Analysis |

UAE Deal Is an Economic Opportunity, but Perhaps Not of the Kind Israelis Think

The agreement being formed with the Gulf state creates opportunities in several areas – but it's also worth paying attention to the fine print

A photo of Dr. Zvi Bar'el.
Zvi Bar'el
Send in e-mailSend in e-mail
Israeli and UAE flags fly in Netanya, August 16, 2020.
A photo of Dr. Zvi Bar'el.
Zvi Bar'el

The emerging peace agreement between Israel and the United Arab Emirates is already making millions of Israelis who have been unable to leave their country for months salivate.

A trip to Dubai has become an almost religious aspiration. For some Israelis, visiting the huge malls or the largest duty-free shop in the world has become a religious obligation that every believer must fulfill at least once in their life, while meeting with Dubai’s Jews has become a kind of Birthright Israel trip.

PODCAST: Inside Israel's no-change, no-cost peace deal with the UAE

But they ought to calm down. The UAE isn’t Italy or Spain, and certainly not in the coronavirus era. It has a limited number of tourist attractions, if you don’t count the hotels and the super-modern office towers designed by the best Western architects. And desert tours will occupy only a day or two.

Granted, the restaurants and bars are excellent and the beaches and the yachting provide refreshing experiences. But ultimately, this is a country of business deals and connections. Their Tourism Ministry mainly seeks to persuade people to stay for a night or weekend on their way to other countries.

The real opportunities lie in the field of investment. Dubai is an international center for both Arab and Western corporations. Thousands of companies from countries that don’t have relations with Israel, including Iran, Saudi Arabia and North African countries, have offices in Abu Dhabi and Dubai, as do Russian, European and American companies.

That creates opportunities for making business connections and arranging deals to export Israeli products or to import products to Israel at prices that may well be cheaper than it would be to import from their country of origin.

Moreover, the UAE suffers from a chronic shortage of professionals at every level, and that provides another opportunity. Of its nine million residents, more than eight million are foreigners. This gives it the highest ratio of foreign residents to citizens in the world.

Most of the foreigners do simple jobs like gardening, cleaning, maintenance and driving. Their salaries range from $500 to $1,400 a month, depending on the type of work and how long they’ve been working there.

Most of these workers come from poor countries in Asia. They live in neighborhoods far from the center of the city, or else in quarters attached to their employers’ homes. Most have no health insurance, paid vacation or social safety net of any kind.

They pay thousands of dollars to get a work permit, which is conditional on their employer’s sponsorship. The employer is responsible for their behavior, and for removing them from the country if necessary.

At the other end of the scale are professionals with needed skills from Western or Asian countries. A project manager in the computer industry can earn $25,000 a month or more, as can people in senior accounting jobs.

An entry-level worker with no experience in a field where with a labor shortage, such as planning, management, marketing and medicine, can expect his salary to jump by 30 percent after two to five years. Additional raises are paid every two years thereafter.

These workers are also likely to get many benefits, such as health insurance and partial reimbursement for moving expenses and their children’s schooling. The latter is very expensive. Tuition sometimes runs to more than $5,000 at private elementary schools and as much as $25,000 for a two-year master’s degree program.

It’s not clear whether Israelis will be able to work in the UAE, even though Israelis with foreign passports have been working there for quite some time on projects run by foreign companies. But if Israelis are eligible for work permits, this could open new fields of employment to them, like the oil industry or Islamic banking. This would require suitable training and the development of new curricula at Israeli colleges.

The peace agreement with the UAE is also arriving at a good time for people interested in renting or buying a home there. Over the last three years, the country’s real estate industry has been in free fall. Housing prices have fallen by more than 30 percent, and both contractors and landlords are offering fantastic deals. Landlords, for instance, are willing to divide the rent into six or even 12 payments, something that was extremely rare a year ago.

One of the homes on offer via the website propertyfinder.ae is a 190-square-meter row house with three bedrooms plus a room for the maid, four bathrooms and a communal pool, gym and covered parking lot shared with the rest of the row, all for $1,600 a month. There’s also a 140-square-meter home in a good neighborhood with three bedrooms plus a maid’s room up for sale at an asking price of $328,000 with the option of a 10-year mortgage.

The magnitude of the real estate crisis is also evident in the number of homes for sale and rent on this website alone – around 21,000 and 42,000, respectively. But real estate agencies expect the second half of the year to be a bit better than the first, mainly due to hopes that the coronavirus will be contained and that thousands of workers who left the country will therefore return.

It’s too early to talk about Israelis descending in droves on the UAE’s job and real estate markets. But the chance to dream is nevertheless worth something.

Comments