Falling rents make UAE more affordable for expats

Mercer's 2011 Cost of Living Survey compares housing, food, and other costs in 214 cities as a guide to help multinational companies determine compensation allowances for their expatriate employees.

The survey found that falling accommodation costs have been a trend throughout the Middle East, causing the cities in the region to fall in the global ranking. Heading the list from the region is Abu Dhabi, which fell to 67th this year from 50th last year, while Dubai is ranked as the 81st most expensive city in the survey, dropping 26 places compared with last year.

Dubai rental costs declining since 2009

"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," said Callum Burns-Green, who heads Mercer's Dubai office. "The government has also announced plans to control inflation in other key areas such as the cost of food."

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).

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.

Tokyo remained 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 ranked as least expensive city

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.

"During the period of data-collection for this year's survey the world has witnessed an incredible number of natural disasters and political upheavals that have all affected the lives of expatriate employees to some extent. The resulting currency fluctuations and the impact of inflation on goods and services - petrol in particular - have impacted the changes to the cost of living ranking of many cities," Callum said.

"Overall, cities in the Middle East have moved down the table reflecting a reduction in cost relative to other regions. Where the depreciation has been accompanied by political stability and good levels of security, such as in the UAE, all other things being equal, we would generally expect a favourable impact on those cities from an economic perspective as expatriates and their employers see a reduced cost of living and doing business there," he added.