Economy & Finance
The Cost of Expat Living: Average Expenses in the UAE
- Be prepared to spend about half of your monthly salary on rent. Housing in Abu Dhabi can be even more expensive than in Dubai.
- International education and private healthcare make up another large chunk of your budget, but expat families don’t really have alternative options.
- Grocery prices are comparable to the UK or the US — and you can splurge as much as you want on shopping and leisure.
When you are planning your move to another country, you should have a rough idea of what your living expenses will be like. To find out more about your prospective cost of living in the UAE, start by itemizing your monthly household budget. The two or three most important expenses for expats living in the UAE are usually housing, healthcare, and childcare or education.
Abu Dhabi: The World’s Second-Most Expensive City to Rent in?
Housing will probably be the biggest item in your budget when it comes to the UAE’s cost of living. Obviously, the actual rent strongly depends on the size, the location, and the standard of the property. However, you will also be facing a definite shortage of affordable housing in the UAE.
In autumn 2015, local media, such as the National, reported that an international survey commissioned by a London-based residential property agency had identified Abu Dhabi as the second-most expensive out of 31 metropolises worldwide. In the CBRE Residential UK study, both Dubai and Abu Dhabi were among the top ten cities with the highest monthly rents across the globe. The report listed circa 1,700 GBP as the average rent in Abu Dhabi, followed by not quite 1,500 GBP in Dubai. If we use the foreign exchange rate of April 2016, these rental costs would be the equivalent of approximately 8,900 AED and 7,850 AED, respectively, per month.
Abu Dhabi’s rental market in particular is characterized by long waiting lists, even for high-end property. The emirate is nearly as populous as neighboring Dubai, but there is less construction activity and fewer property developments. Dubai’s exploding real estate market, on the other hand, seems to have slowed down a little. In the above-mentioned report, the average rent in Dubai "only" increased by 7%, compared to a 12% increase in Abu Dhabi. Prognoses for 2016 predict less steep rental increases for Abu Dhabi, as well as a slight rent drop for Dubai in the course of the year.
How Much to Spend on Housing in Dubai and Abu Dhabi
The sharp rental increases in Abu Dhabi seem to especially affect smaller apartments for single expats. A studio apartment requires an average annual rent of 65,000 AED, while you have to pencil in about 100,000 AED for a place with one bedroom. Expat families looking for more spacious accommodation have to pay circa 190,000 AED a year for a three-bedroom flat on Reem Island or 225,000 AED for one along the Corniche.
Unlike Abu Dhabi, Dubai has an online rental increase calculator, as provided by the Dubai Land Department. If you choose a specific neighborhood, as well as your preferred housing type, the website will give you a price range for that kind of rental property, also indicating by how much your landlord can raise your annual rent. Researching several areas with good transport connections to your workplace may help you to better plan your cost of living in the UAE.
So if you plan on moving to Dubai or Abu Dhabi, please consider that rental costs may add up to about 50% of your monthly salary. To reduce your cost of living in the UAE accordingly, talk to your employer about an additional housing allowance. However, as competition for available jobs is getting tougher, such expat perks are less and less common. Settling on a smaller allowance for shipping your belongings or furnishing your new home might still be on the table, though.
Utilities Not Included
But paying for your new home in the UAE doesn’t just involve the rental costs: don’t forget about the utility bill! These fees are usually not included in the rent. You need to set up your utilities in the UAE with the respective authority in your emirate, for example the DEWA (Dubai Electricity and Water Authority) or the ADDC (Abu Dhabi Distribution Company). These utility providers are responsible for the water and electricity supply, as well as the waste water and sewage disposal, in their respective emirate. The costs for water consumption and electricity will make up the biggest chunk of your utility bill — the additional sewerage charge is fairly negligible (e.g. the DEWA charges one fils per gallon of waste water).
You can check out the exact tariff on the DEWA and ADDC websites. Please take into consideration that the companies distinguish between fees for smaller apartments and those for larger villas with higher consumption (e.g. with a garden or a swimming pool on the premises). Both utility providers will also raise their tariff if your property consumes an excessive amount of water or electricity.
As a rule of thumb, figure in 500 AED for your monthly utility bill if you live in a studio apartment. For villa-type properties, utility costs can add as much as 5,000 AED to the monthly cost of living in the UAE. Due to the extreme heat from around April/May to September/October, the bill may actually be a little higher than that during the summer months, but you’ll need less electricity in winter when you don’t use the air-conditioning so much.
Hello, Hello, Baby — You Called?
Last but not least, you also have to think about your phone and internet connection. It is well worth shopping around and comparing various offers from the big local service providers, such as Du or Etisalat. One of these companies should have the ideal tariff that fits your personal needs. Just to give you a first impression of how much having a landline, using your smartphone, and getting a broadband internet connection will add to your cost of living in the UAE, here are some of their packages from February 2016:
A Du mobile plan with 2 GB of data, an additional 1 GB of social data, and 600 free minutes of phone calls can be purchased for 300 AED per month. Etisalat offers a pre-paid smartphone data pack of 1 GB that’s valid for 30 days at the price of 100 AED. Both companies’ monthly plans for 20 Mbps broadband internet, a landline phone connection, and free TV amount to circa 370 AED a month.
To see what else might add up during your expat life in the UAE, just read on in part two of this article.