Cost of Living in Dubai: Accommodation, Transportation, and Food

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Lured by the prospect of a tax-free salary, abundant job opportunities and relatively high standard of living, foreigners have come to the UAE in droves and made it their home. The UAE is considered the most liberal country in the Gulf and many expats use it as a base from which to commute to jobs in more conservative countries such as Saudi Arabia and Kuwait.

Thousands of other expats work in well-paid jobs in the UAE itself and enjoy a lavish and cosmopolitan lifestyle. Many others leave their families behind and work as taxi drivers and construction labourers, earning higher wages than they would back home so they can executive stock options should be reported as compensation expense dubai their children to school.

However, with a steep rise in living costs, increased efforts to nationalise the workforce and persistently low oil prices, changes are afoot. Many expats are leaving the UAE, by choice or otherwise, amid increasing economic uncertainty. Companies can no longer justify paying big salaries to Western employees and are looking to recruit from elsewhere to cut costs.

Or, they are simply downsizing. Oil and gas, construction and related industries have been especially hard hit. In neighbouring Qatar, state-run Qatar Petroleum laid off 1, foreign workers this year as part of restructuring, while pan-Arab TV news station Al Jazeera closed its American channel in April and laid off around staff, most of them in Doha.

In Saudi Arabia, thousands of jobs are being axed at construction behemoths such as Saudi Oger and Saudi Binladin Group, two of the biggest expat employers in the region.

And in Oman, thousands of labourers are being sent back to their home countries due to a lack of projects, with one anonymous manager telling a newspaper in June that his camp in Sohar had gone from to 12 workers in the space of a few months. With governments and companies terminating contracts across the region, global service providers such as engineers, bankers, lawyers and consultants — many of which use the UAE as their Middle East base — are at the sharp end of retrenchment plans.

Meanwhile, living costs are rising. Abu Dhabi was ranked 25th, up from 33rd in Housing and utility costs in Dubai have risen by 3. The story of expats abandoning their cars at Dubai airport in when the global financial crisis hit is well remembered by many.

But recruiter Trefor Murphy, CEO of Cooper Fitch, warned in June there could be a fresh exodus of expats as the oil price slump sends ripples through the region. While any move to quit the UAE is undoubtedly less dramatic now than it was inmany people working at the coalface of expat life tell Arabian Business there has been a noticeable increase in the number of people leaving within the past 12 months.

Saudi Binladin Group has laid off about 77, foreign employees. Abhilash Nair, regional manager of the removals division at ISS Worldwide Movers, says requests for outbound international moves increased by percent between July and July There has been a smaller increase in inbound requests, of around percent.

The cost of education was up 5. Al Jazeera Network announced a 10 percent reduction in workforce. A source from the American School of Dubai says withdrawal rates the number of students taken out of the school are running approximately percent higher than in previous years.

This does not necessarily mean families are leaving the UAE, the source says, but concedes: One sector with valuable insight into corporate recruitment practices is human resources. Firms are dealing with a rise in repatriation as a result, she says. But the government has escalated plans and some people are finding themselves without jobs earlier than anticipated.

The absence of official statistics showing expat arrival and departure patterns in the UAE makes it difficult to calculate the number of departures without caveats. For example, many would-be expats arrive on a tourist visa that they later convert to residency. The closest statistical picture available at the time of writing came from immigration services firm Fragomen, which compiled figures exclusively for Arabian Business executive stock options should be reported as compensation expense dubai an overall increase in residency visa cancellations between and At the same time, executive stock options should be reported as compensation expense dubai number of new residency permits dropped from representing 69 percent of cases in July to 52 percent this year see table.

July figures were used as that is the peak month for arrivals and cancellations ahead of the academic year, Fragomen says. The client database comprises companies from all industry sectors, not just oil and gas. ADNOC plans to cut 5, jobs by the end of the year. Dubai Expo is one of the driving factors for this optimism, says Masri. The event is expected to lead to an increase in development projects in the country, creating more thannew jobs and boosting industry.

Radha Stirling, founder of lobby group Detained in Dubai, says: Expats are in a precarious position in that they usually have no backup or support, and in our experience unemployed expats struggle to survive more than ninety days without defaulting on rent and other obligations. Jonathan Macpherson, deputy chairman and chief operating officer COO of the British Business Group, says group membership continues to rise by executive stock options should be reported as compensation expense dubai percent each year and there remain plenty of opportunities for British businesses in the UAE.

It is estimated that expatriates account for more than 50 percent of the labour force in most of the GCC countries. The medical profession appears to be somewhat cushioned from the economic slowdown. Kaneez Nabijee, CEO of recruitment and licensing body Doctors in Dubai, reports a rise in demand for doctors in the UAE — she says her client base has risen 50 percent between and as the government invests in the healthcare industry by building new hospitals and clinics.

She notes a rise in UK doctors moving to the UAE because they hate working within the cash-strapped National Health Service NHSexecutive stock options should be reported as compensation expense dubai is increasingly forcing doctors to work punishing hours for pitiful salaries.

Membership has risen by percent in the past 12 months, executive stock options should be reported as compensation expense dubai says. If you run away from one country, you could find yourself in a worse situation somewhere else. Others have noticed a demographic shift towards fewer Western expats and more from Asia and the Arab world rather than an outright exodus. The anonymous recruiter says: Gulf companies are looking for alternative, cheaper sources of labour even if the skill set is less advanced.

I think what we are seeing is a rebalancing of the market to more sustainable levels from one that has overpaid for many years. New expats are far more likely to be single than married with children as companies seeks to cut down on visa costs, adds Brian Cummins, founder of expat support network Abu Dhabi Paddy.

With its year-round sunshine, exciting lifestyle and business prospects the UAE is certain to remain a major destination for expats for years to come. However, economic uncertainty in the region is clearly prompting significant structural shifts and more expats could be making life-changing decisions in the weeks and months ahead.

Imran Serugo Lugo, business development executive stock options should be reported as compensation expense dubai at health insurance firm Lifecare International:. My previous job had good career prospects, but house price inflation was rising quicker than I could save. So when the opportunity to work in the UAE, where it is tax-free and a better quality of life coupled with good career prospects, it seemed silly not to.

My new job was in construction marketing executive stock options should be reported as compensation expense dubai I realised that the change in industry and international move was extremely stressful. I was lucky to have great friends who helped me, as insider knowledge is crucial. I was lucky as my rent stayed the same but I heard lots of stories of landlords doubling rents on existing tenants.

There was a definite feeling of expats being priced out and the job market had simply stopped moving. I had lots of good times in Dubai but I was fed up of always looking for cheaper deals. The UAE expat's dilemma The slowing economy has left ripples of uncertainty across the Gulf, hitting the job executive stock options should be reported as compensation expense dubai and causing living costs to escalate.

For many people who moved to the UAE to cash in on its abundant prospects, it no longer makes sense to stay. Fri 12 Aug Subscribe to our Newsletter. Saudi Arabia says Jazan targeted by missile from Yemen 30 Mar Dubai launches first Happiness Platform on Jumeirah beach 28 Mar UAE named among world's 20 happiest countries 15 Mar France issues arrest warrant for Saudi crown prince's sister 15 Mar Young girl attacked by lion cub at Jeddah festival 08 Mar Bahrain arrests alleged members of 'Iran-linked cell' 03 Mar Dubai police 27 Feb Bollywood superstar drowned in Dubai, say police 26 Feb

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A number of high-profile technology companies recently adjusted their equity compensation programs in a manner they hope will help attract employee talent by providing an extended period to exercise vested stock options after termination of employment. In particular, Pinterest and Quora adjusted their stock options to allow employees with at least two years of service to exercise their vested stock options for up to seven years after they terminate.

Other emerging growth and startup technology companies may be considering similar adjustments to their stock options. Providing an extended period to exercise vested stock options is not a new idea. In the past, employers have considered this approach, typically on a case-by-case basis, if the employee was in good standing and unique circumstances were present upon termination or if the employee has some degree of leverage in negotiating his or her departure.

What is new is the trending consideration to provide an extended post-termination exercise period to employee option holders generally. Due to certain tax and securities laws, as well as accounting rules, it is very common for stock options issued by private companies have a term of up to ten years from the date of grant. Recognizing that there is flexibility in how long a stock option can remain outstanding following termination of employment, some technology companies have considered providing a longer post-termination exercise period.

This Alert outlines some advantages and disadvantages of providing an extended exercise period. The considerations for both employer and employee are slightly different if the extended exercise period is added by amendment rather than included in the original award. Current employees and future hires may view an extended post-termination exercise period as highly favorable because the decision of choosing to exercise and pay the purchase price for their vested stock options can be delayed if the employee leaves the employer before the option has expired.

Less pressure on the employer to gain liquidity: In the current economic and capital markets environment, many private companies are delaying their IPOs until much later in their business lifecycle and considering mergers and acquisitions. Providing an extended period to exercise allows an employee to terminate and still potentially enjoy the liquidity of a later IPO or sale of the company.

There may be less administration involving stock option exercises when employees terminate employment because questions regarding deadlines to exercise, loans and secondary sales to third parties to facilitate financing the exercise of stock options may be avoided or postponed. However, if a terminated employee is able to retain vested stock options for an extended period, the underlying shares will necessarily continue to be reserved for a potential future exercise and more shares will be needed to grant awards to new hires or for refresh grants.

As a result, common stockholders will face added dilution from a larger number of outstanding equity awards. Increasing the likelihood of employee terminations: Employees who cannot pay the exercise price for their vested stock options will not feel financially handcuffed to their employer out of fear of forfeiting vested stock options immediately after termination.

Incentive stock option limits will still apply: Incentive stock options ISOs generally convert to nonstatutory stock options NSOs three months and one day after an employee terminates his or her employment except in the case of death or a disability. As a result, an employee who wants to keep his or her ISO status for tax purposes would not benefit from an extended exercise period. Likely higher employment tax expense for the employer and the employee: The exercise of NSOs requires both employee and employer to pay Social Security and Medicare taxes, as well as income tax withholding.

ISOs do not trigger these taxes. As a result, by extending the period by which stock options may be exercised, the employer likely increases the chances that many of its vested stock options will not be ISOs and will therefore result in greater employer Social Security and Medicare tax liability. Income tax withholding obligations increase: The exercise of NSOs requires the employer withhold income tax from employees and former employees.

ISOs do not trigger income tax withholding upon exercise. An extended post-termination exercise period is one of the benefits an employer may offer a terminating employee in exchange for a separation agreement and release of claims.

If stock option agreements already provide for an prolonged post-termination exercise period, employers will need to find other carrots to entice employees to sign release of claims agreements. If an outstanding stock option is amended to extend the post-termination exercise period, a few additional considerations apply:. An extension of the exercise period will likely require approval of this amendment by the equity plan administrator e.

ISO and optionholder consent issues: However, the ISO holding period for capital gain purposes will restart. An amendment to an existing stock option to extend the exercise period likely will be considered a modification for accounting purposes and may lead to an additional non-cash compensation charge on the employer's financial statements.

To avoid adverse employee tax treatment under Section A of the Internal Revenue Code governing certain deferred compensation , the term of otherwise exempt options may not be amended to exceed the ten year anniversary of the original date of grant or the original expiration date of the stock option, whichever comes first. If you are considering an adjustment to your stock option program to provide for extended exercise period generally or to an individual stock option holder, please contact William Hoffman , Cisco Palao-Ricketts or any member of our Employee Benefits and Executive Compensation group.

Related topics Complying with the regulators Global workforce management.