Wednesday, August 15, 2007

Cost of living in Saudi Arabia

One of the issues a potential expatriate wanting to work in Saudi Arabia should know is the cost of living in the kingdom and the savings he would be making as an expatriate. This is a rather tough question to answer, because there are factors such as income, habits of individuals, etc., which also have a bearing on the total savings. Nevertheless, a rough idea is given here.
Bread is usually quite cheap, though recently the cost of rice has increased by about 20%. Fuel is also very affordable and is currently around SR0.47 a liter. The only worrying thing is the cost of housing, which is going up exponentially. Most western expatriates prefer to stay in housing compounds, as mentioned in an earlier post. Due to the limited number of such compounds, the rents have gone up tremendously. Most of the companies which used to bear the housing of such expats have now changed their policy to paying house rent allowances instead, to offload their burden.
Eastern expatriates on the other hand, usually prefer to stay in apartments. A typical double room apartment for a family, which used to cost SR12000 a year now costs anywhere between SR15000 to SR18000 a year. For those who get housing allowances from their companies, this will put a big hole in their pocket. Expats living in apartments must enter into a contract with the house owners. Usually, the rent is payed in advance either once or twice a year depending on the agreement with the owner. For the period of the contract, the house owner cannot raise the rent. However, in case the expatriate wants to vacate the house and move to some other place, he has to pay the rent for the remaining part of the contract. Most house owners take advantage of this law and use it to their advantage for fleecing. In recent years, the rents have been going up at a mind-boggling rate. As this has a direct effect on the savings, most expats are now considering sending their families back home.
For potential expatriates planning to work in the kingdom, my advice would be to let the company take care of the housing. If this is not possible, then ask for a housing allowance which should not be linked to your basic salary (most companies pay 3 times the basic pay). After all, if you have the right skills and they need you, they would definitely pay you. If not, it's really not worth it.