Dubai, Abu Dhabi more affordable for expats

Both Abu Dhabi and Dubai plunge down expensive cities rankings on cheaper rents.

Declining rents in Dubai and Abu Dhabi have made the cities relatively affordable ones for expatriates compared to others around the globe, the latest Mercer Cost of Living Survey has found.

While Dubai ranks 55 on the list of most expensive cities, Abu Dhabi is only slightly more expensive with a rank of 50, which it shares with Frankfurt in Germany, the survey said.

It also threw up a few surprises: displacing Tokyo from its traditional spot at the top of the list, Luanda, Angola's capital, has emerged as the world's most expensive city for expatriates. Tokyo came in second, while, in another surprise, another African city completed the top three – Chad's capital ?Ndjamena. Moscow was in fourth position followed by Geneva in fifth.

The rear was brought up by Karachi, which the survey found to be the least expensive city for expatriates to live in.

The Mercer survey covered 214 cities across five continents and measured the comparative cost of over 200 items in each location, including housing, transport, food, clothing, household goods and entertainment.

"While across the UAE, the cost of living has remained relatively stable, we are seeing that accommodation costs have continued to decrease in Abu Dhabi and Dubai, driving down the overall cost of living for expats," said Dr Markus Wiesner, who heads Mercer's Dubai office.

He said Mercer increased the number of cities surveyed this year from 143 to 214, which means that the cities cannot be compared with their previous rankings.

For the first time, the ranking of the world's top 10 most expensive cities includes three African urban centres: apart from Luanda and Ndjamena, Libreville in Gabon comes in at seventh place.

The top 10 also includes three Asian cities: besides Tokyo in second place, Osaka at six and Hong Kong jointly ranked eighth. Moscow, Geneva and Zurich, which shares the eighth spot with Hong Kong, are the most expensive European cities, followed by Copenhagen at 10.

Middle East

The most expensive city in the Middle East is Tel Aviv, Israel's financial capital, which was ranked 19. Middle East next appeared on the list only at No50.

At 186, Tripoli in Libya is the least expensive Middle Eastern location, preceded by Saudi Arabia's Jeddah at 181 and Muscat in Oman at I76.

Analysing the Middle East market, the survey said that in Saudi Arabia, residential rents had fallen slightly since last summer, as the Jeddah real estate market noticed a slowdown in demand due to the global crisis. Rents in Riyadh have been more or less stable over the past couple of months as demand and supply are balanced.

Dubai's residential rental market, however, continued its decrease at the end of 2009 and the beginning of 2010. Weakening demand and huge supply are the main reasons for the arrow moving downwards, the survey said.

"Many tenants have been moving from larger units to smaller ones due to a reduction in household income and adoption of a more cautious approach towards household expenditure. Moreover, there has been an increase in available accommodation for rent, as many investors, unable to sell their properties, have been placing those units on the rental market," it said.

This, however, is the very reason why expats now find it cheaper to live in the UAE's most important cities and have more options to pick from.


In the Asia-Pacific, two Japanese cities, Tokyo and Osaka, are the most expensive. Other Asian cities ranked high are Hong Kong (8), Singapore (11), Seoul (14), Beijing (16), Nagoya (19) in Japan, Shanghai (25) and Taipei (78). A total of seven Chinese cities appeared on the 2010 rankings, highlighting the increased commercial importance to multi-nationals of locations other than just Beijing Shanghai and Hong Kong.

New Delhi (85) is India's most expensive city followed by Mumbai (89) and Bangalore (190). Elsewhere, Jakarta in Indonesia ranks 94, followed by Vietnam's Hanoi and Thailand's Bangkok (both at 121) and Kuala Lumpur (138) in Malaysia. Pakistan's Islamabad (212) and Karachi (214) are the region's two least expensive cities.

Taking stock of prices in India, the survey said the price increases in Mumbai are relatively stable in comparison to other Indian cities. The energy bill for a resident in New Delhi has increased because of the increase in water tariffs as well as more extensive usage of generators due to power cuts, which started in June 2009 and accelerated in November 2009. The cuts are mainly due to the ongoing construction works for the Commonwealth Games that will take place on October 3-14 this year, it said.

"The residential rental markets in India have not recovered yet and demand is still quite low in Mumbai, New Delhi and Bangalore. Property rental prices have remained pretty stable since the last survey. The rising number of expatriates coming back to India should have a positive impact on the real estate market and, as a consequence, a slight increase in rental rates is expected during the coming months," said the survey.

In China, Beijing and Shanghai saw lower rentals as a result of demand situation.

"Average rentals of villa, luxury apartment and serviced apartment properties have continued to decline slightly since March 2009. In general, ample availability of quality properties and service apartments remains. In 2010 in Shanghai, rents started to moderately increase over the past months as the housing market prices rebounded with high demand. In Beijing, the low demand forces landlords of different types of properties, including villas, luxury apartments and serviced apartments, to decrease the rents. As a consequence, average rentals have continued to decline slightly over the past six months but are expected to stabilise in 2010," said the survey.


Reflecting the increasing economic importance of Africa across all business sectors, Mercer's ranking now includes many African cities. Many rank highly in the 2010 survey, reflecting the high living costs for expats.

After Luanda, Ndjamena and Libreville, the region's most expensive cities are Victoria (13) in the Seychelles, Niamey (23) in Niger and Dakar (32) in Senegal. In South Africa, Johannesburg and Cape Town rank 151 and 171, respectively.

At the bottom of the pile, Addis Ababa (208) in Ethiopia is the cheapest African city, preceded by Windhoek (205) and Gaborone (203) in Namibia and Botswana, respectively. "We've seen demand increase for information on African cities from across the business spectrum – mining, financial services, airlines, manufacturer, utilities and energy companies," commented Nathalie Constantin-Métral, a Senior Researcher at Mercer.

Europe and the Americas

After Moscow, Geneva, Zurich and Copenhagen, the most expensive cities in Europe are Oslo (11) in Norway, Milan (15) in Italy, London and Paris (both 17) and Bern (22) in Switzerland.

Other expensive European cities include Rome (26), Vienna (28), St Petersburg (30) Amsterdam (35), Baku (36) Dublin (42), Istanbul (44), Barcelona (49), Frankfurt (50), Madrid (52) and Lisbon (72).

The Latvian capital of Riga ranks 81, followed by Budapest (94), Warsaw (96) and Tallinn (115) in Estonia. The least expensive city in Europe is Tirana (200) in Albania, followed by Macedonia's Skopje (197), Sarajevo (196) in Bosnia Herzegovina, Minsk (192) in Belarus and Belfast (182) in UK.

Sao Paolo, Brazil (21), New York (27), Rio de Janeiro, Brazil (29), Havana, Cuba (45) and Los Angeles (55), tied with Dubai, with were the most expensive in the Americas.

Inflation as measured on the Mercer basket of goods has remained relatively low in Europe. The euro gained more than six per cent against the US dollar between March 2009 and March 2010. However, the euro has started to lose ground since April 2010.

Since March 2010, the euro has continued to lose ground. To illustrate this point, it has lost almost six per cent against the Indian rupee. As a consequence, the mean to mean cost of living index Paris-New Delhi increases from 75 to 78, the survey said.

How the scales tilt

A number of firms that have employees working overseas do not apply negative cost of living indices, which means that in places where the cost of living in the host location is lower than in the home location, the employees assigned abroad benefit from the difference in living costs.

However, in case the cost of living index increases, but remains below 100, the expatriates will see no change in their allowances, and may perceive they are losing money.

In a way, this is true, as the windfall they have enjoyed is decreasing, but it is still a financial gain that the employees enjoy over and above their net salary and expatriate allowances.

It is important to communicate this to an employee and to demonstrate that as long as the cost of living in the host location is lower than in the home location, and the negative index is not applied, the expatriate will always be enjoying a financial advantage, said the Mercer survey.

UK and US

In the UK, the value-added tax increased on January 1, 2010, from 15 per cent to 17.5 per cent. As a consequence, the price movement of the Mercer basket for cities covered in the UK ranged between 2.5 per cent and 4.5 per cent inflation for 12 months.

"Residential rental prices decreased from March 2009 to September 2009 as a consequence of falling demand for rental accommodation in London. As it became difficult to sell properties, homeowners were trying to let unsold houses. This caused a rise in the supply of accommodation available, and landlords had to reduce rents to be competitive. Prices stabilised in late 2009 as demand rose again at the end of 2009. Residential rental prices have been increasing in 2010 due to the economic recovery in London. This can largely be attributed to a strong demand for rentals."

The weakening of the US dollar against major currencies has moved US cities down in the survey rankings. As a consequence, transfers from US cities will see their cost of living indices increase to compensate for the weakening of the dollar.

Accommodation vacancies in the US hit records in the fourth quarter of 2009, and rents continue to decrease as landlords scramble to retain existing tenants and attract new ones.

"With an unenthusiastic economic environment, residential rents in New York City continued to decrease over the past months. Demand in the city is weakening, which is leading to reductions in rental prices."

Rents in the Los Angeles area, too, have been declining over the past months.

In Canada, it noted that rental prices have been increasing slightly during the past months, though home prices decreased. Vancouver keeps benefiting from the Winter Olympics, and prices have gone up.

UAE expats speak up

Naoshad Pajan, chemical engineer, resident of Bur Dubai

"My expenses have gone down from 2009, because my friend circle is not partying so much any more! Jokes aside, the cost of having a life outside home – going out, eating out and such like – has gone up slightly, say by four or five per cent. But, on the other hand, the rents are stable. And the thing in Dubai is that you can choose your lifestyle. Being single, I can save about 60-70 per cent of my salary, my major expenses being the car and the rent. Two years ago, I was saving less."

Kim Thomson, publisher, resident of Mirdiff

"I would say the cost of living has gone up by about five per cent. It is not the rent that is up, but food and electricity. The cost of shopping for provisions has definitely increased. Also, we do not go out often, as I find that a meal outside is quite expensive. Luckily, the car does not cost my anything, as it is a company car. But we do not manage to save much at the end of the month."

George Gomes, Hotel apartment manager, resident of Bur Dubai

"There has been no major change in the cost of living in Dubai in the past one year. For an average family with one child, I would put the minimum monthly salary essential for leading a normal life in Dubai at around Dh14,000. The major chunk of salary for a person like me goes into paying the house rent. I have lived in Dubai for the past 17 years and believe the emirate knows how to fight back. I am sure that Dubai will see much better times in future."


  • Twitter
  • submit to reddit
comments powered by Disqus

Editor's Choice




How do you plan to contribute towards the ‘Year of Giving’?

Most Popular

In Case You Missed It ...

eSuggestion eComplain eComplain eSuggestion

Emirates 24|7

Your Feedback

Are you satisfied with your browsing experience?

Happiness Meter Icon