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Dubai: According to Mercer’s 2023 Cost of Living report, Dubai and Abu Dhabi have risen significantly in the global cost of living rankings to rank 18th and 43rd respectively.
One of the main drivers behind the change in rankings in 2023 is the soaring cost of rentals, with Dubai the second city after Singapore to see a significant increase in rents, with an average increase of 25%. In contrast, Abu Dhabi experienced significantly less impact on housing movements, with changes ranging from 6% to 8%, with some areas unchanged from last year.
In addition to rising rents, the report also noted an increase in the cost of living across all categories in both Dubai and Abu Dhabi. Supermarket food prices rose by as much as 11%, transport prices rose by 4%, and sports and leisure prices rose by 5%. However, the UAE’s economic fundamentals are helping to combat inflation and strengthen the country’s economy, driven by non-oil economic expansion and wage growth.
“Employers in the UAE are taking note of these changes. Our research shows that organizations will experience an average annual growth rate of 4.2% in performance through 2023,” said Vladimir Vrzhovski, Industry Leader, Financial Services and Technology, Mercer Middle East. “Many of them are reviewing their compensation packages, and more and more are increasing bonuses rather than increasing base salary to increase total compensation without a long-term commitment.”
“Our research shows that, in response, 40% of organizations surveyed have reviewed their 2023 policies, increasing housing allowances by an average of 5-10% depending on occupation level,” he added.
competitive cost of living
Despite rising rankings, the cost of living in the UAE remains competitive compared to major global cities. Changes in rankings are attributed to factors such as inflation, housing costs and exchange rate fluctuations. The UAE has been proactive in addressing these issues, reflecting its strong economic resilience.
According to the report, Hong Kong (No. 1) remains the most expensive city for expats to live in, followed by Singapore (No. 2), which climbed to second place. Global centers such as London (17th) and Amsterdam (28th) dropped some places, while New York (6th) moved up one place.
Among Middle Eastern cities, Tel Aviv has the eighth highest cost of international staff, while Cairo ranks 217th and Amman 110th.
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