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Dubai and Abu Dhabi ranked as second and third most expensive Middle Eastern cities for expatriate cost of living
Source: Mercer , Author: Posted by BI-ME staff
Posted: Fri June 23, 2017 12:50 pm

UAE.  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, commented: “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 one hundred, including Riyadh (52), Beirut (53), Manama (55), Amman (59), Doha (81) 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, Amman by nine and Doha by five.

Middle Eastern cities that fell just outside of the global top one hundred include Jeddah (117), which rose by four places, as well as Kuwait City (111), Istanbul (142) and Cairo (183), which dropped by eight, forty-one and ninety-two spots respectively.

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: “Globalisation 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 organisational 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.”

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.

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 5, despite changes in ranking positions; Hong Kong, Tokyo, Zurich and Singapore complete the list of most expensive cities in the world.

Mr. 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.”

The Americas
Cities in the United States are the most expensive locations in the Americas, topped by New York City (9), 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.

Ms. 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.”

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 forty-one and fifty-four 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 Ms. Constantin-Métral.

Up thirty-five places from last year, Vancouver (107) has overtaken Toronto (119) to become the most expensive Canadian city in the ranking, followed by Montreal (129) and Calgary (143). Ranking 152, Ottawa is the least expensive city in Canada. “The Canadian dollar has appreciated in value triggering the major jumps in this year’s ranking,” explained Ms. Constantin-Métral.

Europe and Africa
Only three European cities remain in the top 10 list of most expensive cities for expatriates.
Zurich (4) is still the most costly European city on the list, followed by Geneva (7) and Bern (10). Moscow (14) and St. Petersburg (36) surged fifty-three and one hundred and sixteen places from last year respectively due to the strong appreciation of the ruble against the US dollar and the cost of goods and services.

Meanwhile, London (30), Aberdeen (146) and Birmingham (147) dropped thirteen, sixty-one and fifty-one spots respectively as a result of the pound weakening against the US dollar following the Brexit vote. Copenhagen (28) fell four places from 24 to 28. Oslo (46) is up thirteen spots from last year, while Paris fell eighteen places to rank 62.

Other Western European cities dropped in the rankings as well, mainly due to the weakening of local currencies against the US dollar. Vienna (78) and Rome (80) fell in the ranking by 24 and 22 spots, respectively. The German cities of Munich (98), Frankfurt (117), and Berlin (120) dropped significantly as did Dusseldorf (122) and Hamburg (125).

“Despite moderate price increases in most of the European cities, European currencies have weakened against the US dollar, which pushed most Western European cities down in the ranking,” explained Ms. Constantin-Métral. “Additionally, other factors like the Eurozone’s economy have impacted these cities.”

As a result of local currencies depreciating against the US dollar, some cities in Eastern and Central Europe, including Prague (132) and Budapest (176) fell in the ranking, while Minsk (200) and Kiev (163) jumped four and thirteen spots, respectively, despite stable accommodations in these locations.

Quite a few African cities continue to rank high in this year’s survey, reflecting high living costs and prices of goods for expatriate employees. Luanda (1) takes the top spot as the most expensive city for expatriates across Africa and globally despite its currency weakening against the US dollar. Luanda is followed by Victoria (14), Ndjamena (16), and Kinshasa (18). Tunis falls six spots to rank 209 as the least expensive city in the region and overall.

Asia Pacific
Five of the top 10 cities in this year’s ranking are in Asia. Hong Kong (2) is the most expensive city as a result of its currency pegged to the US dollar, which drove up the cost of accommodations locally. This global financial center is followed by Tokyo (3), Singapore (5), Seoul (6), and Shanghai (8).

“The strengthening of the Japanese yen along with the high costs of expatriate consumer goods and a dynamic housing market pushed Japanese cities up in the ranking,” said Ms. Constantin-Métral. “However, the majority of Chinese cities fell in the ranking due to the weakening of the Chinese yuan against the US dollar.”

Australian cities have all experienced further jumps up the global ranking since last year due to the strengthening of the Australian dollar. Sydney (25), Australia’s most expensive city for expatriates, gained seventeen places in the ranking along with Melbourne (46) and Perth (50) which went up twenty-five and nineteen spots, respectively.

India’s most expensive city, Mumbai (57), climbed twenty-five places in the ranking due to its rapid economic growth, inflation on the goods and services basket and a stable currency against the US Dollar. This most populous city in India is followed by New Delhi (99) and Chennai (135) which rose in the ranking by thirty-one and twenty-three spots, respectively. Bengaluru (166) and Kolkata (184), the least expensive Indian cities, climbed in the ranking as well.

Elsewhere in Asia, Bangkok (67) jumped seven places from last year. Jakarta (88) and Hanoi (100) also rose in the ranking, up five and six places, respectively. Karachi (201) and Bishkek (208) remain the region’s least expensive cities for expatriates.

Mercer produces individual cost of living and rental accommodation cost reports for each city surveyed. For more information on city rankings, visit www.mercer.com/col.

Notes
The list of rankings is provided to journalists for reference and should not be published in full. The top 10 and bottom 10 cities may be reproduced in a table.

The figures for Mercer’s cost of living and rental accommodation costs comparisons are derived from a survey conducted in March 2017. Exchange rates from that time and Mercer’s international basket of goods and services have been used as base measurements.

Governments and major companies use data from this survey to protect the purchasing power of their employees when transferred abroad; rental accommodation costs data is used to assess local expatriate housing allowances. The choice of cities surveyed is based on the demand for data.

Photo Caption: Nuno Gomes, Principal Information Solutions Leader at Mercer Middle East, North Africa and Turkey

About Mercer
Mercer is a global consulting leader in health, wealth and careers. Mercer helps clients around the world advance the health, wealth and performance of their most vital asset – their people. Mercer’s more than 20,000 employees are based in more than 40 countries and the firm operates in over 130 countries.

Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global professional services firm offering clients advice and solutions in the areas of risk, strategy and people. With 57,000 employees worldwide and annual revenue exceeding $13 billion, Marsh & McLennan Companies is also the parent company of Marsh, a leader in insurance broking and risk management; Guy Carpenter, a leader in providing risk and reinsurance intermediary services; and Oliver Wyman, a leader in management consulting.

For more information, visit www.mercer.com. Follow Mercer on Twitter @MercerInsights.

Mercer also provides advice and market data on international and expatriate compensation management, and works with multinational companies and governments worldwide. It maintains one of the most comprehensive databases on international assignment policies; compensation practices; and data on worldwide cost of living, housing, and hardship allowances. Its annual global mobility conferences and other events provide companies with the latest trends and research on mobility issues.

Visit https://mobilityexchange.mercer.com/ for details. Follow Mercer’s mobility news on Twitter @Mercer_Talent.

 

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