Dubai and Abu Dhabi both cities are the perfect destinations to start a business in the United Arab Emirates (UAE). Both cities attract entrepreneurs and traders from across the globe to start their business. This year Dubai and Abu Dhabi became more reasonable. If you are wondering why Dubai and Abu Dhabi have become more affordable for entrepreneurs then here we highlight the details that a new report says about Dubai and Abu Dhabi.
Both cities of the United Arab Emirates (UAE) are affordable because the cost of living declined due to a drop in the oil process and deflationary pressure. From the 43rd to 53ed position the Abu Dhabi moved 10 places down in The Economist Intelligence Unit’s latest Worldwide Cost of Living Index 2020 and on the other hand, Dubai falls down from 58th to 66th position. The major reason behind the reduced cost of living in the United Arab Emirates (UAE) was the decline in oil prices.
Now, Dubai and Abu Dhabi the two best business hubs of UAE have become the more affordable country for ex-pats because the cost of living has declined in spite of the introduction of value-added tax (VAT). Market examiners assigned this to the deterioration in rents, increasing of the dollar-pegged dirham against other currencies, and lower oil prices.
The Upasana Dutt head of World Cost of Living and Liveability Index at The Economist Intelligence Unit said because of the plunge in global crude prices, the United Arab Emirates (UAE) has been facing deflationary pressures. This has changed the shopping basket of the consumer and the apparel sector. She also said that the price trends in the United Arab Emirates (UAE) are not likely to see further downward trends as the oil process recover moderately, although she expects a still subdued consumer sentiment in the year 2021.
The CEO at Chartered House Anurag Chaturvedi said that Dubai and Abu Dhabi have seen process fall because overseas workers left the country because of job losses after the coronavirus pandemic. He also added that “ With the all-round population declining throughout the last six months, particularly the Asians who make up the majority of the country’ population, this gives the market downward. Along with this the reason for the decline in the rating is mainly due to the consumer spending fell sharply in the trend and luxury segments”.
The Economist for the MENA region at Capital Economics, James Swanston, said that headline inflation in the United Arab Emirates (UAE) was already in negative territory before the turn of the years slowed sharply in recent months. He also added, there are a couple of major factors driving deflation. The first is downturns in the real estate sectors. The property prices and rents in both the United Arab Emirates have been declining since the middle of 2016 and the further hit to demand from the recent crisis blended with more supply coming on stream has caused rents to fall even more sharply. So the housing inflation in these cities has slumped.
After this he also added, the second is the effects of virus containment measures, which have hit domestic demand hard and pessimistic price pressures. Sectors most exposed to containment areas have been those where expansion has fallen the most. Such expansion of recreational goods and services has plummeted in numerous Gulf economies as demand collapsed.