Notwithstanding the fall in cost of living in UAE, Abu Dhabi and Dubai continue to be the most expensive cities in the Middle East for expatriates, according to a new report from the global consultancy firm, Mercer.
The survey covers 214 major cities of the world. UAE capital slid 17 places from 2010 to emerge at the 67th spot in Mercer's 2011 Cost of Living survey, while Dubai dropped 26 places to rank 81.
"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, head of Mercer's Dubai office.
Despite the high cost of living UAE has become more affordable to expats. The country has also regained its competitive advantage on the global scene in comparison with other international hubs. "This is particularly true of Dubai, which really is the business hub for the region," said Philippe Dauba-Pantanacce, senior economist for global markets, Middle East and North Africa at Standard Chartered Bank.
The biggest component of the CPI [consumer price index] basket in the UAE is the rent item. Rentals have fallen between 40 to 60 per cent from peak to trough, which has had a major impact on the general cost of living since it represents the biggest expense of a typical household, he added.
Other cities in the GCC were ranked as follows: Riyadh (135), Manama (157), Kuwait City (159), Doha (164), Muscat (184) and Jeddah (185).