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UAE residents continue to face high living costs

The residents of UAE are spending less these days, due to lower rent rates, amongst other reasons, said the 2010-11 Cost of Living Report by Kershaw Leonard.

The report attributes low property prices, including declining rentals as one of the major factor in reduced expenditure.

The Managing Partner at Kershaw Leonard, Mike Heynes, who spoke to the Gulf News, has mentioned that the companies that were offering housing allowances separately have begun cutting them, offering rent at cost, according to rental contracts presented by the employee.

The employees have benefited from companies that paid their housing costs during boom times. Those who are liable to pay rentals were often at the receiving end, as the housing allowances paid by the companies were below the exorbitant increases in rent. But, now, they are compensated to a certain extent.

But, the companies that offered a lump sum to employees in the form housing allowances, have not reduced the same, as the cost of living in general is yet to drop, Heynes said.

Several UAE residents have upgraded from smaller properties to larger ones, and have moved their base to Dubai from Sharjah, so as to avoid commutation and be closer to work.

This indicates that residents are willing to increase their comfort of living by spending a considerable amount on rent, rather than reducing their costs, the report said.

The findings reveal that an Asian family residing in Sharjah and working at Jebel Ali will spend an average of 21 percent of their income on rent. Similarly a single Arab or a Western expatriate family living in Shaikh Zayed Road or in Meadows will be spending 40 percent of their salaries on accommodation.

So, while the Asian family has reduced the amount they spend on housing by 8 percent by staying in Sharjah, the Western family has increased their budget for accommodation by 8 percent.

According to the CEO of Asteco, Elaine Jones, expatriates are expecting a reasonable quality of life. International norm indicates that one can pay 30 percent of their salary on rent. But, the Kershaw Leonard figures indicate that UAE residents are continuing to pay more than the internationally accepted average.

Further, the cost of living continues to rise in the UAE, with increase in school fee and medical expenses. Even the shopping expenditure has slightly increased. Imported food prices like cereals are continuing to grow and so is the case with dry cleaning. But, the report suggests that things on the job front are fine as of now, the report said.

Posted on 22/2/2012

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