The trend of falling accommodation costs across the Middle East region has seen Dubai drop significantly down a global list of the most expensive places to live for expats.
Mercer's 2011 Cost of Living Survey, which was published on Tuesday, shows that Abu Dubai (67) is ranked the most expensive city in the Gulf region after Dubai fell 26 places to be ranked at number 81 out of 214 cities covered.
Other cities across the GCC were ranked as follows: Riyadh, Saudi Arabia (135), Manama, Bahrain (157), Kuwait City, Kuwait (159), Doha, Qatar (164), Muscat, Oman (184) and Jeddah, Saudi Arabia (185).
The Mercer Cost of Living Survey data is used by firms and governments to help determine remuneration for expats being relocated to cities across the globe.
Callum Burns-Green, who heads Mercer's Dubai office, said: "Dubai in particular has witnessed a reduction in accommodation costs since 2009 as the strong supply of property coming on to the rental market has reduced the shortage that existed in the several years prior to 2008.
"The government has also announced plans to control inflation in other key areas such as the cost of food."
Luanda in Angola was ranked the world's most expensive city for expatriates for the second year running, largely due to the high costs associated with security and safe accommodation.
Mercer's 2011 Cost of Living Survey placed Tokyo in second position and Ndjamena in Chad in third place.
Moscow followed in fourth position with Geneva in fifth and Osaka in sixth. Zurich jumped one position to rank seventh, while Hong Kong drops down to ninth.
New entries in the top 10 list were Singapore (8), up from 11, and Sao Paolo, Brazil (10), which has jumped 11 places since last year's survey.
Karachi, Pakistan was ranked as the world’s least expensive city, and the survey found that Luanda, in top place, was more than three times as costly as Karachi.
Recent world events, including natural disasters and political upheavals, have impacted the rankings for many regions through currency fluctuations, cost inflation for goods and services and volatility in accommodation prices, Mercer said.
Down one place from last year, London (18) is the UK’s most expensive city, followed by Aberdeen (144), Glasgow (148) and Birmingham (150). Belfast (178) is ranked as the UK’s least expensive city.
The survey covers 214 cities across five continents and measures the comparative cost of over 200 items in each location, including housing, transport, food, clothing, household goods and entertainment.
"Multinational companies have long understood the competitive advantage of a globally mobile workforce, though the enduring challenge is to balance the cost of their expatriate programmes," said Callum Burns-Green.
"Currency fluctuations, inflation, political instability and natural disasters are all factors that influence the cost and quality of living for expats.
"It is essential that employers understand their impact, for cost-containment purposes but also to ensure they retain talented employees by offering competitive compensation packages that are tailored to the needs of the expatriate on the ground."