World’s Expensive Cities: Dubai more affordable than in 2008

The cost of accommodating an employee in London is almost double that of Dubai, Sydney, Los Angeles or Chicago, according to Savills latest Live/Work Index.

The index measures the combined cost of residential and office rental per person per year across 20 leading world-class cities.

Even as Dubai – ranked at No. 9, features among the Top 10 most expensive cities in the world to host an employee – the cost of living and working in the emirate is almost half of that in London, New York and Hong Kong, the Top 3 most expensive cities on the list.

According to Savills, the cost of hosting an employee – including their residence and office rents – works out to $58,300 (Dh214,135 per annum or Dh17,845 per month), which is 49 per cent less than what it would cost a firm to host an employee in London – $112,800 (Dh414,315).

According to the annual index, the average total cost of accommodation per worker, per year in the 20 cities measured is $56,855 (Dh208,828).

Still more affordable than 2008

Additionally, according to the Savills report, the Dubai live/work cost per employee for a company is still lower than the over $60,000 (Dh220,380) per annum, or Dh18,365 per month, that it used to cost an employee to live/work in Dubai in 2008.

Read: Dubai becomes more affordable to live and work in

The cities that have been selected by Savills to be part of the index are a combination of established world cities and their dynamic up and coming rivals, dubbed ‘upstarts’ by Savills.

The cheapest city to host an employee among the selected 20 is Rio de Janeiro, where it costs just $16,500 (Dh60,605) a year.

“The productivity of cities and their value to global businesses clearly has a pronounced effect on demand and hence rental costs. The highest ranking global cities – London and New York – are also the most expensive for businesses and workers to occupy,” says Yolande Barnes, head of Savills world research.

“Arguably, both are achieving a fair price in relation to their composite world city scores, but Hong Kong looks more fully valued,” she notes.

“However, world cities can become a victim of their own success when rents rise to the point where affordability becomes an issue. Rapid urbanisation demands supply elasticity – the test for the top Alpha cities is to supply new business quarters and residential neighbourhoods while capturing the characteristics that made the city attractive in the first place. Growth without social, economic or environmental loss is perhaps one of the biggest challenges facing our world cities today,” she says.

While some of the larger and most prominent world-class cities struggle to replicate their most successful city fabric in new places, other cities are emerging into the global spotlight.

Real estate recovery has not been universal, but rather concentrated in the cities favoured by occupants and investors in the growing digital and creative economies.

This means some relatively small cities, such as Berlin (population 4.3 million) and Dublin (1.7 million) are fast moving into the realm of world-class city status and competing with the giants in a new digital age, while San Francisco’s place in the top 10 now looks secure, says Savills.

Further, real estate growth has shifted back from east to west. From 2005 to 2011, new world cities of ‘BRIC’ (Brazil, Russia, India and China) countries: Shanghai, Mumbai and Moscow as well as Hong Kong and Singapore significantly outperformed London, New York, Paris, Tokyo and Sydney.

But in the years to 2015, this trend has reversed – as economic growth and wealth creation has slowed in the new world, economic revival has driven real estate recovery in Europe and, most especially, in the US, the report says.

“Looking forward, increasing the supply of high quality workspace will be crucial for emerging cities such as Rio de Janeiro, Mumbai and Lagos but this stock might not have to be international-style office blocks if a more local low or mid-tech solution is more appropriate,” says Barnes.

“The vast majority of workspaces across the globe in both emerged and emerging economies remain small-scale, informal and local buildings rather than international architectural-style, plate glass fronted offices.

“The choice between a fine-grain city of mixed-use neighbourhoods and grand masterplans of big blocks faces virtually every world city today and will make a huge difference to the way of life of citizens in their houses as well as work places.”

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