Dubai: The cost of education, tobacco, drinks or petrol may have increased, but there remains no expense greater than a house. So much so that people’s spending on accommodation in the UAE is forecast to hit Dh300 billion by the end of 2017, which would be enough to build a dozen mega shopping malls.
Renting an apartment or villa is certainly the biggest financial outgoing for UAE residents, with housing costs representing nearly half (42 per cent) of total consumer expenditures. What’s more, it’s still rising every year.
Despite a slowdown in the realty sector, spending on housing is expected to increase by 1 per cent this year from Dh297 billion in 2016.
What else UAE consumers are spending on
UAE households are also shelling out billions of dirhams on food and drinks, and spending more money on other non-essentials.
In fact, they’re racking up more bills on leisure and recreation, than they are on clothing and footwear, according to the latest data compiled by Euromonitor International.
However, while consumer spending continues to go up, it’s been moving at a rather slow pace, with overall expenditure estimated to top Dh712 billion this year, up by just 0.9 per cent from 2016.
This is partly due to the softening of rents, an analyst said. There is also a general trend of people holding on to non-essential purchases in order to save money.
According to Rabia Yasmeen, Euromonitor research analyst, there has been a slowdown in spending on clothing, footwear, communications, tobacco and spirits and bubbly.
“Considering the overall market development during 2017, various business sectors continued to report growth slowdown, including retail and lodging sectors, following a slowdown in consumer expenditure,” explained Rabia Yasmeen, Euromonitor research analyst.
“Slowdown in consumer expenditure has shadowed the impact of lower oil prices impacting business entities, resulting in downsizing activities as well as lowered frequency of new hires in various sectors such as banking and energy sectors, following effects from last year’s challenging economic scenario.”
Such factors, Yasmeen added, largely affect consumer sentiment and their buying behaviour. Yasmeen said consumers have turned “cautious in practicing secondary expenditures in preference for saving.”
“In such circumstances, slowdown in wage growth has strengthened the case of weaker growth in consumer expenditure. Living costs [on the other hand] have remained stable as rents continued to soften on average.”
Consumer expenditures (2017)
Housing: Dh 300.4 billion
Food and regular drinks: Dh 103.1 billion
Clothing and footwear: Dh13 billion
Household goods and services: Dh28 billion
Health goods and medical services: Dh7.4 billion
Transportation: Dh 93 billion
Communications: Dh33.8 billion
Leisure and recreation: Dh19.6 billion
Education: Dh36 billion
Hotels and catering: Dh30 billion
Tobacco, spirits, bubbly: Dh2.8 billion
Miscellaneous goods and services: Dh43 billion