According to Mercer’s 2017 Cost of Living Survey, Dubai and Abu Dhabi are the second and third most expensive Middle Eastern cities for expatriate cost of living.
The global ranking sees Dubai climbing one place from last year to become the 20th most expensive city in the world, with Abu Dhabi just behind in 23rd place and two spots up from last year. The rise in the rankings follows the wider Middle Eastern trend of GCC countries becoming more expensive.
Nuno Gomes, Principal Information Solutions Leader at Mercer Middle East, North Africa and Turkey, said: “Dubai and Abu Dhabi continue to rise in the global rankings in line with increasing cost of living indicators in the UAE. However, this year currency fluctuation was less of a factor in worldwide changes in the rankings, so the slight rise on the list represents a true increase in the cost of living in the UAE when compared to other cities globally.”
In addition to Dubai and Abu Dhabi, six other Middle Eastern cities appeared in the world’s top 100, including Riyadh (52), Beirut (53), Manama (55), Amman (59) and Muscat (92). Manama (Bahrain) climbed by the most spots among Middle Eastern cities, coming in at 16 places higher than last year, with Riyadh and Muscat also rising by five and two places respectively. Meanwhile, Beirut fell by two places and Amman by nine.
Middle Eastern cities that fell just outside of the global top 100 include Jeddah (117), which rose by four places, as well as Kuwait City (111), Istanbul (142) and Cairo (183), which dropped by eight, 41 and 92 spots respectively.
Cairo; experiencing the pinch of currency devaluation
The plummet in Cairo’s ranking follows a major devaluation of its local currency, and the city now represents by far the least expensive city in this part of the world. The other least expensive cities in the region are Istanbul, Jeddah and Kuwait City.
Mercer’s 23rd annual Cost of Living Survey finds that factors like instability of housing markets and inflation for goods and services contribute to the overall cost of doing business in today’s global environment.
Ilya Bonic, Senior Partner and President of Mercer’s Career business, commented: “Globalization of the marketplace is well documented, with many companies operating in multiple locations around the world and promoting international assignments to enhance the experience of future managers. There are numerous personal and organizational advantages for sending employees overseas, whether for long- or short-term assignments, including career development by obtaining global experience, the creation and transfer of skills, and the re-allocation of resources.”
One of the most exhaustive surveys
Mercer’s authoritative survey is one of the world’s most comprehensive, and is designed to help multinational companies and governments determine compensation allowances for their expatriate employees. New York is used as the base city and all cities are compared against it.
Currency movements are measured against the US dollar. The survey includes over 400 cities across five continents and measures the comparative cost of more than 200 items in each location, including housing, transportation, food, clothing, household goods, and entertainment.
Europe, Asia dominating the list
At a global level, European and Asian cities continue to dominate the top of the list. This year’s most expensive city though is Luanda, Angola, back at the top spot, which it also occupied in 2014 and 2015. The same cities remained at the top five, despite changes in ranking positions; Hong Kong, Tokyo, Zurich and Singapore complete the list of most expensive cities in the world.
Bonic added: “While historically mobility, talent management, and rewards have been managed independently of one another, organisations are now using a more holistic approach to enhance their mobility strategies. Compensation is important to be competitive and must be determined appropriately based on the cost of living, currency, and location.”
Cities in the United States are the most expensive locations in the Americas, topped by New York City (nine), San Francisco (22) and Los Angeles (24), which climbed by two, four and three spots respectively. Among other major US cities, Chicago (32) is up two places, Boston (51) is down four places, and Seattle is up seven places. Portland (115) and Winston Salem (140) remain the least expensive surveyed cities for expatriates in the US.
Constantin-Métral commented: “Overall, US cities either remained stable in the ranking or have slightly increased due to the movement of the US dollar against the majority of currencies worldwide.”
Brazilian cities witness major jump
In South America, Brazilian cities Sao Paulo (27) and Rio de Janeiro (56) surged 101 and 100 spots, respectively due to the strengthening of the Brazilian real against the US dollar. Buenos Aires ranked 40 followed by Santiago (67) and Montevideo, Uruguay (65), which jumped 41 and 54 places respectively.
Other cities in South America that rose in the rankings include Lima (104) and Havana (151). Dropping from 94th position, San Jose, Costa Rica (110) experienced the largest drop in the region as the US dollar strengthened against the Costa Rican colon. Caracas in Venezuela has been excluded from the ranking due to the complex currency situation. Depending on which exchange rate is being used, the city would arrive at the top or at the bottom of the ranking.
“Inflationary concerns continued to cause some South American cities to rise in the ranking, whereas the weakening of the local currencies in some of the region’s cities caused them to drop in the ranking,” said Constantin-Métral.