Higher Rents, Fewer Raises, Expats Save Little Money

RIYADH, 4 January 2007 ? Rising rent prices and other cost-of-living factors have led one study to conclude that 23 percent of expatriates living in Saudi Arabia are unable to save any money. According to the study titled ?Pay, Inflation and Mobility in the Gulf? by GulfTalent.com, one of the region?s leading recruitment companies, the highest rate of foreign non-savers in the Gulf region is in the United Arab Emirates (UAE), at 43 percent. The survey is based on interviews of 18,000 professionals, including 1,000 nationals and 6,000 expatriates living in the Gulf Cooperation Council (GCC) countries, and 11,000 expatriates based outside the Gulf region but with an interest in relocating to the region. The conclusion that more foreign workers in the region are unable to grow personal savings comes at a time of robust economic growth driven largely by record-high oil prices and a large influx of foreign investment. The study says that the financial attraction of the region is rapidly diminishing, particularly in the UAE and Qatar, thanks to a quick increase in the cost of housing. The study estimates that in 2006 the average rent in Qatar consumed a third of personal income, while in the UAE it absorbed 30 percent. Saudi Arabia is still relatively low in terms of cost of housing at 19 percent. ?Rents in Saudi cities are also less than half of those seen in Dubai and Doha,? said the survey. ?Seven percent of the UAE-based expatriates said that their salaries do not even cover their living costs, forcing them to borrow,? it added. While the cost of renting in the Kingdom is relatively low, it also reports one of the lowest rates of salary increases last year, 6.5 percent, only barely above the worst rate, Bahrain, at 6.4 percent. The average for the region was between 7 and 8 percent, led by Qatar, 11.1 percent, and the UAE at 10.3 percent. Seventy-three percent of those surveyed said that they prefer to work in the UAE despite the high cost of living. Six percent of those surveyed that work in the region said they plan to leave by the end of the year. ?Saudi Arabia is strongly seeing a resurgence of interest as the security situation stabilizes and salaries rise at well above the inflation rate,? said the portal?s study. Referring to the cost of living in the region, the survey said that the Kingdom continues to enjoy low inflation, while the rates of inflation in Qatar and the UAE stand at higher levels. The report, which analyzed cost of living and employment patterns, said that the expatriates in Qatar make up 80 percent of the country?s population, compared to 83 percent in Qatar, 80 percent in the UAE, 53 percent in Kuwait 34 percent in Bahrain and 19 percent in Oman. Saudi Arabia?s documented foreign population is 21 percent of the total, but they make up 47 percent of the workforce due to the high unemployment rate of Saudi nationals. The study also found employers in Saudi Arabia, Bahrain, Kuwait and Oman have difficulty attracting professionals in sufficient numbers and many are losing existing staff to the UAE. ?The regional dominance of the UAE as a destination for world-class talent has become a key factor in many multinationals? decision on where to locate their regional headquarters,? said the survey, estimating that 52 percent of the expatriates working in Saudi Arabia are seeking jobs in other Gulf states. A small portion, which includes many Indians, were also said to be returning to their home countries because of higher costs of living in the region and better opportunities at home. The report states a small portion of European expatriates are also returning as the weakness of the US dollar had sharply reduced the attractiveness of Gulf salaries against the euro and pound sterling. Those surveyed cited attractive career opportunities, and good infrastructure and facilities. Expatriates said they also preferred Dubai because of its liberal social customs.

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