Tootsie Frickensprinkles

For anyone considering a move to Doha and searching the forum, these are the latest official figures. On the ground in real terms, eating out and many imported foods/goods I would say have seen 20-50% price increases in the last 18 months. Rent went up 29% ytd.

http://www.arabianbusiness.com/50482...lmost-14?ln=en

John Rogers

But the salaries must also be going up to adjust for the rising inflation right?

I mean just look at the 70% wage-increase that all the government employees in the UAE recently received, more than enough to make up for "14% inflation".

Autonomy

for the less than 10% of the population that work for the government - maybe...

plus the real drop in dirham value of about 20% against most other currencies...

so if your a local that banks in dirhams and only spends dirhams and work for the government - yes - you're fine... for the rest of us....

Tootsie Frickensprinkles

The state salary hike here was 40% for nationals and 20% for non-nationals. OH had a per diem increase last year, I expect the same this year. His pay raises are a completely seperate issue. He is government contracted though, most people dont get that kind of analysis linked location allowances.

So in real terms, no, salaries are not keeping up, and, local hire salaries here are no where near the UAEs from what I have seen.

Alexa

Nope, not for us.Not for most Expats from what I hear.

John Rogers

Ok. I guess I should have made sure my post came out clearly as tongue-in-cheek (as I intended).

The kind of things that people keep complaining about here (high rents, gas prices, food prices, tuition, etc.) are not things that are necessarily peculiar to the Gulf region. There is worldwide, in pretty much every nation in the world, skyrocketing real estate prices, ever-increasing food prices, spiralling rents, endless traffic jams, lengthy school waiting lists and food price inflation. If you don't think so, then I can only suppose that you've slept through the past decade or so.

The world (i.e. China and India) is becoming increasingly wealthy and that means the demand for global goods and services is constantly increasing, sometimes exponentially. That demand will eventually be expressed in the form of sticker shock in every country in the world. Unless you live in North Korea or Cuba, no region or territory will be spared the forces of globalization. The working classes will simply have to learn to adapt instead of complaining ad nauseaum.

Don't like Doha or Dubai because it's too expensive or inconvenient? Move back to low-rent, cheap-gas, traffic-free London then.

Alexa

John, I don't quite agree with you.
Maybe theses things happen all over the world, I do not know, so I can't dispute.
But, Qatar is a developing country, it has rather bad infra structure,low life quality etc. Prices for, example food, go up on a weekly basis, so do fees for hospitals etc. Sadly the quality provided is extremely bad. Housing prices, for what is on offer, are ridiculous. The prices we pay here are comparable to New York, and that IMHO is just not right.
The other thing, "go back to London", well, I am not British,I also do not see going "back" as a solution, even though many people are planning on /and/or doing just that. For me no, I will go to another place as an Expat as soon as the possibilty arises.

Eeyore

London's a bad example for you to use, because it has a comprehensive public transport system. In fact, most capital cities do. Most people who work in central London, or New York, or Paris, or Tokyo (etc) don't drive a car to work because they don't have to.

As for rent, the big difference is that in pretty much every country in the world outside the GCC, you pay rent monthly, not annually. That makes a big difference to affordability. Poll the Western expats in Dubai who don't get their rent paid by their company, and you'll probably find that the biggest issue for most them isn't so much the level of the rent as the need to come up with a lump sum in advance.

John Rogers

Inflation is a reality in every civilized country in the World today, although Western governments hide it very well through some very creative accounting (e.g. by not considering food, housing or gas prices in the "basket of commodities" that they use to calculate inflation). I spoke to a colleague the other day who had just returned from a business trip to the Sudan and he said the topic du jour in Khartoum was (what else?) sky-high rents which are now apparently approaching first-world levels.

True, but Qatar also forks out first-world salaries with 0% taxes to boot for the professional elite who get a chance to work there. I'm not saying this makes inflation ok, simply that it's the natural consequence of globally rising income levels and an increasing liberalization in the free movement of labour worldwide.

Again, with respect, it's the market that decides which prices are "right" based on what consumers are willing to accept. If expats feel that prices are too high, they will simply stop paying them and leave. So far, I have not seen any evidence that that is happening on any discernable scale. The populations of Qatar and the UAE, if anything, are exploding day by day, not decreasing. For every job that a Westerner leaves behind there will be 10 equally qualified, talented and hard-working Chinese or Indians who will gladly take it up even with the diving currencies, high cost of living, etc. because it will still be substantially more than what they can make at home.

Alexa

John, as I said before I do not know much about global economy. Your post is very informative though.
All I can tell you is, that here in Qatar ,a few very unscrupulous ,influential people make life very difficult for many expats. And yes, the amount of Western Expats leaving might not bi significant now, since there are many non Western Expats taking over those jobs.
I have seen the same thing in Saudi after the bombings....now ,after about 4 years ,they are hiring Western Expats again.

Tootsie Frickensprinkles

Actually, a lot of Indians will not come now either. Whilst the populations are growing, the tide has turned, there are a lot less people willing to come now, and of those that do a lot more leave sooner. Particularly westerners. I would leave in a heartbeat, he sees it differently ... but that has as much to do with niche skills as salaries or anything else. He earned less but saved more in London. Mind you, the dollar has died since then.

If I'm having to pay first world prices, and "I" as accompanying spouse dont get that elite professional expat salary, I have to deal with local hire wages aka 50-70% less than I can earn in London, nett, then fukc it, I want to be living in the first world thanks. It's not just the price tag, it's the bullshit levels that make this place unbearable in many ways.

Eeyore

Inflation has only started to become a serious issue for most western expats in the last 2-3 years. Up until then, the cost of living was low enough and salaries were high enough for expats to be able to absorb - perhaps unwillingly, but absorb nonetheless - the increases.

It's now reaching the point where, unless you get all the big bills paid by your company (and most new expats don't, and haven't for some time), the amount of disposable income for many expats has dropped dramatically - in some cases, to the point where the fact that there is no income tax in Dubai is effectively meaningless.

There's a lot of evidence that many companies here are tiring of helping to fuel inflation and aren't increasing salaries by the amount needed to maintain a decent financial comfort zone for their employees. Certainly, some companies are actively starting to withdraw perks like fully-paid accommodation and school fees. Yes, they're usually increasing employee salaries to compensate, but because the whole point of the exercise is to save money, they're obviously not increasing them by the amount they're withdrawing - leaving the employees out-of-pocket.

Ask the longer-term expats, and they'll tell you that they've never known so many people be talking about leaving, or indeed actually going ahead and doing it. A tipping point definitely seems to have been reached.

But look at the demographics rather than the sheer numbers, and you'll find that the explosion is mostly comprised of low-paid service-industry workers, *not* the higher-paid western professionals.

But those qualified, talented, hard-working Chinese and Indians won't be paid the same as western professionals, and the western professionals are leaving because inflation is ensuring that they're not being paid enough for it to be worth their while staying here.

So who's going to pay to rent all the apartments and villas that will be vacated by the leaving westerners? Who will have enough income?

John Rogers

Gareth, I don't gainsay that you make several important observations. That said, what you're complaining about is a global phenomenon that's happening everywhere. Worldwide, the salaried middle-class is getting squeezed in a vice by ever-increasing prices for pretty much everything from petrol to rents to tuition. My point is simply that there is nothing exceptional in the fact that the forces of globalization have finally begun hitting the Gulf states.

No dispute here. But ever been to London recently? New York? Singapore? New Delhi? Khartoum? You will find people fretting over exactly the same things, ad verbatim. This is happening everywhere!

There's no doubt that there is a lot of grumbling and discomfort. However, it has not (yet) translated into any kind of substantial exodus of expats. I've yet to see a single person who's said: "I'm leaving Dubai and heading back to London because the cost of living is way lower there".

Maybe, but as long as the Dhiram continues to be worth more than the Rupee or the Remnimbi (in purchasing power terms), expat wage pressures will continue to exist until the virtually inexhaustible pool of highly qualified, English-speaking labour in India, China and the rest of Asia are completely exhausted. That could well take decades if not a century or two. Either way, the world will be a dramatically different place by then.

Well, how many Indian or Chinese people have you lived with? My Dad always used to tell me that if you want to save a buck or two, shop where the Chinese do and live where they live. Asians are many many times more resourceful at ekeing out savings out of miniscule wages than Westerners. Witness the construction worker in the Gulf who toils in unbearable, unthinkable conditions for $8 per day (i.e. how much you and I would spend over a glass of beer) and STILL manage to send money home. Would your average Western expat be able to last 2 days living on those wages?

Eeyore

Yes, it *is* happening everywhere. But surely a key issue is that most of the people working in London or New York or New Delhi or Khartoum are natives of those countries. They will fret, but they will stay. They have nowhere else to go.

The workforce of the GCC, on the other hand, is largely comprised of expats, and if life gets too expensive, those expats - especially the westerners - can and will leave. That will have serious repercussions, especially for the local property bubbles.

We don't know anyone who's moved back to London either. But we do know people who have moved back to other parts of the UK because Dubai simply became too expensive in terms of rent, school fees etc. London is significantly more expensive than most other places in Britain, after all.

As Tootsie says, the bullshit levels in this place are very high. Expats are expected to put up with an awful lot - the rampant inflation, having to pay rent annually rather than monthly, the lack of rights, the intrusive construction, the summer climate, the traffic levels and incredibly dangerous and selfish driving, laws made and changed on a whim etc - but the tax-free lifestyle is *supposed* to make up for all that. The narrower the gap between earnings and expenditure, the less likely that is to happen.

Nope. But then, westerners wouldn't come in the first place for those wages. And with the gaining strength of the Indian economy, the UAE is finding it much more difficult to attract labourers, because they can earn more (and enjoy a better standard of living while they do it) in their own country - hence the current, serious shortage of construction site labour.

There was one important question you didn't address, so I'll ask it again, slightly rephrased: the property bubble in Dubai is entirely dependent on high-wage western expats, because the majority of the population - 95.4% according to the Dubai government's own figures - could never afford to either buy or rent property here. So if inflationary pressures force the westerners out, who will be left with the income to afford to maintain that bubble?

John Rogers

Agreed. And if that happens, they will be replaced by the Indians and Chinese who will be happy to accept these high-paying jobs (relative to what they make at home). If they can send money home while earning $8 per day, you can betcha your bottom-dollar, they will be more than grateful to do so while earning $200-500 per day.

Maybe, but then they can't make as much $ as they can make in London or Dubai. Most people in the world would prefer to earn high wages while living in a high cost-of-living region rather than make lower wages while living in a low cost-of-living region. It's all a trade-off. In a perfect market, your actual disposal income (gross salary - cost of living) will be exactly the same no matter where you live.

I'm not sure I understand your question. If the property bubble bursts, then that means property will become more affordable, rents will become less expensive and the cost of living will accordingly ease. And why exactly is this a problem again?

In any case, I believe I've answered your question already. We seem to have an unwarrantedly overextended view of our own indispensability here. The "high-wage Western expats" can and will be easily replaced by equally talented, possibly more hard-working, English-speaking Chinese, Korean, Indian and Asian expats who are being churned out of Asian universities at prodigious rates. What's more, the savings rate among those groups is much higher than for Westerners and they tend to invest in "legacy items" like real estate at much higher rates than Westerners. So I would think that that development would actually be a huge boost for the property bubble.