Exchange rates and rents lift cost of living in Abu Dhabi and Dubai

Dubai and Abu Dhabi are the most expensive cities in the Middle East for expatriates, with Jeddah, at 151, still the least expensive despite rising 24 places.

Mercer’s annual cost-of-living survey shows effect of ‘steep increases for expatriate rental accommodation’. Antonie Robertson / The National

Abu Dhabi and Dubai are the 33rd and 23rd most-expensive cities in the world, because of global currency fluctuations and a steep rise in rents for expatriates.

Abu Dhabi moved up 35 places from last year’s Cost of Living survey by Mercer, the human resources consultancy. The cost of living in Dubai has also risen – the city was 67th last year.

Dubai and Abu Dhabi are also the most expensive cities in the Middle East for expatriates, with Jeddah, at 151, still the least expensive despite rising 24 places.

A significant increase in the cost of living was recorded in almost all big Middle East cities.

Beirut, third most expensive after Dubai and Abu Dhabi, climbed 19 places to 44 in the ranking. Manama and Doha moved up 59 places, ranking 91st and 99th respectively.

Amman climbed 49 places to 54, while Riyadh moved up 40 places to 71. Kuwait City was the 117th costliest city, up 30 places from the previous index.

“Many currencies in the Middle East are pegged to the US dollar, which pushed the cities up in the ranking,” said Nuno Gomes, information solutions leader for the Middle East at Mercer.

“Global currency fluctuations were a key factor influencing the significant changes observed in the overall raking.

“Steep increases for expatriate rental accommodation, particularly in Abu Dhabi and Dubai, also contributed to the increase of the cities in the ranking.”

Although the rankings do not have a direct impact on employees working and living in the UAE and other countries in the region, the cost for multinationals to move staff to Middle East countries has greatly increased over the past year, which could reduce the attractiveness of the region for such assignments.

Conversely, regionally based companies looking to send employees overseas on work assignments have found it to be more affordable.

“GCC-based organisations may take this as an opportunity to increase their international assignment activity and provide greater career experiences to high-potential employees,” Mr Gomes said.