Financial confidence on the rise for UAE residents

Households have now absorbed the effect of VAT and paid off any high summer expenses, study finds

A Cambridge University study into habit formation and learning in young children by behavioural experts found that adult money habits - both good and bad - were set by the age of 7. Mike Young / The National
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Financial confidence soared in the fourth quarter of 2018 after residents adjusted their budgets to factor in the effects of VAT and high summer spending, a study from UAE financial comparison website yallacompare found.

According to the company’s Consumer Confidence Tracker for the fourth quarter of last year, 54 per cent of the 1,200 UAE residents polled reported feeling more confident about their finances than the previous quarter. The tracker also reported a 21 per cent decline in the number of residents worried about the cost of living in the Emirates.

“It’s great to see confidence rebounding and returning to, or even exceeding, the levels we saw at the start of 2018,” said Jonathan Rawling, the chief financial officer of yallacompare. “With summer holidays to be paid off and school fees due, we know that the third quarter of the year heightens consumers’ concerns over their finances. The survey results suggest that with the impact of VAT now being absorbed and people feeling hopeful about a more likely salary increase, confidence is returning.”


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Following the introduction of VAT at the beginning of last year, the UAE introduced a raft of reforms aimed at boosting economic growth, creating jobs and diversifying the economy away from a reliance on oil income. The initiatives strengthened business sentiment in the UAE, which in turn improved job prospects for residents during the third quarter along with their financial outlook.

A November study from global consulting company Mercer, for example, found salaries in the UAE are projected to increase by 4.8 per cent across all industries this year – a further boost to resident's personal finances.

According to yallacompare’s latest tracker, UAE residents now feel better able to cope with the effect of inflation. In the third quarter of 2018, 27 per cent were struggling to make ends meet because of VAT – compared to 16 per cent in the final months of the year – representing a 40 per cent decline.


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Residents are now far less likely to leave the UAE due to their financial position – 45 per cent of respondents in final quarter of the year claimed to be less likely to leave compared to 38 per cent in the previous period - yallacompare found.

They are also more optimistic about their job prospects over the next 12 months. According to the study, 65 per cent said they expected a salary increase this year – a confidence indicator that climbed throughout 2018.

The increase may be attributable to a stronger sense of job security, says yallacompare; in the fourth quarter 37 per cent of respondents said they felt more secure in their job than at this time last year compared to 32 per cent in the third quarter.

On the debt side, almost half of those polled said they had less debt than they did a year ago and a quarter of those polled said they are paying less in rent than a year ago.

Apartment rental rates in the capital declined by 10 per cent over the course of 2018, a January report from real estate consultancy Asteco found, while villas dropped by 8 per cent. In Dubai, apartment rental rates fell by 10 per cent and villas at 8 per cent.

“We have been advising our users for some time that while the rental market is in decline, to see a personal benefit tenants need to negotiate with their landlords and do it more than three months before the contract expires (otherwise it renews on the same terms)," said Mr Rawling. "We are delighted that this message may be getting through and we are helping our users to save money.”

While the overall results of the tracker are positive, some indicators were less so.

While 17 per cent of those polled are saving more than they were 12 months ago, 57 per cent said they were saving less.

Steve Cronin, the founder of, an independent community for financial education in the UAE, said: "More people are saving part of their income than in previous quarters (45 per cent), but the trend is still negative with most people saving less than last year or saving less than Dh1,000."

Mr Cronin urged residents with a more optimistic outlook to avoid splashing out this year or loading up on debt, to ensure they are prepared for any bumps in the road.

“Life isn't too bad but it's not amazing either,” he said. “School fees and rent are not going to drop drastically to help you. 2019 will be more of the same unless there is a global recovery, the oil price strengthens and Expo 2020 has a big impact as it draws near. None of these are impossible but you absolutely should not gamble your financial security on them happening.”