At least some of you have probably heard that the United Arab Emirates (or the city of Dubai, which you might know more than the country) is "tax-free". For the last 3 years I have been living in Abu Dhabi (the capitol), and since I am a big fan of personal finance, I decided to share with you my costs of living.
A few insights on me: I am a software engineer with 9+ years of experience, and I live on my own with no roommates, family, etc. I am a citizen of one of the EU states.
I am frugal and I don't make compulsive shopping decision nor buy goods to prove my status - such as expensive clothes, watches and cars. I mostly blow my money on traveling and experiences, but this is another story. In this post, I'm going to show you that living in the UAE can be affordable. I'd even say it's significantly less expensive than many of the US and European cities. Maybe this can help you to decide if moving to the UAE is a feasible option for you.
I rent a one bedroom flat in a popular area mostly inhabited by Western expats - Reem Island. I have a standard-size one-bedroom flat, which is 688 sqft. (66m2). It comes with central AC, a balcony, a parking spot and a laundry room (it is more of a laundry wardrobe). My building has great amenities such as a chilled outdoor pool and a well-equipped gym. The gym is so good that I cancelled my gym membership, since I could do complete workouts there. The only disadvantage is location - it is almost the last building on the island, so driving to downtown takes at least 10 minutes on weekends.
My rent is 55,000 AED per annum (~$15,000 US) plus municipality tax and contract fee (900 AED / $250 per annum). I will explain the municipality tax later, since it is included in the bill from the energy and water distribution company.
This means the rent costs me 4,583 AED ($1,250) per month.
An integral part of renting a flat are utility bills and real estate taxes. Fortunately, energy, water, sewage, and real estate taxes are combined in one bill issued by a distribution company of the emirate called ADDC (Abu Dhabi Distribution Company).
My monthly bill total ranges from 330 up to 365 AED ($90-100), and the major part of it is the municipality tax (real estate tax) - it is 5% of annual rent split into 12 months. Let's look closer into the math:
- 55,000 AED * 0.05 (5%) = 2,750 AED - annual tax
- 2750 AED / 12 months = 229.17 AED ($63) per month
Below you can find one of my bills. As you can see electricity ($24) and water ($9) are marginal. Sewage and waste are included in the municipality tax.
TVs, laptops, Roomba vacuum cleaners, and sound systems need Internet access these days. It is expensive in the UAE. There are only two providers - du and Etisalat - and it seems like they never change their offers.
I pay 313 AED ($85) per month for 12mbps Internet. It is the least expensive plan I found (I subscribed in 2019). You can get significantly faster Internet if you need, but it will cost you more and you will need to sign a 2-year contract (I have no contract now).
As of December 2022, the available Internet plans are:
- 500mbps - 450 AED ($123) per month with 2-year contract;
- 750mbps - 671 AED ($183) per month with 2-year contract;
- 1gbps - 1049 AED ($286) per month with 2-year contract.
As you can see Internet is pricey here.
If home Internet is expensive, you can be sure that mobile won't be any cheaper. My good former employer allows me to subscribe to their business plan for 105 AED ($29) per month only. My plan has 15 GB data and this is the only feature I care about - I don't do calls or text messages.
Keep in mind that for a similar plan (outside of a corporate business plan) you will need to pay about 210 AED ($59) per month. The cellular providers are also ISPs, so du and Etisalat.
Chilled water (AC / Aircon)
Most of the buildings in Abu Dhabi are connected to district cooling plants, which is actually the most affordable option. My monthly bill ranges from 40 AED ($11) up to 200 AED ($55) in the summer months. In 2021 I paid for the Aircon 1100 AED ($300) for the whole year.
Unfortunately, Abu Dhabi doesn't have a convenient public transportation system as we know it from major European metros. There are only buses and taxis (no metro, trains, trams etc.). This means that your transportation options are limited to:
- buying a car - gas is cheap. As of December 2022, 1 gallon costs 12 AED ($3.27) or 1l cost 3.18 AED ($0.87)
- using taxis and local Uber (called Careem)
- hiring a driver - it isn't expensive at all, and works well if you commute on permanent routes such as office or school
- riding a bike and e-scooter - it might work well if you live close to your office, but keep in mind that summers will be hot. The temperature will often reach 45-50C (105-120F) in July and August.
Personally, I decided I won't buy a car since I'd rather avoid all hassle with maintenance, insurance, prolonging registration, and so on. I take a taxi every other day and it costs me about 1,100 AED ($300) per month. BTW. I calculated the total cost of commuting to my previous office in taxis (10 miles ~ 15km) everyday, and actually the taxi was still less expensive comparing to owning a car.
Food is a tricky part since everybody has different eating habits. You might buy only organic products, expensive steaks, pork, be vegan or eat very little. All major grocery shops have online stores so you can compare prices of your favorite products. I mostly order groceries from Carrefour, Waitrose (has pork), Kibsons, and noon.com.
I spend about 100 AED ($28) per day on food, and I order at least one delivery per day.
Going out to restaurants and bars is expensive but it won't make a big dent in your budget if you do it 2-3 times per month. In terms of prices - think California - it means 38+ AED ($10+) for beer, 50-90 AED ($14-25) for cocktails, and 150-250 AED ($41-70) for dinner for two (in a mid-range restaurant). A decent bottle of wine in a restaurant costs 250-450 AED ($69-125).
I don't have sophisticated hobbies - I do yoga and training at the gym only. I used to do CrossFit, so let me drop prices of those:
- Yoga - 90 AED ($25) per class or 900 AED ($245) per month
- Gym - 1100 AED ($300) for a 3-month pass
- CrossFit - 999 AED ($272) per month
There are plenty of free parks, fields, and activities available but you need to look for them. I know a few people who run volleyball, bike-riding or rollerblade groups - those are completely free but you need to reach the right people.
I spend about 11,000 AED ($3000) per month. I think it is significantly more affordable than most cities in the US and Europe. The majority of software engineers in Abu Dhabi make between $86k and $120k in annual tax-free salary. This means that there is a huge room for saving money by moving to the UAE. I will try to comment on salaries in the next post.
Let me know where you live and how much you spend in the comments.