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DUBAI: The Middle East’s favorite expat destinations Dubai and Abu Dhabi have been ranked as the most expensive cities to live in the Arab world, Mercer’s latest Cost of Living Survey showed, with the former moving up the rankings to the 20th spot and the UAE capital coming in at 23 on the list.
Four other Gulf cities — Riyadh (52nd), Manama (55th), Doha (81st) and Muscat (91st) — also figured in the top 100 rankings, while Kuwait City and Jeddah were placed 111th and 117th respectively, according to the report.
Luanda in Angola is the most expensive city for expats in the world, followed by Hong Kong, Tokyo, Zurich and Singapore.
Nuno Gomes, principal information solutions leader for Mercer Middle East, North Africa and Turkey, said Dubai and Abu Dhabi’s rise in the rankings is attributable to the rapid increase in costs in the UAE compared with other cities.
“The survey covers all elements of spending, not only on daily life in terms of food, transportation, etc, but also other elements such as housing and other goods and services that are consumed on a regular basis,” Gomes said, according to newspaper.
“If you look at all those factors, we have seen a slowdown, or at least not an increase on the housing front, which really has contributed in the past to accelerate the position in the rankings. But generally speaking, food at home, food outside of home, other goods and services have become more expensive. It is not a tremendous increase, we are talking about a climb in one (and two) positions in the rankings.”
On the other hand, Gomes noted that currency fluctuations did not have a huge effect on spiraling living costs in the Gulf states.
“This year, currency fluctuation was less of a factor in worldwide changes in the rankings — so the slight rise on the list represents a true increase in the cost of living in the UAE when compared to other cities globally,” Gomes said.
It may be a different story, however, when the Gulf Cooperation Council-wide value added tax (VAT) comes into effect January 1 next year.
With the introduction of VAT, Gomes said there was expectation that “some of that will get reflected in consumer spending as well and prices at supermarkets and other goods and services.
“There is an expectation that inflation will (continue to) increase over the next two to three years. That is only going to propel Dubai and Abu Dhabi further up in the rankings. We don’t know what sort of currency issues we will face in the near future, but if everything remains as it is, then we could expect that Dubai and Abu Dhabi continue to rise slightly in the rankings due to higher inflation,” he said.