A tight lid on the prices of many day-to-day items, coupled with a relatively stronger US dollar, made Dubai one of the most affordable cities to live in, according to a new study.
The 2013 Cost of Living survey published by Economist Intelligence Unit (EIU) shows that Dubai’s cost of living rank declined from No. 94 last year among 131 metropolitan cities surveyed to No. 96 this year – a drop of two places.
This is over and above the decline of 16 spots that Dubai witnessed last year, when it dropped from No. 78 worldwide to No. 94. The continuous decline in the emirate’s relative cost of living (Dubai was ranked at No. 80 five years ago, and No. 56 a decade ago) boosts its competitiveness as a magnet for businesses as well as professional workers.
Neighbouring Abu Dhabi, on the other hand, rose 8 positions in the index, from No. 91 in the previous edition of the EIU study to No. 83 this year, suggesting that the UAE capital is a relatively more expensive place to live in than its more flamboyant neighbour.
In the past five years, Abu Dhabi has indeed become a more expensive place to live in, primarily because rentals have firmed up and the price of petrol – which was earlier subsidised more than what it was than Dubai – has increased and is now standardised across the country.
The emirate was ranked No. 92 five years ago while 10 years ago, it was ranked at No. 63.
The survey, which looked at the price of more than 400 commodities and goods, ranked India’s Mumbai and Pakistan’s Karachi as the cheapest destinations globally (ranked at a joint No. 130), followed by Indian capital New Delhi (No. 129), Nepal’s Kathmandu (No. 128) and Algiers (Algeria) as well as Bucharest (Romania) both ranked at No. 126, comprising the five least expensive cites in the world.
Japan’s Tokyo re-emerged as the world’s most expensive city this year – a title that it has held for 14 of the last 20 years, closely followed by Osaka, another Japanese city. Although Tokyo’s position is little surprise, the increased prominence of Asian cities among the most expensive is becoming noticeable, as is the fact that European cities are becoming more affordable if only because of economic fears and growth in emerging markets.
Europe has, of course, long been home to some of the world’s most expensive places, but for perhaps the first time, no European city is ranked among the Top 3 most expensive cities to live in. Although Oslo, Zurich, Paris and Geneva remain among the 10 most expensive, European cities have seen the cost of living slide thanks to a strengthening US dollar and rising wages in emerging markets.
Fears over the single currency have pushed the index of Eurozone cities down by an average of over 13 percentage points over the last 12 months, the EIU said in a media statement this morning.
“The cost of living in Europe has seen relative declines thanks to economic austerity and currency fears,” comments Jon Copestake, editor of the report, which looks at over 400 individual prices. “But Asian cities have also been rising on the back of wage growth economic optimism. This means that over half of the 20 most expensive cities now hail from Asia and Australasia.”
In particular, Australian cities have been rising very quickly up the rankings as economic growth has supported inflation and currency swings to make them more costly.
The current survey sees Sydney rated as third and Melbourne as fifth most expensive cities surveyed. They are joined in the top 10 by Singapore and the Venezuelan city of Caracas. Although the presence of the Venezuelan capital in the top 10 may come as a surprise, it is entirely due to artificially high exchange rate controls. In fact, if alternative parallel exchange rates were applied, Caracas would actually be on a par with the cheapest cities surveyed.
The bottom ranked cities have a familiar feel, both in terms of geography and consistency. While Asia is home to over half of the world’s 20 priciest cities, it is also home to six of the 10 cheapest.
Five of the bottom 10 (and six of the bottom 11) cities hail from the Indian subcontinent (defined as India, Pakistan, Bangladesh, Nepal and Sri Lanka). Mumbai and Karachi are the joint cheapest locations in the survey, with indices of just 44 when New York is set as 100.