Relocating to the UAE is an “exciting” prospect but not necessarily a cheap one. These are the words of Stuart Ritchie, director of financial planning at fee-based advisory AES International, who advises new arrivals to research all the costs involved.
In this two-part guide, we will examine all the expenses. From setting up in the first month to choosing a bank account, borrowing, saving, investing and more, we will highlight any pitfalls along the way.
What is the cost of living in Dubai and Abu Dhabi?
HSBC's cost-to-settle calculator (using 2016 market data) estimates that a family of four – with one nursery-age child and one secondary school-age child – looking to rent a three-bedroom villa, a hatchback and an SUV could expect their annual outgoings to hit almost Dh510,000 in Dubai, with their first month coming in at Dh235,500.
In Abu Dhabi it would be slightly lower, with outgoings at Dh444,700 annually and Dh201,500 in the first month. In Dubai, a single person renting a one-bed waterfront apartment and a convertible car would pay Dh222,500 a year and Dh105,350 in the first month. In Abu Dhabi this would be Dh229,700 annually and Dh109,200 in the first month.
Steve Cronin, the founder of DeadSimpleSaving.com, says you will have a "flood of expenses" in your first couple of months and it may take longer than expected to set up a bank account, so ensure you have plenty of cash, both in the UAE and in your home bank account. If you need to convert foreign money into dirhams, shop around at the exchange companies in the malls, he says, and ask the manager for their best rate if transferring a large amount.
Wealth and wellness planner Rasheda Khatun Khan advises new arrivals to be "conscious spenders" and live "mindfully". "Don’t fall into the trap of keeping up with the Joneses," she says. "A few years later, you are the Joneses."
Mr Ritchie advises keeping three to six months' worth of income in cash "to cover costs over the set-up period".
What is the visa process for the UAE?
The work visa process starts with a two-month permit being issued, giving the employer time to organise medical tests, an Emirates ID card, labour card and a stamped residence permit in the employee’s passport. The processing costs will be paid by your employer. Once resident, the employee can sponsor family members as long as they earn a minimum of Dh4,000 a month, according to Government.ae.
Generally, employees are issued residency for one or two years and family members the same length of residency. An expatriate man can sponsor his daughters if they are unmarried and a son to the age of 18 or, if studying, until 21. He can also sponsor stepchildren and parents.
In Abu Dhabi, a woman can sponsor her husband and children if she is an engineer, teacher or working in the medical sector and earning at least Dh10,000. In Dubai, a woman not employed in one of these categories may still be able to sponsor her family if she earns more than Dh10,000 and receives special permission.
However, new visa regulations are also coming into force this year as the UAE tries to position itself as a hub for innovation, talent and economic development, says Ali Haider, manager for the Middle East and North Africa for immigration specialists Fragomen Worldwide.
Ten-year residencies are to be created for the "skilled, white-collar workforce" in medicine, research, engineering, academia and scientific innovation.
Importantly, "mainland" UAE will soon be open to foreign investment without the need for a local partner, says Mr Haider, meaning expats can own a business in the UAE, outside free zones, without needing a local, majority stakeholding partner. A new five-year visa for retiring residents also offers the option for a longer stay beyond work.
What are the set-up costs for Dubai and Abu Dhabi?
To activate your electricity and water account, you must pay a connection fee – Dh110 for Dubai Electricity and Water Authority (Dewa), for example – and a security deposit of Dh2,000 for an apartment or Dh4,000 for a villa. The deposit is refunded after settlement of the final bill when moving out.
Registering for a tenancy contract with Ejari in Dubai costs Dh195 and is required before you can register for utilities. In Abu Dhabi the equivalent, Tawtheeq, costs Dh100 – Dh1,000 for an initial registration – and should be the landlord’s responsibility. New tenants would be "wise" to check the property is registered before signing the tenancy contract, the UAE law firm Al Tamimi advises.
ServiceMarket.com, an online marketplace for international and local moving services, says that for those needing help getting established in their new home, a handyman costs about Dh150 an hour, a deep clean Dh600 for a two-bed apartment and garden maintenance Dh250 a month.
How much is rent in Dubai and Abu Dhabi?
Rent is the number one expense in the UAE and will take a good chunk out of your salary, even with an accommodation allowance and despite rent figures softening in the last year. In Dubai, according to property company Asteco’s second-quarter numbers, expect to pay an average of: Dh110,000 a year in the popular Dubai Marina for a one-bed apartment; Dh135,000 for a two-bed; Dh60,000 and Dh90,000 respectively in the affordable Discovery Gardens; and Dh110,000 and Dh175,000 in the Downtown district. A three-bed villa in the Arabian Ranches costs around Dh170,000 a year, Dh215,000 in the Meadows.
In Abu Dhabi, a one-bedroom apartment in Saadiyat Beach costs Dh115,000 a year; a two-bed Dh165,000 and in the mid-end Khalifa City and Mohammed Bin Zayed City areas, Dh85,000 and Dh125,000. A three-bedroom villa in Saadiyat Beach would cost Dh310,00 and Dh135,000 in Khalifa City.
To rent you need a residence visa, a copy of which must be presented when you sign the lease. In the UAE it is typical to pay your annual rent in one to four cheques upfront – some landlords will accept post-dated cheques – along with a security deposit.
Mr Ritchie says tenants who can pay their annual rent in a single cheque "may command discounts over those paying in two or four cheques". And beware your bills shooting up in summer, he warns. "It’s not unheard of that summer air conditioning bills can reach Dh4-5,000 a month."
If you are considering buying, Propertyfinder has created an online calculator to help you decide whether it is more cost-effective to rent or own your home in the Emirates.
What are school fees in Dubai and Abu Dhabi?
School fees tend to be a family's biggest expense after rent. According to HSBC’s cost-to-settle calculator, expect to pay Dh35,000 for nursery school fees and up to Dh70,000 a year for secondary school, although some schools charge more.
Research by Zurich Middle East puts the total cost of educating a child in the UAE over 17 years – including three years at a UK university – at a mind-blowing Dh1 million.
Although parents are typically charged school fees by the term, there are options to spread the cost over 12 months, with some banks offering zero per cent interest payment plans.
How much does it cost to rent a car?
Renting a car can cost from Dh21,600 a year for a hatchback to Dh36,000 for an SUV and Dh54,000 for a convertible, according to the HSBC cost-to-settle calculator. Therefore, it is often more cost-efficient to buy a car, particularly with the UAE's thriving second-hand market.
Using a Lexus ES300, and taking into account depreciation, service costs, fuel, Salik, cleaning and insurance, but not traffic fines or costs related to an accident, CarSwitch.com, a UAE platform, calculated the total price of renting to be between Dh60,000 to Dh65,000; taking an Uber or Careem, Dh45,000, and owning Dh35,000 to Dh40,000.
Take care not to get carried away and lose track of the cost of motoring says Bill Carter, chief systems and innovation officer at Autodata, who thinks leasing is more cost-effective for residents that only intend to be in the UAE for a short period.
For those wanting a car that will hang on to its value after they buy it, some models fare better than others. According to CarSwitch, the Nissan Patrol had the best resale value in 2017 one year after purchase – retaining 85 to 88 per cent of what the buyer initially shelled out.
"This is considerably higher than the overall average of about 80 per cent," CarSwitch says. The Lexus IS came in second place with an 83 to 86 per cent retention rate, and the Toyota Land Cruiser took third position with an 82 to 85 per cent retention figure.