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Wed 21 Jun 2017 10:30 AM

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Dubai, Abu Dhabi become more costly cities for expats to live

Mercer says rising cost of housing and goods leading to higher cost of living

Dubai, Abu Dhabi become more costly cities for expats to live

Dubai has been listed as the 20th most expensive city in world for expats, according to Mercer’s 2017 cost of living survey.

Abu Dhabi rose two places in the list of most expensive from last year, moving to the 23rd position, driven by rising cost of housing, goods and services.

Riyadh climbed five places over its 2016 ranking and is listed 52nd, while Jeddah (117) and Muscat (92) remain among the least expensive cities in Middle East.

UK-based Knight Frank predicted rentals in Dubai will “move up” from mid-2017 as preparation for Expo 2020 go ahead in full steam.

While rents in Abu Dhabi will decline, the three percent housing fee on annual rent is expected to “increase cost pressures on households”.

Besides, the Gulf countries will also introduce five percent value-added tax (VAT) from January 1, 2018, which will increase the cost of living.

According to Mercer, Cairo fell 92 places from last year following a sharp devaluation in its local currency. Ranked 183rd on the list, it is the least expensive city in the Middle East.

Nathalie Constantin-Métral, principal at Mercer, responsible for compiling the survey ranking, said: “Egypt's decision to allow its currency to float freely in return for a $12 billion loan over three years to help strengthen its economy resulted in the massive devaluation of the Egyptian Pound by more than 100 percent against the US dollar, pushing Cairo down the ranking.”

Angola’s capital Luanda is listed as the costliest city for expats in the world due to increasing cost of goods and security. Other cities making it to top 10 list are Hong Kong (2), Tokyo (3), Zurich (4), Singapore (5), Seoul (6), Geneva (7), Shanghai (8), New York City (9), and Bern (10), while the three least expensive cities for expatriates are Skopje (206), Bishkek (208) and Tunis (209).

London (30), Aberdeen (146) and Birmingham (147) dropped 13, 61 and 51 spots, respectively, as a result of the pound weakening against the US dollar following the Brexit vote.

“Currency fluctuations, including the weakening of both the British Pound and the Euro against the US Dollar, have had a major impact on this year's rankings,” Kate Fitzpatrick, Mercer's Global Mobility Practice Leader for the UK & Ireland, added.

India’s most expensive city, Mumbai (57), climbed 25 places in the ranking due to its rapid economic growth, inflation on the goods and services basket.

Mercer's survey, which covers 209 cities across five continents, measures costs in each location, including housing, transport, food, clothing, household goods and entertainment.

The survey is designed to help multinational companies and governments determine compensation allowances for their expatriate employees. New York is used as the base city and all cities are compared against it, with currency movements measured against the US dollar.