Abu Dhabi and Dubai rise in most expensive city rankings but trail behind global capitals

UAE capital enters top 50, in part driven by strong dollar, finds Economic Intelligence Unit survey

Abu Dhabi, United Arab Emirates, Oct. 1, 2013 /// 
Aerial view of the construction on the Abu Dhabi skylin, on Tuesday, Oct. 1, 2013.(Silvia Razgova / The National)

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Abu Dhabi has entered the list of the 50 most expensive places to live, as Dubai also rose in a Worldwide Cost of Living rankings.

The UAE capital was one of the three cities in the Middle East among the top 50, rising 13 places in a year to 49th, according to the Economist Intelligence Unit. The researchers took into consideration costs such as rents, school fees, utility bills and everyday items including haircuts and bread in 133 cities.

The survey was carried out in 2018, the same year that 5 per cent VAT was introduced and there were significant drops in rent in many areas.

The strength of the dollar, to which the dirham is pegged, is another reason for the rising costs compared to other nations.

The EIU report said the region remains a comparatively affordable place to live, with Singapore, Paris and Hong Kong sharing top spot as the priciest places on Earth.

Abu Dhabi’s rise was the fifth-steepest recorded in the survey, compared to the previous year.

Dubai was ranked as the 58th most expensive city globally, a climb of eight places compared to last year.

“The novel introduction of 5 per cent VAT for major goods and services at each point of sale last year has spurred Abu Dhabi and Dubai's (joint 58th) rise in the ranking in 2018," said Roxana Slavcheva from the Economist Intelligence Unit.

"For the most part, however, cities in the UAE still offer relatively good value for money. Both cities are less expensive than the index's base city, New York, with Dubai being 28 per cent cheaper and Abu Dhabi – 24 per cent cheaper overall than the Big Apple.”


Elsewhere in the region, Tel Aviv was the 10th most expensive city in the world while Amman was 25th.

“Tel Aviv remains unchanged as the region’s most expensive location, falling by one place down the ranking to tenth since last year,” the report said, analysing the picture in the Middle East and Africa.

"However, Israel's business capital is something of an outlier. The Jordanian capital, Amman, and Abu Dhabi in the United Arab Emirates are the only other regional cities among the 50 most expensive cities in the world.

“For the most part, cities in the Middle East and Africa still offer relatively good value for money,” it said.

In Abu Dhabi, the average price of 1kg loaf of bread was found to be $3.23 (Dh11.86), while in Dubai it was $3.72.

More expensive cities included Paris, where it was $5.66, while the same quantity of bread was $15.59 in Seoul and $8.33 in New York. Cheaper cities for bread included Dublin ($2.36) and Berlin ($2.97).

Cheap petrol prices in the UAE continue to save residents money. The cost of $0.70 per litre in the UAE compared with $2.06 in Reykjavik, $2.14 in Paris and $2.02 in Oslo.

The cheapest city on Earth was found to be Caracus, displacing Damascus, as a result of the economic crisis in Venezuela. Places to plummet in the rankings due to poor economy included Buenos Aires, which fell 48 places to 125th, Istanbul, which also fell 48 places to 120th and Sao Paulo, down 30 to 107th.

“The cheapest cities in the world have seen some changes over the past 12 months,” the report said.

“This year, Damascus bestowed the title of least expensive city in the world to Venezuela’s capital, Caracas, which saw a significant worsening of economic conditions in 2018, with hyperinflation and a breakdown in public services fuelling growing social unrest.

“The Venezuelan government unified and devalued the official exchange rates in early 2018, in an attempt to reduce currency pressure, but amid hyperinflation, the currency remains hugely overvalued, as reflected in an extremely large black-market premium,” the report said.

Among other cities rising significantly in the list was Muscat, up 15 to 92nd place. The highest rise was recorded in Noumea in New Caledonia, a French territory comprising dozens of islands in the South Pacific, which rose 33 places to 20th.

“The endemic high cost of living in the French territory of New Caledonia partly reflects a lack of competition, particularly in the wholesale and retail sectors, which are dominated by a small number of companies,” the analysts said. “These factors drove its capital, Noumea, 33 spots up the ranks in joint 20th place.”