UAE’s rising cost of living is big concern for expats – HSBC

 Bahrain, Qatar and Oman are more popular destinations for expats than the UAE because of the rising cost of living in Dubai and Abu Dhabi, according to HSBC’s annual Expat Explorer 2014 survey.

Switzerland, Singapore and China ranked as the top three expat destinations, with Bahrain (5th) being chosen as the best place to set up a home in the Middle East.

The UAE was ranked 15th in the list, published on Wednesday, with Qatar (13th) and Oman (14th) both ahead of the country where Dubai and Abu Dhabi has been attracting expats from around the world for many years. Saudi Arabia and Kuwait were ranked 28th and 29th respectively.

The survey said that despite the offer of better job prospects and higher salaries, respondents said expats in the UAE continue to face “significant challenges due to the rising cost of living and expenses related to raising children”.

Expat Explorer 2014, a survey of close to 9,300 respondents from over 100 countries and 963 people in the UAE, assesses expat attitudes towards their host countries.

Expats with aspirations of boosting their earning potential and job prospects still flock to the UAE according to the report.

Seven out of 10 respondents (71 percent) said that they would earn more in the UAE than in their home country, compared to the global average of 53 percent. At the same time, 58 percent of expats associate the UAE with high salaries, outpacing the global average of 40 percent.

The majority of expats also recognise the benefits of not having to pay taxes, as two-thirds (66 percent) associate the country with a lower tax system.

In spite of the financial opportunities of living in the UAE, the survey showed that people are struggling to cope with the high cost of living standards. Six out of 10 expats stated that they would consider moving away from the UAE because it is too expensive, far higher than the global average of 32 percent.

With inflation in the country rising to its highest level in five years in September, driven primarily by rising housing and utility costs, 75 percent of expats said that they spend more on accommodation and 62 percent spend more on groceries.

The report also revealed that the rapid increase in property rental prices is the factor that poses the biggest threat to the financial well-being of expats in the Middle East.

Andy Ripley, head of retail banking and wealth management, UAE, HSBC said: “The high cost of living is an understandable source of concern, and we see that this is being compounded by 58 percent of expats stating that their finances have become more complex since they moved.

“This is especially true for high earners who face difficulties in managing their finances across multiple countries and in various currencies. While there certainly are aspects that are out of people’s control, such as the cost of utilities or household goods, you can cut back your expenses in other areas through better financial planning.”

Another area that people in the UAE find difficult are the expenses related to raising children. An alarming 85 percent said that the overall cost of bringing up a child is higher than their home countries, while 77 percent stated that they pay more for childcare than they did previously.

Education is also often cited as an issue, with 86 percent percent stating they spend more than they did previously.

On the other hand, one of the major positives for parents is that the UAE is recognised as among the top five safest countries to raise children. In fact, a larger proportion of expats associate the country with higher personal security (66 percent), compared to the global average of 42 percent.

The report also revealed that expats view their stay in the UAE as transitory in nature, with the majority likely to consider relocating for retirement reasons.

It showed that over half (53 percent) choose to keep most of their retirement provisions in their home countries while only 13 percent chose to keep these savings in the UAE, which is far lower than the global average of 41 percent.

Ripley said: “As expats tend to view their stay in the UAE as a short-term venture, we see that many put off saving for this stage of life. Instead they should be looking to take advantage of the financial benefits offered by a career in the UAE in order to start building a retirement pot early. Consequently, people need to also consider portability of their investments and ensure their savings are not hindered by relocation.”

 

© 2014 ITP DIGITAL Provided by SyndiGate Media Inc. (Syndigate.info).

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