Complex Made Simple

Most expensive city to live in the Middle East revealed

Considering various factors such as instability of housing markets, low inflation, and fluctuating prices of goods and services, Mercer has revealed the rankings of the most expensive cities for expatriates. In its 24th annual Cost of Living Survey, Mercer has declared Cairo as the least expensive city in the Middle East.

In fact, with the region welcoming hundreds of thousands of people every year from all cultures and countries, for work or tourism, it is worth studying its cost of living, because you might want to relocate to another country in the region.

Most expensive city: Dubai or Riyadh

According to the Mercer’s survey, Dubai is adjudged the most expensive city in the Middle East. However, globally it is ranked 26th most expensive city in terms of cost of living in 2018.

READ: Dear expats, the UAE is fixing all your problems

In the global ranking, Dubai was followed by Abu Dhabi (40th), Riyadh (45th), Manama (77th), Jeddah (118th), Muscat (119th) and Kuwait (121st). However, the overall annual cost of living for expatriates has dropped throughout 2018 when compared with its value in 2017. Cairo (188th) remains the least expensive city in the Middle East.

“On the whole, most Middle Eastern cities have dropped in the ranking, due to decreases in rental accommodation costs throughout the region,” said Yvonne Traber, Global Mobility Product Solutions Leader at Mercer.

According to the survey, both Dubai and Abu Dhabi registered a drop in the cost of living in 2018. Dubai dropped by seven places, from the 19th place in 2017 to the 26th this year.

As for Abu Dhabi, it dipped by 18 places, reaching 40th in 2018 from 22nd in 2017.

Is the living cost really going down?

“The ranking dip does not necessarily mean that the real cost of living is going down in Dubai and Abu Dhabi, as this ranking compares global cities. We can say that the actual cost of living for an expat is not going down but is slashing when you compare it with other global cities like Hong Kong, Tokyo and New York,” said Eugene Watson, a personal wealth manager based in Dubai.

READ: Survey: 78% of investors see crypto market gaining 30% in value in 3 years

Talking about the reasons behind the dip in Dubai and Abu Dhabi’s ranking in 2018, Watson added: “During last year, rents were going down in Dubai and Abu Dhabi, so this could be one factor.”

Rob Thissen, Senior Associate of Mercer in Dubai, said that one reason behind this could be depreciation of the US dollar versus several major currencies over the last 12 months, implying that the Dirham does not go as far when traveling overseas.

“When I look at the list, particularly cities that are higher such as Hong Kong (1st), Tokyo (2nd), Singapore (4th) and New York (13th) – these are all in typically stable markets with stable and strong currencies; and some of those currencies to the Dirham changed last year. So that’s why Dubai and Abu Dhabi have moved down,” a UAE-based news outlet quoted Thissen as saying.

READ: UAE car insurance buyers skipping add-on covers to to keep premiums low

Living cost not impacted by VAT

Industry experts in the UAE stated that the introduction of VAT in 2018 did not play any major role in increasing the cost of living in the UAE.

“If we look at various survey’s findings, VAT is not having any significant effect on peoples’ monthly budgets. It impacted less than 50 percent of total expenditures of people in the UAE,” stated Watson.