Living costs and saving money in the UAE

One effect of the multiple layers of bureaucracy in the Emirates is it can be hard to work out the actual cost of anything.

Your salary may be tax-free, but the many hidden costs and fees involved in daily life are unclear and can soon eat up a large chunk of it.

As a general rule, shopping and eating in malls hit your pocket much harder than if you seek out the local souks (bazaars and markets). What better way to soak up local culture and save money at the same time?

Tax-free, or just a hidden fee?

There is no doubt that salaries for most expats in the Emirates are more generous than back home, or that consumer goods, petrol and food (if you know where to look) are cheap. But is it really ‘tax-free’? It used to be but not anymore.

“You’ll need a piece of official paper for nearly everything apart from blowing your nose, and it’s all at a cost”. Anonymous expat blogger, 2016

The government continually introduces new fees. There are tolls to use the motorways (known as Salik in Dubai), housing fees, and a ‘knowledge fee’; ironically no one knows what this is.

Expatisan has produced an excellent online comparison tool for the cost of food, clothing, transport, personal care and entertainment in Dubai. This shows the cost of products and services in U.S. dollars, British pounds, and UAE dirhams. Dubai is the most expensive city, so knocking 10-20 percent off these figures will give you roughly the cost of products and services elsewhere.

Cost of food, transport and products in Dubai

• A litre of milk: Dirham 5.71, ($1.85) (£0.80)
• 0.5 litre local beer bought in the supermarket: Dirham 8 ($2.14) (£1.72)
• Bread: Dirham 4.21, ($1.15) (£0.93)
• 40” flat screen TV: Dirham 1,844 ($502) (£404)
• 1 litre (1/4 gallon) of gas (petrol): Dirham 1.68 ($0.46) (£0.37)
• Monthly ticket, public transport: Dirham 109 ($30) (£24)
• Taxi trip 8 km. (5 miles): Dirham 20 ($5.39) (£4.33)
• Dinner for two at an Italian restaurant in the expat area including appetisers, main course, wine and dessert: Dirham 417 ($114) (£91)
• One beer in neighbourhood pub (500ml or 1pt): Dirham 33 ($9) (£7)

You can buy magazines and reading materials from back home at heavily inflated prices.

Cost of housing

By purchasing your home, you’ll save money that you would have spent on rent, but it is worth considering the additional cost you may incur in the long run. Building regulations and standards are not the same as in the west and, as properties age, their flaws increase. You can end up spending so much patching up your home that it’s cheaper to rent[m1] .

Choosing to live in a newly-built rented property might work out cheaper than your older home because these new developments often offer discounted rent to attract new tenants. Year-on-year rental increases are strictly controlled by the UAE Government. In Dubai, you can check your rental increase here.

Example rents and utility costs in Dubai

• Monthly rent for 85 m2 (900 sq ft) furnished accommodation in EXPENSIVE area: Dirham 9,976 ($2,716) (£2,183)
• Monthly rent for 85 m2 (900 sq ft) furnished accommodation in NORMAL area: Dirham 8,326 ($2,267) (£1,822)
• Utilities 1 month (heating, electricity, gas, etc.) for 2 people in 85 m2 flat: Dirham 365 ($99) (£80)

Source: expatistan.com (16 Nov 2016)

Schools

Non-UAE residents pay anywhere from $1,600 (£1,300) to $12,500 (£10,000) per child, each year in school fees, which vary depending on the school. If you have school-aged children, their extracurricular activities, field trips, any extra tuition, music lessons, and school transport fees will all add up. Depending on the school, these can be anywhere up to $1000 (£812) per  term, per child.

Saving for the future

What should you do with your spare dirhams at the end of the month, if you have any? It’s the perfect time to start planning for your future. Investing in a personal pension and saving for retirement is relatively easy in the UAE. . But, there is also no safety net in the Emirates. If for some reason you lose your job, you’ll need savings to cover your living costs until you find something else. Contact our expert advisers who can help you plan ahead.

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