Just thinking about his rent makes Karunakaran Gopalan want to leave his job as a mechanical engineer in Abu Dhabi and return to his newly built house in Kerala.
“I want to finish paying off my loans and then run away,” says Mr Gopalan, who works for Al Ryum General Contracting. “Accommodation and school costs are killer blows.”
For decades the UAE’s Dh175 billion construction industry has relied on expatriate Indian workers and professionals such as Mr Gopalan to build the skyscrapers, shopping malls and hotels that dominate the skylines of Dubai and Abu Dhabi.
But now a building boom at home driven by the economic reforms of the prime minister, Narendra Modi, is encouraging many would-be Indian emigrants to stay in India – forcing employers throughout the UAE to look farther afield to fill positions.
A second interest rate cut in India last week was the latest boost for the expanding construction sector, which the IMF expects to help propel GDP growth of 6.5 per cent next year.
“We haven’t hired any new Indian labourers. It’s difficult because the salary of labourers in India is more than before,” said Mahmoud Irshaid, a project manager at Abu Dhabi-based Al Mezin General Contracting.
Monthly salaries for Indian labourers have jumped to Dh1,600 from Dh1,200 two years ago on many sites in the capital.
“Lots of our Indian employees have resigned and moved back to India,” Mr Irshaid said. “The ones who stayed asked for increased salaries.”
Contractors such as Al Mezin and Al Ryum have switched to cheaper sources of labour.
“We aren’t hiring any new labourers from India – instead we’re hiring labourers from Pakistan, Afghanistan and Nepal, and some from the Philippines,” Mr Irshaid says.
“Ask anyone in the UAE,” he says. “They’ll say the same thing.”
Pakistani workers are paid about Dh1,000 per month, while some Nepalese labourers will work for Dh800 per month, Mr Irshaid says.
It is not just the construction economy that is being affected.
“There’s more work in India for all jobs these days. More Indians in the UAE have professional jobs than a few years ago,” says Abdul Nasser Ammunny, a manager at Raneh and Taneh Mobile Phone in Abu Dhabi.
He has lived in the UAE for 12 years but visits his family in India every year.
“There aren’t as many Indian construction workers in the UAE as there were three years ago. More are coming from Bangladesh, Pakistan and other countries,” he says.
Housing costs have risen rapidly in Dubai and Abu Dhabi as the country’s housing stock struggles to keep up with the influx of migrant labour. Higher rents and utilities have pushed inflation to above 4 per cent in both emirates. A particular shortage of cheap or mid-range housing options means that shortages and price rises are particularly acute for those on lower incomes.
Returning workers cite the increasing cost of living across the Arabian Gulf and harsh recruitment company practices as key reasons for their decision to return home, says Debajan Chakrabati, the general secretary of the Construction Workers Federation of India, a trade union based in Kolkata.
Exploitation by “unscrupulous recruiting agents” is a common complaint, he says, with many workers reporting having passports seized on arrival and receiving lower salaries than promised.
But the boom in infrastructure spending means that the standard of living for construction workers at home is improving.
“Metro lines are being opened and there is a lot of new spending on infrastructure,” says Naweed Khan, who is also a mechanical engineer at Al Ryum.
“Drastic changes in the power industry” and the new government’s taste for public-private partnerships have further lifted the construction industry at home, he said.
Not everyone believes that Mr Modi deserves all the credit for India’s new-found economic optimism.
Wages are not rising “because of Modi – wages were rising before Modi,” says Mr Ammunny. Wages are increasing “because there are more educated people and more professional jobs in India”, he says.
Family is a strong pull keeping labourers at home. It takes a sizeable wage differential to persuade construction workers to leave their families – and now that it is falling, fewer are willing, adds Mr Irshaid.
Mr Khan, however, still has no immediate plans to return to India. He says he will wait for the gap between wages here and in India to narrow more before returning, and is confident that this will happen eventually.
As an engineer with a degree from Gulbarga University in Karnataka, Mr Khan earns Dh13,000 per month working in Abu Dhabi. He would earn about Dh10,000 were he to return to India, but his income would be taxed.
Still, rising rents may make him contemplate a return sooner.
“I spend 35 per cent of my salary on rent. If accommodation costs go up, it would be the same, working in India versus working here.”
But Mr Gopalan, his co-worker, is itching to leave. Once he pays off the loans needed to build his Kerala home he will be heading for the airport.
Then he will never have to pay rent again, he says with a smile.
Additional reporting by Rebecca Bundhun in Mumbai and Lucy Barnard in Abu Dhabi.
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U19 World Cup in South Africa
Group A: India, Japan, New Zealand, Sri Lanka
Group B: Australia, England, Nigeria, West Indies
Group C: Bangladesh, Pakistan, Scotland, Zimbabwe
Group D: Afghanistan, Canada, South Africa, UAE
UAE fixtures
Saturday, January 18, v Canada
Wednesday, January 22, v Afghanistan
Saturday, January 25, v South Africa
UAE squad
Aryan Lakra (captain), Vriitya Aravind, Deshan Chethyia, Mohammed Farazuddin, Jonathan Figy, Osama Hassan, Karthik Meiyappan, Rishabh Mukherjee, Ali Naseer, Wasi Shah, Alishan Sharafu, Sanchit Sharma, Kai Smith, Akasha Tahir, Ansh Tandon
The Bio
Favourite vegetable: “I really like the taste of the beetroot, the potatoes and the eggplant we are producing.”
Holiday destination: “I like Paris very much, it’s a city very close to my heart.”
Book: “Das Kapital, by Karl Marx. I am not a communist, but there are a lot of lessons for the capitalist system, if you let it get out of control, and humanity.”
Musician: “I like very much Fairuz, the Lebanese singer, and the other is Umm Kulthum. Fairuz is for listening to in the morning, Umm Kulthum for the night.”
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
MATCH INFO
Uefa Champions League, last-16, second leg (first-leg scores in brackets):
PSG (2) v Manchester United (0)
Midnight (Thursday), BeIN Sports
Company Fact Box
Company name/date started: Abwaab Technologies / September 2019
Founders: Hamdi Tabbaa, co-founder and CEO. Hussein Alsarabi, co-founder and CTO
Based: Amman, Jordan
Sector: Education Technology
Size (employees/revenue): Total team size: 65. Full-time employees: 25. Revenue undisclosed
Stage: early-stage startup
Investors: Adam Tech Ventures, Endure Capital, Equitrust, the World Bank-backed Innovative Startups SMEs Fund, a London investment fund, a number of former and current executives from Uber and Netflix, among others.
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
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Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
