Expats continue to recognise the UAE as one of the top destinations in the world due to the buoyant economic climate and the high potential for financial gain according to HSBC’s annual Expat Explorer 2014 survey. With better job prospects and higher salaries, respondents have highlighted these factors as the major draws of living in the country. Despite these positive sentiments, expats continue to face significant challenges due to the rising cost of living and expenses related to raising children here.
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. This year’s survey revealed that the UAE ranked 15th overall as an expat destination out of those assessed; making it one of the most popular countries to settle abroad in the world. Overall, 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.
UAE a hub for career-driven expats
Expats with aspirations of boosting their earning potential and job prospects flock to the UAE according to the report. 7 out of 10 respondents (71%) said that they would earn more here than in their home country, compared to the global average of 53%. At the same time, 58% of expats associate the UAE with high salaries, outpacing the global average of 40%.
The majority of expats also recognise the benefits of not having to pay taxes, as two-thirds (66%) associate the country with a lower tax system. The report also revealed that 58% say they have more disposable income here than their home countries. As the economic climate here is expected to continue improving, increasing job opportunities will be another factor pulling people here. The report showed that 60% of expats moved to the UAE for this reason, far outpacing the global average of 38%.
Cost of living expenses weighing down expats
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. Indicative of these attitudes, 6 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%.
With inflation in the country rising to its highest level in five years this April, driven primarily by rising housing and food costs, it is not surprising that 75% of expats said that they spend more on accommodation and 62% spend more on groceries. This is expected to rise further, as inflation in the UAE is predicted to reach 2.2% by the end of the year, and hit 2.5% in 2015 according to the IMF.
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. This is more often cited in the region (22%), compared to other places like Asia (18%) and Europe (15%). It is also most acutely felt by expats in the UAE (58%), who highlight this issue more than any other country surveyed.
Commenting on this matter, 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% 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.”
“With better cars, higher quality accommodation and domestic help being most often cited as some of the benefits of living in the UAE, people here are often tempted to spend beyond their means. As a result, expats have to develop a better balance in order to benefit from the great salaries and career prospects, while coping with the high cost of living.”
Another area that people in the UAE find difficult are the expenses related to raising children. An alarming 85% said that the overall cost of bringing up a child is higher than their home countries, while 77% stated that they pay more for childcare than they did previously. Education is also often cited as an issue, with 86% stating they spend more than they did previously.
Robust quality of life in the UAE for short-term expats
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 (80%). In fact, a larger proportion of expats associate the country with higher personal security (66%), compared to the global average of 42%. This also appears to contribute to the positive perceptions about the quality of life in the country. Over a third (37%) said that this was their main motivation for moving to the UAE, and over half (54%) continue to associate with this sentiment after they arrive here.
Nonetheless, the report revealed that expats view their stay in the country as transitory in nature, with the majority likely to consider relocating for retirement reasons. The report showed that over half (53%) choose to keep most of their retirement provisions in their home countries. While only 13% chose to keep these savings in the UAE, which is far lower than the global average of 41%.
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.”
Highest level of confidence in Middle Eastern economies
On a broader level, people in the Middle East are also among the most confident in the state of their local economies. While this is a source of worry for 1 in 3 expats globally, people in the region are least concerned about this (18%) compared to other parts of the world. In fact, four of the top ten countries where this was of the least concern were from the GCC, with over eight out of ten expats (82%) in the UAE reflecting this positive sentiment.