Sunday, February 01, 2015

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Living in Dubai

Cost of Living in Dubai (2015)

A look at the latest cost of living update in Dubai will offer a better understanding for expatriates on the kind of life that awaits them in Dubai, and as an expat, it may help you in planning your finances in a smart and effective manner, taking into consideration not only the present, but also in being prepared for the future.

The tax-free system in Dubai and the extravagant lifestyle that it offers has made Dubai one of the most-attractive destination for expatriates. There is no tax on salaries and valude added tax on commodities is very minimal. But, despite this, living in Dubai may still be a burden on your pockets.

Cost of Living in Dubai

The Cost of Living Survey for 2014 by Mercer, reveals that Dubai ranks 67th, which is 23 places higher than its 90th rank last year. Dubai is considered as the third most expensive city in the Middle East, after Tel Aviv (18th) and Beirut (63rd) positions. This increase in ranking is largely due to huge rental costs in the city.

According to the Dubai Statistics Centre figures, prices in October last year grew by 4.4 percent, the highest rise since May 2009. The price hikes are particularly evident in ‘rent’ and ‘food’ sectors. Housing and utility accounts for about 44 percent of average consumer expense in Dubai. This has grown by 6.7 percent last year, while the food and drink prices have grown by 4.7 percent. According to Reuters, this may continue into 2015, and overall inflation is likely to grow another 3 percent.

Therefore, expect to wheel and deal for your salary. There is no minimum wage, so should you land an interview, be prepared to answer the question of how much you expect to be paid. Set a bottom limit so that you don’t slip under it. Once you've landed that job, the three factors that will determine your quality of living will be: your living expenses, your purchasing power and your lifestyle. Without having lived in Dubai, knowing how much of a salary you will need is difficult to determine, but the three most important factors are: transportation, accommodations and food. Let’s take a brief look at each one of these.

Transportation cost in Dubai

Transportation is definitely a consideration in Dubai. Business centres have been designed to be situated away from residential districts, and traffic is usually heavy especially during peak hours, with massive vehicle volume seen in Dubai’s prime locations, particularly on Sheikh Zayed Street.

This year, on the transport front, taxi fares have already seen an increase, and metro fares are sure to follow. Dubai Taxi is likely to increase its taxi fleet by 180 cars during the first quarter of the year.

The Dubai taxi fares will follow a different fare structure and will not be part of unified fare structure for public transport system in the year 2015. In March 2014, the RTA launched NoI cards, wherein, taxi users in Dubai can pay the fare by debit, credit or NoI cards. The payment for taxis will be dependent on distance travelleled. The rates will be charged as per the prevailing rates at taxi dispatch centres. In the year 2014, the flag-down rate of taxis in Dubai was increased to Dh.5 from Dh.3 during peak hours. The flag-down rate of orders from the Booking and Dispatch Centre was hiked to Dh.8 from Dh.6 during off-peak hours and to Dh.12 from Dh.10 during peak hours.

The public transportation system in Dubai maintains very high standards and is mostly reliable. The buses, trains and taxis are all owned and managed by Roads and Transport Authority (RTA), which regulates the fares and registration of vehicles in the city. The train and bus fares may cost anywhere from Dh.2.00 to Dh.5.00. There are also water taxis, abras and car lifts available. However, some may choose to rent a car paying a monthly average. Those who own cars may also come forward to help in transporting friends and officemates to and from work.

Gasoline is fairly cheap in Dubai, so those who can afford to buy a car and can obtain a driver's license will do well to buy a vehicle. Ordinary second-hand cars go for around Dh.15,000 to Dh.50,000 and a brand new car will range anywhere from Dh.40,000 to Dh.300,000. Despite the work-hour commute, owning a car is definitely an advantage in Dubai. A car is the fastest, cheapest and simplest way to get around town.

The UAE boasts of the fifth cheapest petrol prices in the whole wide world – The price of 1 litre of gasoline in Dubai is Dh.1.75 on an average. This is four times less than petrol prices in the UK and only half of prices in the US. This is an advantage as owning a car is also less expensive than in Dubai. For instance, a Honda Civi in UAE may cost about Dh.70,000, while the same when purchased in UK may cost about Dh.130,000. Luxury cars are also commonly seen in Dubai streets as they are more affordable here than in western countries.

Accommodation cost in Dubai

Given the constant high-demand for accommodation, villas and flats and residing quarters in Dubai, which has become a scarce resource, accommodation is possibly the single largest expenditure to be considered, as real estate is a booming business here. Therefore, cost of rentals, particularly housing, have surged in recent years, due to huge expat influx and increased demand for accommodation.

Bachelors mostly share a flat for practical reasons, as sharing helps in coughing up the required payment of deposit and advance rentals. Expats with families, or even bachelors who can afford to pay the rental of a flat/apartment/villa, or those entitled for housing allowance, have plenty of options to choose from, including studios, single, double, triple bedroom apartments and villas, depending on the budget allocated.

House Rental Costs

Housing rentals generally vary depending on location, be it Deira or Bur Dubai or Jumeirah. Rent takes up major portion of your salary in Dubai. While the rentals grew steadily in 2014, there are some areas where it has actually begun to decline. Currently, the five cheapest places to rent in Dubai are International City (Dh.42,000), Discovery Gardens (Dh.58,500), Dubai Silicon Oasis (Dh.60,000), Dubailand and Dubai Investment Park at Dh.65,000 each.

Just like in any other city, housing prices in Dubai depend on where you would like to live. For instance, in popular areas like Jumeirah Beach Residences or Dubai Marina, a studio apartment may cost you Dh.50,000 to Dh.100,000 annually, while a single bedroom to double bedroom apartment may cost anywhere between Dh.100,000 to Dh.200,000. Expats also choose villas, such as in Arabian Ranches or Emirates Hills, but, they are highly expensive. A 4-bedroom or 5-bedroom villa may charge as much as Dh.250,000 to Dh.400,000, while the Palm Villas can even cost up to Dh.1000,000 annually.

However, in modest locations like Al Waqaa and Al Satwa, the apartments may cost much lesser. A studio apartment can cost about Dh.30,000 to Dh.50,000 per year, while single bedroom may cost about Dh.40,000 to Dh.60,000 and double bedroom apartments may cost Dh.60,000 to Dh.100,000 annually.

For those planning to settle down in Dubai, however, purchasing a property may be the best option at hand. A studio apartment in Dubai Marina or Jumeirah Beach may cost up to Dh.1000,000 while single and double bedrooms may cost Dh.200,000 to Dh.3000,000. However, purchasing a property in Dubai has to be done very carefully, after taking advice from an expert.

In the year 2015, prices may slow down further, say property experts. A potential drop of 15 to 20 percent may be expected, as plenty of projects are likely to hit the market, swaying the demand-supply balance.

Food Cost in Dubai

The cost of food is comparatively cheap in Dubai. In fact, dining is a wonderful experience in Dubai, as apart from being inexpensive, the international population in Dubai cater to variety of authentic international cuisine from all over the globe, ranging from Indian Biryani to Italian pasta. Therefore, expatriates will not miss their favourite dishes from their home countries while in Dubai.

Dining out at Dubai's premium restaurants is expensive as expected, but there are many restaurants that offer delicious dishes for a reasonable Dh.35 to Dh.95 per person. Still, if you want to eat on a smaller budget, cook at home during the week and reserve eating out for the weekends.

If you are used to European and North American style of living, there are plenty of options in Dubai, when it comes to obtaining the basic necessities. Major supermarkets like Carrefour, Spinneys, Waitrose, and Choithrams may be found in major malls throughout Dubai, with prices more or less equivalent to the US or UK prices. But in Dubai, there is the added advantage of minimal value added tax.

For expatriates who are single, groceries may cost anywhere between Dh.300 to Dh.700 depending on choice of food. On the other hand, a family of four may be able to afford variety of foods at Dh.1000 to Dh.1500 per week. Locally grown vegetables are cheaper, and chicken is cheaper when it comes from Saudi Arabia, rather than from Europe.

The Big Mac Index by The Economist, measured the purchasing power in cities, and revealed that a Big Mac in Dubai may cost Dh.13 £2.18, which is £0.71 less than a British Big mac. However, a Grande Starbucks Latte can cost Dh.16 in Dubai, while Starbucks Latte in UK may cost only Dh.14.

On the whole, expenses on groceries and food will largely depend on your food preference and lifestyle.

Education Cost in Dubai

The costs of education are high in Dubai. Relocating to Dubai with children of school age may prove to be a challenge if salaries are insufficient to meet educational needs, while also meeting demands of a cosmopolitan lifestyle. Typically, private schools that are run by American and British nationals usually have high fees while a few other schools, operated by Asians, are comparatively more affordable.

The directories and profiles of several private schools in Dubai are available online, and it would be good to research few private schools in Dubai before relocation. Further, be aware that a hike in tuition fees can be expected at any time.

Generally, the school tuition fee varies largely depending on whether you want your children to study in a school with CBSE syllabus or an international school with American or British curriculum. For instance, the tuition fee charged for a CBSE based school may range from Dh.12,000 to Dh.17,000 for kindergarten (depending on location of school) and for grade 1 to grade 12, the fee may range from Dh.14,000 to Dh.25,000 for schools with CBSE syllabus. For international schools, fee ranges from Dh.50,000 to Dh.100,000 or more.

One thing to be taken into account when school-hunting in Dubai, is the standard and quality of education. For instance, the most popular school usually has higher tuition fee. Hence, education is one of the heaviest financial burdens for expatriates in Dubai.

Other costs like registration and text books, apart from tuition fee are charged separately and are not taken into consideration here. Some private schools in Dubai, also charge a deposit, amounting to Dh.50,000 (refundable) for damage to school property.

Several expats, unable to bear the cost of education here, are even sending their children back to home countries for education.

One way to avoid huge educational expense is to choose schools where your company has a corporate seat, making fee much lower.

Communication Expenses

Dubai has a modern communications infrastructure. The cost of home telephone rental, call charges, service provider fees, internet connection, mobile/cellular phone contract, in comparison to other cities is moderately expensive. Within the Emirates, calls are either free and calls outside of the Emirates have very low fees. Monthly telephone calls, including a mobile or a landline, could range anywhere from Dh.100 to Dh.1000 within UAE, depending on usage.

Grocery and Utilities

Dubai has a modern communication infrastructure. The cost of home telephone rental, call charges, internet connection, service provider fee, mobile phone contract are all moderately expensive in comparison to other cities.

The cost of food, non-alcoholic beverages, cleaning material items, including baby consumables, baked and canned foods, cleaning products, ready-made meals, seafood, spices and herbs are all expensive in Dubai. Majority of the goods in Dubai are imported from the country of manufacture, and hence you may end up paying 20 to 50 percent more for goods, than in your home country.

The Dubai Electricity and Water Authority (DEWA) is the government agency responsible for water and electricity utilities in Dubai, and the fee paid by expats to establish their DEWA in a new place depends on the kind of housing they have. For instance, expats usually will have to pay about Dh.1000 before moving into apartments, while for villas they may have to pay Dh.2000. On the whole, it depends on the size of apartment, consumption and weather.

During the hot months (May to September), temperature rise can be as high as 43 degree Celsius, and a studio apartment may consume Dh.500 worth utility bills, while a single and double bedroom apartment may cost you at least Dh.2000 on utility. Expatriates who live in villas, on the other hand, spend up to Dh.5000 on utility bills. The bills are much less in winter months (October to April), when the heat is not as intense.

As for internet bills, an 8Mbps subscription with Etisalat, the government-owned telecommunications company, may cost about Dh.350 a month, with cable service. However, telephone bills will depend on data and call usage, and can be in the range Dh.250 to Dh.1500. There are different packages, for example, personal mobile plans that range from Dh.250 to Dh.500, while family plans may be as much as Dh.1300 or VIP plans that cost Dh.850 to Dh.2500 a month.

Clothing & Accessories

Although Dubai is duty-free, the cost of clothing and footwear, including casual clothing, business suits, children clothing, evening wear, innerwear and accessories are expensive in comparison to other cities. However, Dubai has a wide range of fashions and accessories, including western wear.

A pair of Levis 501 jeans or similar may cost Dh.434, a summer dress in a chain store (zara, H&M) may cost about Dh.180, a pair of sport shoes like Adidas, Nike or the like will cost you about Dh.406 in Dubai, while a pair of leather business shoes may cost about Dh.480. When it comes to clothing and accessories, Dubai may be even a little more expensive than its neighbour Abu Dhabi.

Healthcare

You need to have insurance when in Dubai. While some companies allow you to choose your medical insurer, and offer some amount of contribution, others insist on using their group scheme. The same insurer may have different ranges of policy with different price tags, and you can choose from the. For a reasonably comprehensive medical insurance policy that permits worldwide medical treatment, you can expect it to cost you about Dh.10k annual. But, this should be ideally factored into your salary or paid by your company.

In Dubai, the cost of general healthcare, medical insurance, consultation rates, hospital private ward, daily rates, non-prescription medicine, private medical insurance, medical aid contributions, are all comparatively more expensive.

However, the lack of tax on your personal income, and the lack of need to make any contribution to UAE's social security and pension fund, helps in keeping down cost of living. However, you may have to save some money for retirement provisions.

A basic consultation with a general practitioner or dentist is quite affordable at Dh.500. However this is exclusive of any other tests or treatment. In case of any serious accident or illness you need to have a good health insurance back up to make use of the private healthcare facilities in Dubai.

Furniture and Appliances

For majority of expats who stay in Dubai for short or long periods, there are ample ranges of budget to designer furniture to choose from. There is a huge selection of every type of furniture from household to office to outdoor furniture to suit your budget.

For several visitors who plan to stay here for short period of time, even second-hand furniture are available, which may help you to save money on furniture considerably. There are certain websites like Dubizzle and Souq.com that offers used items, or check the classified section on newspapers for second-hand furniture.

However, if you are planning long-term stay in Dubai, and have the necessary finance to invest in quality furniture, there are several high quality furniture stores, including boutique designer stores, although they come at steep price.

Listed below are average rates that you may pay in Dubai for large furniture items like for instance a three-piece lounger for living room (Dh.4000 to Dh.8000), TV stand (Dh. 400 – 2000), Coffee table (Dh.200-1000), 6 person dining table with chairs (Dh.1500-2500), King-sized bedroom set (Dh.4000), office table (Dh.800-1500) etc.

Recreation and Entertainment

Leisure and socializing are expensive in Dubai, as it is an international business, entertainment and sports hub in the region. Businessmen and professionals here often dine out after work. Compared to its other Arab neighbours, Dubai is more lenient on its rules on entertainment and has a better night life.

Dinner for two at a high-end restaurant with a bottle of wine can easily cost you Dh.1000 to Dh.1500, while there are mid-range restaurants too, that cost less and offer unlimited drinks for Dh.300 to Dh.500. There are also meals at modest restaurants that you may find along the streets that are equally good, but are much less in cost. In some places, Asian cuisine can even cost you as low as Dh.50. However, alcohol here is more expensive than in other countries, and this has to be borne in mind.

Cost of books, cinema tickets, CDs, DVDs, theatre tickets and sporting events are all comparative to any other place in the world. 2 tickets to the movies can cost Dh.74 while 2 tickets to the theatre with best available seats can cost Dh.246.

Miscellaneous

Cost pertaining to general goods and services, including domestic help, dry cleaning, linens, office supplies, postage, magazines, newspapers, are all quite high in Dubai.

Getting help around the house can be a blessing, particularly for working individuals. But, finding the right maid who fits into your household easily can be a challenging task, particularly when understanding the legalities and cost of hiring and sponsoring your own maid or hiring through an agency are involved. The minimum wage set by national embassies are Bangladeshi maids (Dh.750), Indonesian (dh.800), Filipina (dh.1468), Indian (Dh.1100), Sri Lankan maids (Dh.825). If hiring a maid through agencies, you may also have to pay agency fee ranging from Dh.6000 to Dh.10,000.

Also, cost of personal care products including cosmetics, hair care, moisturizers, sun block, over-the-counter medicines, toothpaste and such other products are expensive on an average in comparison to other cities. Hopefully, this will give you a general idea of expenses involves when relocating to Dubai.

Overall, it is not cheap to live in Dubai, but, to a certain extent it depends your standard of living. The other factor to consider is the amount of support that your company offers you, like medical insurance, housing, children’s education etc. Hence, it is better to be informed of the cost of living when you are offered an employment, so that you can assess the value of your package more accurately.

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