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Fri 25 Jul 2008 09:39 AM

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Gulf cities fall in global cost of living survey

Several Middle East cities fall in list of world's most expensive cities to live in.

Dubai and Abu Dhabi have both fallen sharply in the 2008 list of the world's most expensive cities to live, latest figures reveal.

The pegging of the dirham to the weak US dollar has had a major impact of the cost of living in both UAE cities, according to the latest survey by research consultants Mercer.

Neither city managed to make it into the top 50 with Dubai ranked at 52 and Abu Dhabi at 65. This compares to a ranking of 34 and 45 respectively in last year's list.

In the Middle East, Tel Aviv was the most expensive city, positioned 14th on the global list, up three places from 2007. But for many more cities in the region there was big falls.

Jeddah in Saudi Arabia was down 13 places at number 126 while Riyadh was ranked 119th, down nine places compared to 2007. Manama in Bahrain was named the 112th most expensive place to live compared to a 2007 rating of 91st while Kuwait City also fell (by 14 places) to 94th.

Other Middle East cities included in the list were Amman, Jordan (88th, down 11 places), Beirut (80th, down 17 places) and Tehran (down a massive 44 places at 74th).

The news about Dubai and Abu Dhabi's fall in the list will surprise many residents who are experiencing big increases in food and property prices with inflation topping 11 percent in 2007.

Overall, Moscow was named the world’s most expensive city for expatriates for the third consecutive year, according to the latest Cost of Living Survey from Mercer.

Tokyo came in second position climbing two places since last year, whereas London dropped one place to rank third.

Oslo climbed six places to fourth and was followed by Seoul. Asunción in Paraguay was the least expensive city in the ranking for the sixth year running.

With New York as the base city scoring 100 points, Moscow scores 142.4 and is close to three times costlier than Asunción which has an index of 52.5.

Contrary to the trend observed last year the gap between the world’s most and least expensive cities now seems to be widening.

Mercer’s survey covered 143 cities across six continents and measures the comparative cost of over 200 items in each location, including housing, transport, food, clothing, household goods and entertainment.

It is the world’s most comprehensive cost of living survey and is used to help multinational companies and governments determine compensation allowances for their expatriate employees.

Yvonne Traber, a principal and research manager at Mercer, said: “Current market conditions have led to the further weakening of the US dollar which, coupled with the strengthening of the Euro and many other currencies, has caused significant changes in this year’s rankings.”

She added: “Although the traditionally expensive cities of Western Europe and Asia still feature in the top 20, cities in Eastern Europe, Brazil and India are creeping up the list. Conversely, some locations such as Stockholm and New York now appear less costly by comparison.

“Our research confirms the global trend in price increases for certain foodstuffs and petrol, though the rise is not consistent in all locations.

"This is partly balanced by decreasing prices for certain commodities such as electronic and electrical goods. We attribute this to cheaper imports from developing countries, especially China, and to advances in technology.

“Keeping on top of the changes in expatriate cost of living is essential so companies can ensure their employees are compensated fairly and at competitive rates when stationed abroad."

She added: “In some cases, cost of living increases may be correlated to countries with a high rate of economic growth. Companies may assign high priority to expansion in these economies but may have to deal with inflationary pressures due to competition for expatriate-level housing and other services, as observed in our surveys."