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Dubai, Abu Dhabi among world's least expensive major cities

By Vicky Kapur

EIU's Cost of Living survey for 2012 has Dubai down from 78th to 94th and Abu Dhabi from 86th to 91th
Falling rents, tame inflation figures and a relatively stronger US dollar have pushed UAE cities Dubai and Abu Dhabi among one of the cheapest cities in the world, a new study has revealed.

The 2012 Cost of Living survey published twice a year by Economist Intelligence Unit (EIU) shows that Dubai fell from No. 78 last year among 140 metropolitan cities surveyed to No. 94 this year - a drop of 16 places.

On the other hand, Abu Dhabi dropped to No. 91 in this year's rankings from No. 86 in the previous edition of the EIU study, suggesting that the capital is now more expensive to live in than its more flamboyant neighbour.

The survey looked at the price of more than 400 commodities and goods, ranked Pakistan's Karachi as the cheapest destination globally, followed by India's Mumbai as second cheapest city and New Delhi as fourth cheapest global city while Iran's Tehran is the third cheapest city in the world.

For the first time in at least two decades of reporting the worldwide cost of living survey, Zurich sits atop the ranking as the world's most expensive city.

An index swing of 34 percentage points pushed the Swiss city up 4 places compared to last year to overtake Tokyo which remains in 2nd place.

Geneva, the other Swiss city surveyed saw a 30 percentage point rise in the cost of living to move up six places into joint third alongside Osaka.

Click here to find out the 10 most expensive cities to live in

The Economist Intelligence Unit's Worldwide Cost of Living survey is a full service that enables human resources line managers and expatriate executives to compare the cost of living in 140 cities in 93 countries and calculate fair compensation policies for relocating employees.

Both Japan and Switzerland have seen strong currency movements over the last few years which have made them relatively more expensive. This has become especially true of Switzerland in the last year, where investors looking for a haven currency outside the beleaguered Eurozone have invested heavily in the Swiss Franc, prompting an unprecedented move by the Swiss government to peg the Swiss Franc to the Euro to keep the currency competitive.

Although Switzerland has long featured in, or around, the world's most expensive cities, the strong swing in currency headwinds is responsible for Zurich's current elevated position. In local terms the opposite has been true, with relatively cheaper imports and a stable economy keeping local price inflation low. This mirrors a similar situation in Japan over recent years which resulted in Tokyo and Osaka traditionally holding the unenviable title of being the world's most expensive cities.

Local inflation in mature markets always has far less influence on the relative cost of living than the currency movements of the countries in question. This also explains the recent presence of Australian cities like Sydney and Melbourne in the ten most expensive locations as last year saw the Australian dollar pass parity with the US dollar from holding half that value a decade ago.

© Emirates 24|7 2012

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