Financial News

Bank Plays a Number’s Game with Expat Children

It may be an unusual method to assess the Dubai’s property market, but one bank believes the best way is to simply count the number of expat schoolchildren in the city.

It’s the brainchild of US banking giant Citigroup who say that looking at school enrolment patterns can help estimate the growth levels among the local expat population.

By doing so, they say, you will have a fairly good indicator of Dubai’s property sector’s health.

Farouk Soussa, a Middle East economist for Citigroup, said: “Unfortunately there are no reliable population statistics for Dubai which means you can’t effectively analyse population trends and their impact on growth.

“However, we believe there is one indicator which we believe will give us a reliable idea for the growth of Dubai’s white collar expat population – and that’s the enrolment of expat school children in private schools.”

More expats as city prospers

Citigroup say the number of expat schoolchildren has grown by 8% in 2010/11 – and property prices have risen in tandem.

As data from Dubai’s Statistics Centre is limited, Western banks have to find inventive ways for measuring indicators such as employment, property prices and other economic data.

And in Dubai, 96% of the workforce consists of expatriates whose right to reside there is linked to their on-going employment which means any increase in expats working in Dubai will be reflected in the school’s enrolments.

Citibank also note that Dubai’s dip in prosperity in recent times was reflected in the drop of expat schoolchildren enrolling in schools there.

Dubai is home to a large number of unskilled migrants mainly working in manual jobs who have accommodation provided in camps or in homes working as domestic helpers.

Economic rebound

These workers also sent most of their money home and didn’t buy villas or homes so don’t have an impact on Dubai’s housing.

So when financial experts wanted a more defining indicator of how prosperous Dubai was becoming they found that expat schoolchildren provided the answer because their parents generally stay longer and invest in Dubai.

Farouk explains: “There’s no doubt that Dubai’s economic rebound has breathed life into the real estate market recently.  Since the beginning of 2012, the volume and value of real estate transactions have mushroomed.

“There is positive momentum in the real estate market which means good news for investors in the near term but there is also a broader economic recovery in Dubai as well.”

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