Has the cost of living increased for expats living in Dubai, Abu Dhabi?

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Dubai ranks 18th in recently released ‘Cost of Living Cities Ranking 2023’ MercerThe emirate is second only to Tel Aviv, which ranks eighth globally as the second most expensive city in the Middle East for expats to live in.

Meanwhile, Abu Dhabi also moved up the rankings to 43rd.

One of the key drivers behind the change in rankings was the soaring cost of rentals in most cities, the report said. After Singapore (where rents rose by an average of 50% depending on the region), Dubai was the second city in the survey where rental costs had a significant impact on the ranking, with average rents rising by 25%.

In contrast, the housing movement in Abu Dhabi has had a significantly smaller impact, with changes ranging from 6% to 8%, with some areas remaining unchanged from last year.

In addition to rising rents, the Mercer report also found that the cost of living in other categories was also rising in Dubai and Abu Dhabi. For example, the cost of food in supermarkets rose by 11%, transport by 4% and sports and leisure by 5%.

city ​​in Saudi Arabia Cities such as Riyadh (85th) and Jeddah (101st) also climbed 18 and 10 places respectively to top the global rankings.

Commenting on the findings and the cost of living in the UAE, Vladimir Vrzhovski, Head of Financial Services and Technology Industry at Mercer Middle East, said: “Employers in the UAE are taking note of the changes. growth. Many of these organizations are reviewing their compensation packages, and more and more organizations are increasing bonuses rather than increasing base salary to increase total compensation without a long-term commitment. Our research shows that in response, 40% have adopted their 2023 policy to increase housing allowances by an average of 5-10% depending on occupation level.”

Despite the rise in the ranking, the report notes that the relative cost of living in the UAE remains competitive compared to major global cities. Factors such as inflation, exchange rate fluctuations and housing costs have contributed to these changes. The UAE has been proactive in addressing these issues, reflecting its strong economic resilience.

Cost of living drives ranking

Hong Kong has once again topped Mercer’s 2023 Cost of Living Cities Ranking, making it the most expensive city for international workers. It is followed by Singapore, which has risen six places since last year, pushing Zurich into third place.

The global top ten includes five European cities, four of which are in Switzerland and the fifth is Copenhagen. Global centers such as London (17th) and Amsterdam (28th) dropped a few places, while New York (6th) moved up one place.

Explaining the emerging changes, Vrzhovski said: “Despite the benefits of economic growth, the survey shows that key factors shaping the world economy in 2022 will continue to have an impact in 2023, with inflation and exchange rate fluctuations directly affecting internationally mobile employees. wages and savings. As we can also see from the World Economic Forum (WEF) and Marsh McLennan’s Global Risks Report 2023, the cost of living crisis is one of the most serious risks perceived by governments and businesses around the world. Mitigation The dynamics of inflation are dynamics that have to be shared by private business and the public sector.”

The cheapest cities in the ranking include Havana, which dropped 83 places, and two Pakistani cities, Karachi and Islamabad, partly due to a sharp currency depreciation in the middle of last year.