Once Dubai was considered a place for expatriates to stay for a couple of years, make some money and then leave. Today, as the emirate continues to thrive, its expat community is also flourishing, with many not only staying longer but also making plans to retire here.
Overseas visitors too are discovering the quality of life in Dubai. While some are looking for a comfortable and convenient base for family holidays, others are recognizing the benefits of owning a property as a potential retirement retreat.
Is Dubai now competing with the likes of Spain and France for British buyers seeking a ‘place in the sun’ in the second home and retirement market?
The answer may be ‘not yet’. But there are a number of factors which seem to have increased the popularity of the emirate among retirees.
First, expatriates are staying longer in the UAE. No longer considered a short-term assignment, the average time spent here by expats is now nine years, according to a survey conducted by Zurich International Life and released in December 2007. The survey also says that only one per cent choose to stay for the longer term, i.e. over 20 years, which hints at the limited number of people who may be staying till retirement age.
But there are expatriates who are staying longer, bringing their families with them, and creating a lifestyle. When faced with a decision to either go back to their home countries or stay in Dubai, an increasing number is opting to retire in the Gulf. Furthermore, some retirees are moving to Dubai because they have family already living there and want to be closer to them. No statistics are available of their numbers, but you can meet them among your neighbors or social networks. And they all have their reasons for retiring in Dubai (see sidebar).
Then comes the property factor. With other housing markets around the world cooling, and even beginning to crash, Gulf retirees are looking to stretch their nest eggs further.
Dubai is not a cheap option – many analysts are predicting house prices in the emirate will soon match or even surpass London – but overseas buyers are being wooed by the UAE’s stable economy and the promise of healthy tax-free returns on their investments.
Again this is still a limited buyer market for property developers. Better Homes, one of the UAE’s major real estate agents, says there is not a trend yet towards buying property for retirement.
Manuela Reis, head of residential sales at Better Homes, said, “With the [real estate] market growing rapidly, we have seen an increase in all types of buyers. In terms of the purchase of retirement homes specifically, there doesn’t appear to be a trend. However, as the market shifts towards the end user, this may change.”
A recent survey by Mercer, global provider of consulting, outsourcing and investment services, found that a number of elements were combining to entice expatriates to either stay longer or to permanently relocate. Key among them is greater mobility between jobs, with changes in legislation giving more choice. However, the trend to stay longer in Dubai has also resulted in many expatriates losing their home country pension schemes. This has, in turn, prompted an increase in employer-provided supplementary benefits.
While only eight per cent of the multinationals surveyed by Mercer currently provide a supplementary pension plan in the UAE, 65 per cent of companies surveyed said they were looking into changing their benefits provision, including the setting up of supplementary plans.
Mercer’s Callum Burns-Green says that more and more expatriates are now seeking pensions advice in the UAE.
“There is a definite trend for workers to stay longer. With 85 per cent of employees in Dubai being expatriate, there is increased demand for private income schemes,” he adds.
“The UAE could be seen as a good retirement base for many who perceive a deterioration of standards of living in places such as the United Kingdom, and are opting for Dubai in terms of better lifestyle, tax-free benefits and low levels of crime and high levels of personal safety,” he claims.
Burns-Green adds that as the UAE does not impose salary caps or tax restrictions on local pension plans, financial planners are, therefore, given a blank sheet of paper when it comes to introducing new policies, which gives great flexibility to clients and sections of their workforce.
UAE-based financial advisory company Globaleye is also targeting the expatriate community by teaming up with Hong Kong-based Chesteron Consulting. According to Daniel O’Riordan, joint CEO of Chesterton-Globaleye, Gulf companies with international ambitions need to upgrade their employee benefits if they want to attract and retain quality staff in an increasingly competitive global markets.
“The region’s labour laws here were drawn up in the 1970s when circumstances were very different. Expatriates came for a few years and then returned home. Now that people are buying homes and settling here and will soon be retiring, they need to feel that they have financial security. Employee benefits schemes play an increasingly important role in attracting and retaining the right people,” says O’Riordan.
A proposed new pensions’ savings law in the UAE could also have an important impact on expatriate pension provision. According to recent reports, the General Authority for Pensions and Social Insurance is studying options to bring expatriates in the public and private sectors under the national pensions’ scheme.
Furthermore, healthcare has become an important factor for anyone considering retirement in Dubai. According to online service Xpatulator March 2008 worldwide cost of living comparison, Dubai ranks as the 32nd most expensive city in the world (most expensive city is London, and comes in 28th in terms of the cost of general healthcare and medical insurance.
Medical costs are definitely a concern for those living on pension, but retirees who can afford them are also aware that the standards of healthcare provided are very good and compare favourably with Europe and America. Physicians and other health professionals are well-trained and attracted to Dubai through high salaries and world-class facilities.
A recent government announcement to make health cover mandatory for Emiratis and expats alike in Dubai may bring some good news for resident retirees. However, the final framework of this cover is still unclear.
For now, healthcare insurance providers have already stepped up the mark to offer packages specifically geared to foreigners. For example, many international expatriate insurance specialists are launching various ranges of international health, income protection and life insurance plans designed specifically for expatriates. Through its Corporate GlobalHealth plan, members will have access to an expanding network of clinics, hospitals, and pharmacies throughout the Gulf.
The reason for developing those facilities, according to William Russell’s Adrian Shaw, is their belief that Dubai is now attracting an increasing number of expatriates wanting to retire to the Emirate.
He adds that apart from the quality retail, leisure and housing facilities, Dubai’s healthcare system is also a major draw.
“Expats choosing Dubai as their retirement home can be confident that they will be able to benefit from private healthcare facilities as good as any available in other popular worldwide expatriate destinations. The key, however, is to ensure that they can afford treatment, and good quality international private medical insurance is essential.
“Expatriates also need to give careful consideration to their long-term needs as they become older, as residential care is expensive and it is outside the scope of a private medical insurance,” he warns.