Two in five Emiratis in Dubai are in debt

15 per cent of Emiratis found to have defaulted on at least one monthly loan payment.

About 37 per cent of Emiratis surveyed by the government owed money.
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DUBAI // Nearly two in five Emiratis in Dubai owe money on a loan and about 15 per cent of those defaulted on at least one monthly payment in the previous year, a government survey has found.

About 14 per cent owed money for living expenses, 13 per cent for household appliances and 11 per cent for marriage expenses.

Emiratis were more likely than expatriates to borrow money and more likely to have defaulted.

The research was conducted by Dubai Community Development Authority (CDA) with Dubai Statistics Centre. Staff surveyed nearly 20,000 Dubai residents last year.

The CDA director general Khaled Al Kamda said more research was needed into Emirati debt. "What are the issues related to loans?" he said. "Is it a loan for something essential, or is it a luxury product?"

More than 60 per cent of Emirati borrowers owed money on a car loan, and half on a mortgage. "Homes are normal and very important, that's understandable," Mr Al Kamda said. "Cars here are an issue. We need to see, what is the car?"

About 37 per cent of Emiratis surveyed owed money, compared with about 16 per cent of western expatriates, 13 per cent of Arab expatriates and 10 per cent of Asian expatriates.

About 5 per cent of the western borrowers had defaulted on a payment in the previous year, compared to 3.7 per cent of Asian borrowers and 2.1 per cent of Arab expatriate borrowers.

Researchers also asked whether residents believed they were conservative spenders. Eighty per cent of Emiratis said they were, 10 per cent said they weren't and the last 10 per cent were neutral. Of all the survey respondents, expatriate and Emirati, 93 per cent said they believed they were conservative spenders.

"Part of empowering people or encouraging people to manage their expenditures is really to see how they feel about their spending behaviour," Mr Al Kamda said.

On National Day last year, the President, Sheikh Khalifa, set up a Dh2 billion fund to clear the debts of more than 6,000 Emiratis. The decree followed the recommendation by a higher committee charged with tackling Emirati debt.

In addition, Central Bank regulations introduced last year capped the amount banks can lend to customers at 20 times their monthly salary.