Dispatch from Dubai


I wanted to send this one out before I returned from Dubai, however here it is – a dispatch on the cost dynamics of living in one of the most expensive cities in the world.

There is no income or sales tax in Dubai – there is just no taxation of any kind. So that would be a big incentive for most people as a draw to go and work in Dubai. Sure, it is a nice, and I would say a great feeling when you pay no taxes at all to the government. There are very few places in the world which provide such a strong incentive.

However, the picture is not so simple. Almost all items that one needs to consume are expensive, and even more expensive when compared to Singapore. I think this is true even when a comparison is made with Hong Kong prices of consumption items. May be only Tokyo is more expensive than Dubai.

A Cafe Latte in Starbucks costs 19 AED (Dirhams, the U.A.E. currency), which translates to SGD 7.5 (as against SGD 5.5 in Starbucks Singapore). A decent lunch at a foodcourt in one of the fancy malls of Dubai costs the equivalent of SGD 20 to 25 as against a typical comparable lunch at SGD 11 to 15 in a Singapore mall. All tourist attractions are heavily expensive when it comes to the entrance fees. A typical entrance fee to a theme park or water park costs around AED 270 or SGD 106 – whereas a good price that can be obtained in Singapore for a similar attraction ranges from SGD 40 to 60. Taxi prices are more or less comparable, though the base fare from the Dubai International Airport is AED 25 (or SGD 10) as compared to SGD 6.20 (SGD 3 surcharge from Changi and base fare of SGD 3.20) as base fare from Singapore Changi Airport. There is no apparent reason for such a high base fare.

So, apparently, what the government does not collect is being collected by product and service providers in Dubai via increased prices. The argument that they have to operate with imported labour (mostly Filipinos in service industries) does not fly as the situation is not very different in Singapore for lower-end jobs. The real estate prices are comparable, so that argument also does not work. So, it has to be only the motive of higher profit from the flow of tourists and resident foreigners that is driving higher prices in Dubai.

I have not had the time to do a detailed research on retail prices at Dubai malls (though I bought a couple of items), but had the opportunity to kill some good time at the fabulous shopping areas of Dubai International Airport before departing to Singapore. The liquor prices at the Duty Free Shops were lower than in DFS Changi Shops, and the chocolate prices were marginally lower though the variety of chocolates available was vastly superior in Dubai. I ended up buying good amount of chocolates which are not available in Singapore. The electronic product prices were more or less similar – again, the variety of offerings in Dubai was superior. For example, I saw six different brands of drones in a single shop with almost all accessories as compared to just two brands in a typical Singapore electronics shop. Drones are hot selling items and I am developing an interest as my son is keen to try out the same, and will eventually buy one raptor kind of drone with electronic eyes quite soon.

Overall, living in Dubai is an expensive proposition but then residents save on income and other taxes though paying higher prices for consumer items. Interesting, isn’t it? More news on Dubai soon, it is a place worth visiting for all. Abu Dhabi should not be forgotten either, it seems to be more organized and apparently has more wealth than Dubai itself.

Welcome to more expenses as you travel the world!!!

Cheers,

Vijay Srinivasan

3rd December 2016

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