Many Dubai residents have been feeling a little less prosperous in 2015. The Dubai Statistics Centre has revealed that prices rose by 4.4% last autumn: the biggest hike since 2009. Rent and food are the biggest culprits, with housing and utility bills – which account for almost half of a Dubai resident’s average yearly expenses – rising by 6.7% over the past year. Food and drink, which account for 11% of the annual spend, rose by 4.7%.
Economic forecasters have predicted that these upward trends will continue throughout 2015, with inflation likely to rise by a further 3%. But while many Dubai residents are justifiably concerned, their tax-free status wins them little sympathy from city-dwellers in Europe and the USA who pay high personal taxes on top of high bills for utilities and food.
If you are a single, childless person in the UK you will be likely to pay almost a quarter of your salary in tax, whereas a single person in the US will contribute a little less, at 22.70%. Taxpayers in the EU suffer an even higher tax burden, with Belgium, Denmark, and Germany paying between 38.90% and 42.80% (based on average wages).
When it comes to the cost of living, Dubai is still 29% cheaper than New York and 34% cheaper than in London. But while it may offer some comfort to know that others are worse off than you, it doesn’t help if you are really feeling the pinch financially. So what steps can you take to improve your position?
If you’re due a salary increase, then push for at least 3%, as this will cover the anticipated rise in the inflation rate. If your boss won’t co-operate then it’s time to draw in the purse strings, cutting back on unnecessary expenditure until things improve.
In the worst case scenario, you could look at relocating to a cheaper area. Recent research by consultants ValuStrat has shown that it may be cheaper to buy with a mortgage than to rent in Dubai. JLT, Discovery Garden, International City, Motor City, The Greens and even parts of Dubai Marina are areas that offer better deals for buyers on a mortgage. Property owners could even enjoy financial benefits in the future, as some locations are tipped as well long term investments. To find out more about Dubai’s best places to buy property in, don’t hesitate to contact Allsopp & Allsopp Dubai.
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