Dubai and Abu Dhabi drop down list of world’s most expensive cities
In Blog Dubai
Dubai dropped 19 places, from 23rd most expensive city to 42nd, in Mercer’s 2021 Cost of Living City Ranking, while Abu Dhabi also dropped 17 places from 39th to 56th. The 2021 ranking, which includes 209 cities across five continents, measures the comparative costs of more than 200 goods and services in each location.
US asset manager Mercer said the pandemic had shaken up its Cost-of-Living City ranking, as countries continued to struggle with the economic, political and health fall out. COVID-19, it said, continues to cause unparalleled disruption to international mobility, prompting companies to re-evaluate how they will manage a mobile workforce in a post-pandemic world.
As a result, Ashgabat in Turkmenistan now tops the list as most expensive city for international employees, bumping Hong Kong to second place, while Beirut had risen 42 positions to third as a result of a severe and extensive economic depression due to escalation of several crises — the country’s largest financial crisis, COVID-19 and the Port of Beirut explosion in 2020.
In the Middle East, the UAE had continued to diversify its economy, which reduced the impact of the oil industry on GDP. This ongoing process had caused a negative price movement in both Dubai and Abu Dhabi. N’Djamena (13), Lagos (19) and Libreville (20) were first, second and third costliest cities in Africa for international employees. Zambia capital Lusaka, ranked 208, was the least costly city in Africa.
Three Swiss cities were among the top 10 list of most expensive locations. Zurich remains the costliest European city at number five in the global ranking, followed by Geneva (8) and Bern (10). The strengthening of local currency resulted in several European cities climbing in the ranking, with Paris climbing to 33. Local currency in the UK remained strong with London (18), Birmingham (121) jumping one and eight places, respectively.
More than half of the top 10 most expensive cities were located in Asia. Ashgabat in Turkmenistan climbed one position in this year’s ranking, making it the costliest city for international employees, both in Asia and globally. Hong Kong (2), Tokyo (4), Shanghai (6), Singapore (7) and Beijing (9) followed suit. Mumbai (78) was India’s most expensive city but dropped 18 places in this year’s ranking due to a relatively weak Indian rupee in comparison with other cities in the ranking.
Australian cities had climbed in this year’s ranking because the local currency significantly gained value against the USD. Sydney (31), Australia’s most expensive ranked city for international employees, experienced a climb of 35 places, followed by Melbourne (59) with a climb of 40 places.
Cities in the US dropped in this year’s ranking mostly due to currency fluctuations between March 2020 and March 2021, despite the rising inflation of goods and services. New York (14) ranked as the most expensive city in the US, though it had dropped eight positions since last year, followed by Los Angeles (20), San Francisco (25), Honolulu (43) and Chicago (45).
The Canadian dollar has appreciated in value in relation to the USD, triggering jumps in this year’s ranking. Vancouver (93) was the most expensive Canadian city in the ranking, followed by Toronto (98) and Montreal (129). Ottawa, ranking 156, was the least expensive city in Canada.
Mercer’s Cost of Living Survey is designed to help employers understand the importance of monitoring currency fluctuations and assessing the inflationary and deflationary pressures on goods, services and accommodation in all operating locations. The data also helps employers determine and maintain compensation packages for employees on international assignments and when working abroad.
Additionally, the cost of living in a location can have a significant impact on its attractiveness as a destination for talent, and influences site selection decisions for organisations expanding and transforming their geographic footprint.
“Cost of living has always been a factor for international mobility planning, but the pandemic has added a whole new layer of complexity, as well as long-term implications related to health and safety of employees, remote working and flexibility policies, among other considerations,” said Head of Mercer Strategy Ilya Bonic. “As organisations rethink their talent and mobility strategies, accurate and transparent data is essential to compensate employees fairly for all types of assignments.”