Dubai and Abu Dhabi Experience Sharp Increase in Cost of Living

Dubai and Abu Dhabi have moved up in the rankings for the cost of living, as per Mercer’s Cost of Living 2023 survey. Dubai is now 18th, while Abu Dhabi is 43rd. The UAE’s economy continues to show strong growth and resilience, which is promising for the future.

Rising rental costs have influenced the rankings. Dubai, after Singapore, has experienced significant increases in rent, averaging 25%. In contrast, Abu Dhabi has seen lower housing movement, with changes ranging from 6% to 8% or remaining the same in some areas.

The survey also highlights increases in the cost of living in other categories in both cities, such as food in supermarkets (up to 11%), transportation (4%), and sports and leisure (5%).

Employers in the UAE are responding to these changes. Many organizations are increasing bonuses rather than base salaries to enhance total compensation without a long-term commitment.

Approximately 40% of surveyed organizations have reviewed their 2023 policies, increasing housing allowances by an average of 5% to 10% based on the career level.

Despite the rise in rankings, UAE’s cost of living remains competitive compared to major global cities. Factors like inflation, exchange rate fluctuations, and housing costs contribute to these changes. The UAE has been proactive in managing these issues, showing its economic resilience.

Globally, Hong Kong remains the most expensive city for expats, followed by Singapore in second place. London and Amsterdam have dropped in the rankings, while New York has moved up one spot.

In the Middle East region, Tel Aviv (Israel) is the costliest city for international employees, ranked 8th. Cairo (Egypt) is at 217th, and Amman (Jordan) is at 110th.

The survey states that factors shaping the world’s economy in 2022 will continue to impact 2023. Inflation and exchange-rate fluctuations directly affect the pay and savings of expat employees.

The cost-of-living crisis is considered one of the most severe risks globally, as stated in the 2023 Global Risks Report from the World Economic Forum and Marsh McLennan. Reducing inflation requires cooperation between private businesses and the public sector.

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