The million-dollar expat question: Is it time to leave the GCC?
And where should you go if it is?Jason Cook September 20, 2016
If expats were boxers we’d be world champions. We take on anything and anyone.
A breed of pioneers, among the most intelligent, wise beyond years and perhaps most importantly, rich with cultural experiences and stories.
If this is you, tune your brain in for a moment and take stock of your options because now your place in the world is more important than ever before.
Where are we now?
A 2016 study ranked 67 expat destinations based on factors expats deemed important to their overall standard of living. Taiwan took top spot with the GCC’s Kuwait taking flat bottom. Saudi Arabia came 63rd, Qatar 60th, UAE 40th, Oman 22nd, with Bahrain, at 19th, ranked the best place in the GCC to live.
So what is wrong with the GCC? Compared to most regions it’s a treasure trove of opportunity perfect for us entrepreneurial expat types. The issue therefore could be the everyday challenges we face, and there are many. Is it frustration that has caused our GCC expat brethren to withhold top marks? Do you find what normally is done easily back home takes an age here? Or has everything just become too expensive?
For generations, foreign workers have travelled to the Gulf braving the entirely misconstrued picture the west paints of the region, and have been rewarded with a life of plenty. But for most expats the GCC’s fat pay cheques are gone. Whenever you came here or whatever you came for, those fundamental reasons for being an expat in the Gulf, or being elsewhere, are changing.
So what we must decide is whether on balance it makes sense to be here still. As an expat you want to be making the most of your time, so let’s try and evaluate the best the world has to offer.
What does the GCC have?
The GCC’s vast reserves of oil are what have made the region wealthy, and that income stream is not going anywhere soon. Sure the recent oil price decline has had lasting effects, however a transition to a hydrocarbon free energy infrastructure will take another 50 years or more, so rest assured more interesting times are ahead with regards to the oil price.
Culturally, the GCC has come a long way in its acceptance of foreign lifestyle. The UAE and Dubai (which has the highest percentage of expats on the planet) is perhaps the most tolerant place to live in the world. The ruler HRH Sheikh Mohammed is an exceptional man and his dreams have given expats a wonderfully peaceful, interesting and clean place to live.
However as an expat destination, what makes this region so different to other expat destinations is this: as a foreign resident it is extremely unlikely you will become a citizen. So our loyalty comes at a price. That price is paid with tax free money, which means money is at the heart of the expat love affair with the region and why most people decide to stay or go.
Now, when a region’s economy falters it’s the job of the government to fix it. The GCC would love nothing more than to keep the status quo, because finding sustainable alternatives to plug the income gap elsewhere is risky. Will they be successful? Maybe they will. But that’s another story for another day.
You take delight not in a city's seven or seventy wonders, but in the answer it gives to a question of yours. Italo Calvino
What’s the alternative?
New York, New York! Singapore! Toronto! Sydney! Just a few places expats favour. So which is the best? Which will offer you more value for your money? To evaluate, let’s take a look at a few of the alternatives which consistently rank high in expat surveys as the best places to live. In particular, we’ll focus on a few key metrics such as cost of living, healthcare, pollution and quality of life.
Cost of living
A good measure to understand lifestyle is to understand how far your money will go in another city. For example, you will need around AED 27,273 in New York to maintain the same standard of lifestyle that you can have with AED 18,000 in Abu Dhabi (assuming you rent in both cities).
It will cost you 63.64 per cent more to have a meal in a restaurant in New York than in Abu Dhabi. Groceries prices are also higher, 87.37 per cent, and rent will cost you more, 43.38 per cent.
Toronto is 42.3 per cent lower to rent and its only 10.62 per cent higher to go to a restaurant. Wellington in New Zealand is 48.29 per cent cheaper for you to rent but consumer goods such as televisions and clothes are 27.23 per cent higher. In Rio de Janeiro you can eat out cheaper, your groceries are cheaper and your rent is 65.88 per cent cheaper too!
Cost of living is an important measure to consider when moving abroad. You will almost certainly pay income tax outside of the GCC however you may not have to pay for education, healthcare or will be entitled to receive a benefit of some kind which may be better for you than receiving a gross salary.
Knowing you have great medical care in the city you live is a priority for us all. Out of the 168 cities listed in an index on global healthcare, Riyadh is the highest GCC city at 68 with Doha at 83 and Abu Dhabi at 144. Asia and Europe feature heavily, but the lack of more Gulf cities doesn’t necessarily mean the region doesn’t have some outstanding facilities or healthcare professionals.
Who wants to live in a polluted city? Pollution leads to all sorts of nasty diseases and ailments so living in a city that has low pollution or avoiding cities that have high pollution should form part of your decision making process.
Doha is 36th, Riyadh 66th, Abu Dhabi 122nd and Muscat, the least polluted place to live in the GCC, 152nd. There is no current information for Bahrain and Kuwait.
If clean air is your priority then look no further than Europe, New Zealand or Australia. Other than remote places, the air quality here is currently the best the world has to offer.
Quality of life
What do we mean by quality of life? Is it how safe we are? How much it costs to live? How much time it takes to get to work? What the weather is like? Well let’s take all that into consideration as well as what we have looked at so far.
Australia takes three of the top five spots, which is no surprise. With a great mix of everything you need to make a great life Australia is really expat paradise. Perhaps surprisingly, Edinburgh in Scotland is fifth. It is a very safe, clean city with great healthcare and a low cost of living, meaning it’s a great choice to live if of course rainy days are not a problem for you.
It’s surprising that no GCC countries appear higher up the list, despite a popular reason people moving here is to get a better lifestyle. Riyadh appears highest at 32, with Abu Dhabi next at 63, Doha at 90 and no entries for Oman, Kuwait or Bahrain.
Everyone’s home country has a special place in their heart. So this list in no way means one country is better than another. What it shows is which cities are probably going to be a good place for you to live if you choose to leave the GCC.
This list is also largely dependent on how the factors are weighted. For example my wife prioritises the weather over anything else! So Edinburgh as lovely as it is will not be a choice for us. Your priorities are unique and have almost certainly led you to the GCC in the first place. Which leads us back to the original question.
Is it time to leave the GCC?
Your expenses can go up outside of the GCC. If you choose to move to Europe or go to the US, Australia or Singapore your cost of living will generally increase. So in this sense, no it’s not time to leave the GCC. You still get more for your money here with modern amenities that can shame the competition.
If you are looking for a better quality of life then it seems the GCC is behind the curve on the competition. There are many places offering you a better deal than the GCC. But this comes at a price – your tax-free income!
The GCC rewards you if you have a great job and you are able to manage your finances. If you are living beyond your means then your future may be at risk. It’s that simple. If you are living on loans and credit cards you are in trouble. If you are not saving what you would normally be taxed you are in trouble.
If however you are managing your money well, the GCC will still give you that boost up the wealth ladder you can’t find anywhere else.
Jason Cook is an independent financial advisor; financial-advice.ae.