More affordable housing means Abu Dhabi and Dubai have both improved sharply in an index of the world's most expensive cities for expatriates.
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Abu Dhabi has moved to 67th this year from 50th last year in the worldwide cost-of-living survey. Dubai is ranked as the 81st most expensive city, dropping 26 places compared with last year.
Both cities were still found to be more expensive than elsewhere in the GCC for foreign workers.
Luanda in Angola is the costliest city globally for expatriates, followed by Tokyo and the capital of Chad, N'djamena. Karachi in Pakistan ranked as the cheapest, the survey found.
"For organisations looking at places to do business in, the UAE is stable at a potentially lower cost," said Callum Burns-Green, the head of Middle East operations at the HR consultancy Mercer, which produced the survey.
Falling living costs have been highlighted by economists as important in helping to bolster the country's attractiveness for doing business. The UAE's credentials as a regional financial and services centre have also been enhanced by the absence of unrest afflicting other parts of the Middle East.
The survey offers an insight into the steep decline in living costs since the global financial crisis struck. In the 2009 survey, Abu Dhabi was the 26th most expensive city and Dubai the 20th.
Since then, residential rents, which typically account for the largest part of expatriates' expenses, have fallen by more than half from their peaks.
A retreat by foreign investors and an oversupply of units have hastened the decline in rents.
But falling rents may not be all good news for expatriate workers.
Market declines meant some employers were starting to offer less-generous housing allowances to some employees moving to the region, said Mr Burns-Green.
"For individuals who maybe want to move to a location and are younger and are moving to enhance their career, there's probably a general trend to reward them less," he said.
Senior management would still be likely to be offered generous packages to encourage them to locate to the region, he said.
Annual UAE consumer price inflation increased to 1.4 per cent in May, far below the double-digit inflation of 2007 and 2008.
Price controls on foods in the UAE had also helped the cost-of-living performance of UAE cities against cities elsewhere, said Mr Burns-Green.
The survey of 214 cities on five continents compared costs of more than 200 items in each location including housing, transport, food, clothing, households goods and entertainment.
The survey is designed to help multinationals and other companies determine compensation allowances for their expatriate staff.
New York was used as the base city, with currency movements measured against the US dollar.
tarnold@thenational.ae
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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.”
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Tips for job-seekers
- Do not submit your application through the Easy Apply button on LinkedIn. Employers receive between 600 and 800 replies for each job advert on the platform. If you are the right fit for a job, connect to a relevant person in the company on LinkedIn and send them a direct message.
- Make sure you are an exact fit for the job advertised. If you are an HR manager with five years’ experience in retail and the job requires a similar candidate with five years’ experience in consumer, you should apply. But if you have no experience in HR, do not apply for the job.
David Mackenzie, founder of recruitment agency Mackenzie Jones Middle East
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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
