more expensive food items."

The good news for families is that utility costs have remained the same since 2006. According to Kershaw Leonard's study there has been no increase in the cost of electricity, water or sewerage for a three bedroom house and no increase in Municipality tax in 2007.

Medical bills

One consequence of cutting back on expensive grocery items such as fruit and vegetables could be health problems.

But with private hospitals across the emirate dramatically increasing their consultation fees, being ill in Dubai has become a costly business.

The price of a consultation with a general practitioner (GP) has risen steeply at both the Welcare and American Hospitals. The latter has increased the cost by 117% - from AED150 in 2005/2006 to AED325 in 2007.

Meanwhile the cost of seeing a GP at the Welcare Hospital now costs the same as a visit to a specialist - AED365 as opposed to AED150 in 2005/2006 - a rise of 140%.

Meanwhile, the Iranian Hospital though still a far cheaper option, has doubled its GP consultation fees from AED40 to AED80 over the past year.

Its outpatient consultation fees have also doubled with specialists now charging AED100, representing a significant increase for those least able to meet the costs.

Kershaw Leonard's study reveals that a routine check up at a private hospital now costs up to AED1,050 and the cost of an overnight stay in a private room costs up to AED1,000.

An emergency consultation costs up to AED500 and a specialist check up for conditions such as diabetes costs as much as AED3,200.

Many UAE employees will be cushioned from the blow of medical price increases by private medical insurance provided by their companies.

According to Kershaw Leonard however, increases in the cost of group medical schemes have been a bitter pill for companies to swallow.

Its study reveals that these have increased on average between 10% and 15% in 2007.

For those who cannot afford private healthcare and whose companies do not provide them with medical insurance, government hospitals remain an affordable option charging just AED40 for a GP consultation with a health card and AED200 without.

A specialist consultation at a government hospital costs AED100 with a health card and AED200 without.
Dubai lifestyle

Despite the spiralling cost of living in Dubai, expatriates continue to flock there in droves because of the lifestyle it offers. Year-round sunshine, security, beaches and the nightlife are enough to make up for inflation in many people's minds.

But just like everything else in Dubai having fun has become more expensive.

Where there is very high demand and a short supply salaries are definitely increasing phenomenally.

According to Kershaw Leonard's study lower priced activities have seen little increase in price - for instance the prices of parks and cinemas have remained the same. However, at the high end there have been huge increases creating what the study describes as "A Tale of Two Cities".

Beach clubs and gyms

The biggest increases can be seen in the cost of beach club memberships, which rose on average between 25% to 140% for individual memberships and between 32% to 200% for family memberships.

"Beach clubs are astonishing in what's happening there," says Hynes. "We believe there's been an increase of between 32% at the low-end and 200% at the high-end in a three-year period. This Tale of Two Cities concept is really applied to that kind of expenditure because at the high-end the increases are becoming breathtaking," he adds.

Membership of the beach clubs at the Ritz Carlton and the Grand Habtoor hotels now cost a staggering AED50,000 and AED45,000 per year for a family - increases since last year of 108% and 200%, respectively, according to the study.

At mid-range hotels beach club members have also increased - with the Oasis Beach Club hotel now charging AED14,400 for an individual membership compared to AED6,000 in 2006 - a 140% increase.

Day passes to beach club increased between 10% to 67% in the past year and now cost anything between AED120 to AED500 per individual.

The business of keeping fit in Dubai has also become an expensive one with individual gym memberships rising by between 7% to 40% in the past year and sessions with a private trainer increasing by between 20% to 50% per hour on average. The price of a round of golf for a non-member on an elite course has gone up between 12% to 30% and now costs between AED500 to AED695.


Kershaw Leonard has since 2005 used the prices of Friday brunches in Dubai as its own micro-inflation index. And not surprisingly this too has been hit hard by inflation with average rises of between 10% to 26% in the past year. At the top end - the Burj Al Arab has gone from charging AED240 per adult for its Friday brunch in 2004, to AED290 in 2005 and now charges AED 425 per adult - an increase of 77% in three years.

Similarly the Fairmont used to charge AED315 per adult for its Friday brunch in 2006 and now charges AED400 - an increase of 26%.

At the lower end however, prices remains reasonable with Planet Hollywood charging AED85 and the Al Bustan Rotana, AED 130. According to the study, these differences between high and lower end offerings, symbolise the trend in lifestyle costs across Dubai - showing that while it's still possible to live inexpensively, price inflation at the higher end shows "no limits".

But can you afford it?

Traditionally, making money has been a primary motive for expatriates leaving their home countries to settle in Dubai.

With tax-free salaries and generous relocation packages offered by some employers, it has been seen by expatriates as a place to make more money than they would at home, to pay off debts, built up savings or simply raise their standard of living.

While this is still the case for those working in certain industries, research has shown that in some sectors salaries and employee benefits are no longer keeping pace with the cost of living in Dubai.


Research carried out by YouGov Siraj for recruitment firm's 2007 GCC Human Resource Overview study, claims that while the cost of living in the UAE has risen by 28% in the past year, salaries rose on average by just 15%.

The survey also found that of all the professionals in the GCC, those based in the UAE felt the most underpaid, registering an average ‘deserved' raise of 33%.

Nassim Ghrayeb, CEO of YouGov Siraj, says: "From an end user point of view salaries are not keeping up with inflation - particularly in the last 12 to 24 months.

"There is a perceived 12% gap between the rate at which salaries are increasing and the rise in the cost of living."

Added to this is the fall in the value of the dollar which has resulted in European expatriates seeing their earnings drop in value.

Declan Ball, head of corporate human resources for investment bank EFG Hermes, says: "The cost of living is a major problem. But on top of that the fact that the dirham is indexed to the dollar means people who think in euros and sterling have seen their real earnings drop by around 20%."

According to's study the sectors that registered the lowest salaries in the region were the education, academic, electronic and health service industries. By contrast those working in law, gas and petrochemicals, banking and finance, are best able to meet the cost of living, enjoying the highest salaries.

In terms of salary raises - the average was 12.75% over the past 12 months.

Lama Ataya, head of research for, says: "Raises were most significant in the banking and finance, IT, advertising and construction industries for the recorded period. "Burgeoning private sector multinationals doled out the largest raises at an average of 16.77%."

The lowest salary raises were within the government sector - however earlier this year the Dubai Government announced a 30% increase in salaries for its employees.

Naturally sectors where skills are in the highest demand register the highest salary rises.
According to Hynes certain positions within the construction, legal and financial sectors are the most lucrative. "Where there is very high demand and a short supply, salaries are definitely increasing phenomenally", says Hynes. "For example there is a major shortage of legal secretaries in Dubai. A couple of years ago a legal secretary would be earning say, AED12,000. They are now getting AED17,000 to AED18,000 a month because they are in such short supply. In the construction industry if you are an experienced project manager with a decent CV then you could almost write your own cheque. We've seen salaries go as high as AED60,000 a month. There is a global shortage of experienced project managers and Dubai is now competing with other areas of construction boom such as Russia, India and China. In the financial sector, we're also seeing salary increases particularly with the advent of DIFC, where there are some multinational players. Certainly if you are qualified to work in one of the major corporations in the financial sector then it's a very highly paid job," Hynes goes on to say.

At 26% of polled jobseekers looking to leave the country, the UAE labour pool displayed among the highest loyalty levels.

Gareth Clayton is director of Charterhouse Partnership, a firm which recruits staff for the financial sector. He says that within the industry, the best paid positions are in investment banking, private banking and some areas of retail and corporate banking.

"Clients are willing to pay premiums for very specialised skill sets that focus on particular areas of finance or accountancy. The principle that we tend to work along the lines of is that people relocating here from the UK will certainly be in a position to achieve their net earnings in the UK and in some cases slightly more."

Julie Ferris is GCC manager for the recruitment firm Hill McGlynn which specialises in recruitment for the construction industry.

She agrees that good project managers within the industry still command impressive salaries, however she adds that many large firms have dropped their salaries for certain positions in recent months.

"Even in the last month I've seen a lot of big companies in Dubai really drop their salaries.

"Before for middle to senior management positions companies were paying anything between AED42,000 to AED50,000 a month and that's now been dropped to between AED35,000 and AED40,000. These companies were paying so over the odds for positions before, which was fine in the short-term but in the long-term they are going to lose money so they've come into line with the other companies."

Employee benefits

According to experts, one reason why companies may have started to cut back on salaries is that whereas Dubai was traditionally viewed as a hardship post it is now perceived as a highly desirable place to live and work. This means that employers no longer have to entice talented personnel to the region with such lucrative financial offers.

It means also that less employers nowadays are offering accommodation allowances and paying children's school fees in addition to basic salaries which would normally have insulated employees from any rises in the cost of living.

Case study: the doctor

NameDr Paulose Thomas


Family statusMarried with two sons aged 24 and 16.

OccupationSpecialist Nephrologist at the Belhoul Speciality Hospital, Dubai.

How long have you lived in Dubai?Four years.

What was your motivation for coming here?I ended up staying here almost by accident. Originally I came here on a sabbatical from India but I loved it so much that I stayed for good. The hospitals here have excellent facilities and you get to spend a lot more time with your patients as the pace is less hectic.

Do you receive an accommodation allowance or other benefits from your company?No I don't receive an accommodation allowance - I am provided with a month's holiday a year and a ticket home each year.

Do you own or rent property?We rent a two-bedroom flat in Ghusais at AED7,000 a month and that includes rent and electricity.

Do you find Dubai an expensive place to live?Yes it has certainly become a lot more expensive since I first moved here.
I'd say that both rent and school fees have doubled in the past four years. Unless your income really justifies your spending here it can be a challenge.

As a doctor I have to make sure that my patients are happy so they keep coming back to me.
You have to improve your income here or you just have to leave.

What are your biggest expenses?
School fees. When I first came here they were AED700 to AED800 a month and now at my sons' school, the Millennium School, they have gone up to AED1,400 a month. Also travelling is a big expense. When we go home we tend to spend a lot of money.

Would you say you are well off in Dubai?I have not managed to save a lot of money but it is still more than I would have saved back home.

And I don't pay tax here which is a big advantage and it means that what I would have paid in tax back home I save here.

My salary has been revised twice since I got here and my wife also works as a doctor so we are not too worried about the day-to-day expenses. Otherwise my family may not have been able to stay here in Dubai this long.

"Traditionally you came here and you had a house provided, a car provided, maid's allowances and even food allowances," says Hynes. "But as the years have progressed these benefits have been slowly eaten into because Dubai is no longer seen as a hardship post anymore."

Ferris adds: "Even five years ago Dubai was seen as a hardship post. But now it has sold itself as a lifestyle choice so companies are cottoning on and realising that they don't need to pay extortionate amounts of money to get people over any more - in fact they are actually queuing up to come over here," she goes on to say.

James Watfa, a recruitment consultant at Hays Personnel in Dubai who specialises in IT recruitment, says that at senior management level expatriates still receive generous signing-on bonuses, but adds: "The golden handshake days have really gone now in Dubai and people want to come out here rather than having to be enticed here."

According to Hynes, where accommodation and education allowances are given these are now increasingly included as part of a lump salary package rather than being broken down into separate components.

"If you are in the middle bracket of income now it's very common for the responsibility of housing costs to be handed from the employer to the employee. In other words you don't get a housing allowance, you just get a lump sum. A typical breakdown of a lump sum would be 60% basic salary and then 15% for housing and 15% for transportation. In reality it is often not enough to cover housing and the responsibility for covering the shortfall goes to the employee."

He goes on to say that many employers do still cover the cost of school fees for children but increasingly many are limiting this to a certain amounts or to covering only a certain number of children.

Dr Williams believes part of the reason why employers are providing all inclusive packages to employees is that it cushions them from the blow of rising accommodation and education costs.
"With the uncertainty over inflation employers want to shift that risk to employees themselves. It's far easier for them to bundle everything up and say ‘here's the package, now you go and find your housing and schools'."

Career opportunities

Where Dubai still offers lucrative opportunities however, is in the area of career progression. According to's survey, the UAE is the most popular choice for professionals seeking to work in the region because of the opportunities it offers for career progression.

Ataya says: "The UAE remains overwhelmingly the country of choice for professionals seeking to work in the region and this is primarily due to the opportunities for long-term career progression that it is seen to offer.

"Clearly, a sense of long-term career stability and the prospect of advancing careers with established blue-chip players in a world-class business environment over the long-term holds precedence over short-term compensation levels for today's jobseeker," she goes on to say.

Recruiters say that professionals working in Dubai can often assume positions of far higher responsibility than they would in their home countries because operations in the emirate tend to be smaller. And because businesses are expanding so rapidly, there are plentiful opportunities for moves up the career ladder.

"A lot of companies here are a smaller branch of a bigger parent company so employees tend to go in at a higher level here than they would in their home country," says Watfa.

"The prospects are huge because everybody wants to grow their business in the Middle East. So you'll probably get a much bigger role with a far greater degree of responsibility," he adds.

"Perhaps the biggest reason to come here professionally is because people can actually see the difference they are making within their organisation," says Hynes.

"An example is that a sales director here in Dubai would get involved in far more of the business operations than a sales director in Europe."

Clayton adds: "The remit for growth is pretty progressive here. There is scope for people to develop themselves pretty quickly in this market because there is a lot of opportunity and growth - and businesses need to develop people within that."

Ataya says she believes these career prospects more than make up for any gap between salaries and the cost of living in Dubai.

"For today's career-minded professional, the long-term appeal of Dubai as a bustling stable international business hub that hosts cutting edge global corporations supersedes perceived short-term cost of living considerations."

Case study: the lawyer

NameJames Hemmaway



OccupationLawyer at Denton Wilde Sapte.

How long have lived in Dubai?
1 year.

What was your motivation for coming here?A combination of sunny climate and tax-free salary. Money was definitely a deciding factor. The main advantage I would say is the tax-free salary but it can also be good for your career to have the experience of working in a jurisdiction other than your home jurisdiction.

Does your employer provide you with an accommodation allowance or any other benefits?
We get a core salary and an allowance to cover accommodation and sports club membership and car. It is given us as one package each month. If you are on an expat package then you get a relocation allowance and a furniture allowance when you arrive.

Do you own or rent property?I rent a two-bedroom apartment in Dubai Marina which costs AED125,000 a year.

Do you find Dubai an expensive place to live?Generally Dubai is cheaper than London where I lived previously. But is more expensive than I would have anticipated certainly. Rent is a major expense.

What is your biggest monthly expense?Rent.

Would you say you are well off in Dubai?If you work for one of the international law firms in Dubai your overall salary which includes basic, housing allowance, flight home and sports club membership, might be less than your gross salary in London but of course you don't pay tax so you are a lot better off.

One negative is that you don't get employer pension contributions that you would get in the UK.

I definitely have a better quality of life here though. Things like the climate and access to the beach make a big difference.

Coping strategies

But these "short-term cost of living considerations" are enough to make some expatriates reconsider their long-term future in the emirate.

The cost of living in Dubai shows no sign of dropping and according to experts, for an increasing number of families the best option is for the main breadwinner to remain in Dubai while the rest of the family returns to their home country.

Professor Karnik, says: "For many families, if they decide to stay here, then they have to have a much tighter leash on their budget. In some cases the rest of the family goes home while the employed person - usually the male - stays behind. I don't think there is any authentic data on this but there is definitely anecdotal evidence to the effect that not necessarily those that are getting high levels of income but those who are just about at the border are taking these kinds of decisions."

Hynes adds: "If you look at the middle to lower income families here, who perhaps need both salaries to survive, if the salaries are not keeping pace with inflation and the costs of keeping the family together here in Dubai are not being met, then one alternative is for the wife to go home with the kids and just leave the husband here."

According to Ball, some professionals are moving to other parts of the Gulf that are still regarded as "hardship posts" - particularly Saudi Arabia or Kuwait, where they can still command impressive salary packages.

This he says has made it increasingly difficult to recruit talent to the region: "It's becoming more problematic to recruit people and that's mainly because of the cost of living. People in Saudi Arabia generally make 30 to 40% more than they would in Dubai.

"In places like that - the hard GCC - people would expect to have disposable incomes of about 50%."

Ball goes on to say that he believes the growing strength of the Indian economy means that some Asian professionals can be just as well-off there as they would in Dubai. "Given that, some people simply prefer to go back home," he says.

According to's survey however, residents of the UAE are among the least likely, out of all the expatriates in the Gulf, to return to their home countries - or move to another country in the region.

Of those surveyed only 10% indicated that they would return to their home countries, while 16% said they would consider moving to another country in the GCC. This compares to Qatar where 37% of residents said they were considering a move out of the country.

The survey gives UAE residents the highest loyalty levels in the Gulf after Saudi Arabia.

"At 26% of polled jobseekers looking to leave the country to improve their situation, the UAE labour pool displayed among the highest loyalty levels as compared to the other surveyed countries despite the perceived detrimental changes in the quality of life that are due to inflationary environment."

Professor Karnik adds: "The people surveyed in the past tend to display strong loyalty to Dubai. And it would really take a significant worsening of their situation for them to contemplate moving out."

Case study: the executive secretary

NameBianca Bergh



OccupationExecutive secretary

How long have you lived in Dubai?5 years

What was your motivation for coming here?
A good career and overall a better package than what I had at the time in my home country.

Does your employer provide you with an accommodation allowance or any other benefits?I don't get an accommodation allowance, just an annual ticket home.

Do you own or rent property?I rent a room in a shared villa and pay AED3,500 a month.

Do you find Dubai an expensive place to live?
Petrol and soft drinks may be relatively cheap but Dubai is probably climbing the ranks soon to become one of the world's most expensive places to live.

With more and more expatriates having to send their families back to their home countries and staying back to pay the bills its seems to be becoming unaffordable for many to maintain the same standard of living that they did before.

What is your biggest monthly expense?Rent followed by petrol.

Would you say you are well off in Dubai?When I first arrived in Dubai company benefits include accommodation and transport so I was able to save half of my salary and spend the rest on leisure activities.

But times and careers have changed and nowadays I have to turn my pennies around once or twice before using them.

Looking on the bright side I am still better off financially than I would be in my home country.

To respond to the rising costs of living, rather than taking the drastic step of leaving the country, the majority of UAE residents would instead move to a higher paying industry according to the study.

Ataya says: "A vast majority of respondents indicated that they would respond to the cost of living increases by moving to a higher paying industry. The willingness to switch industries was even more pronounced among professionals with a number of years of experience."

She went on to say that this could create staff retention and turnover challenges for companies that do not offer their staff adequate salary packages or promotion prospects.

"The threats to industries suffering from less attractive compensation and benefit schemes, low commitment to career development and more difficult working conditions in an inflationary environment are evident."

Experts agree that companies in Dubai are under considerable pressure to improve conditions for employees by taking steps such as increasing salaries or providing more generous accommodation allowances that match the cost of living in the emirate. And if these changes are made then Dubai could become an even more favourable environment for expatriate employees.

Dr Williams believes that the combination between the rise in the cost of living and the growth in the economy which has led to demand for talent by employers, has already given employees bargaining power over salaries and benefits.

"The cost of sourcing talent from outside the country is very high so individuals with talent do have bargaining power here and they do get pay rises if they go to the market and negotiate them.
I think inflation leads the way then people try to negotiate a salary increase after the event."

It is this bargaining power on the part of employees that makes it even more imperative for companies to provide attractive conditions for their staff, according to Ataya.

"Clearly, companies need to get creative with their reward schemes and well-defined competitive strategies need to be put in place to hire, retain and motivate top talent," she says.

It is difficult to predict whether the cost of living in Dubai will continue to rise.

Some foresee a correction in housing prices as supply rises to meet demand.

And there are positive signs that the government is working towards addressing inflation having introduced caps on rents and education fees.

But Dubai's booming economy has seen it make the transition from "hardship post" to a land of opportunity - with prices to match.

Disposable incomes have shrunk under the weight of heavy accommodation costs, and families still face yearly hikes in the price of their children's education.

The rising cost of living is not enough however to dent the emirate's popularity as a place to live and work. As research has shown the professional opportunities and lifestyle it offers compensate in many residents' eyes for the rising cost of living.

Rather than leave the emirate, they and the companies they work for are making adjustments to meet the cost of living. And it is that loyalty factor that is perhaps the greatest measure of Dubai's success.

Case study: the regional HR director

NamePramukh Jayathilak


FamilyMarried with two sons aged 6 and 9

OccupationRegional HR director for Microsoft

How long have you lived in Dubai?I complete five years in August.

Does your employer provide you with an accommodation allowance or any other benefits?Microsoft provides a housing allowance, a car allowance and educational assistance for children.

Do you own or rent property?I rent a villa which costs me AED160,000 a year.

Do you find Dubai an expensive place to live?The cost of living has increased dramatically since I first got here.
When I arrived in 2002 the house I had was covered by the housing allowance but now I am out of pocket on both the house and paying for children's education.

What is your biggest monthly expense?Rent and school fees. I have two sons aged 9 and 6 and they go to the American School which costs AED56,000 a year per child. The fees are very expensive but it's my choice to send my children to that school. Giving my children a good education is my top priority.

Also my golf expenses have increased by about 40%. The cost of playing a round of golf in a good club is about AED650 now which is a lot of money.

Would you say you are well-off in Dubai?I have no reason to complain. I think I've been blessed. I work hard and I've reached a certain position where I can more comfortably make ends meet and lead a comfortable life. I'm conscious of the fact that as an expatriate you come to this part of the world to save money so I do save. But for me family comes first and money comes second. Even if we had to stay on the streets we'd rather stay together.

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