Dubai has climbed three spots to become the world’s 15th most expensive city for international employees, according to the latest survey by Mercer. Hong Kong retained the top position globally, followed by Singapore.
The rise in Dubai’s cost of living is primarily attributed to escalating property rentals, which surged significantly after the pandemic.
According to Mercer’s 2024 Cost of Living City Ranking, rents for three-bedroom properties jumped 15% year-on-year, with a 21% increase from 2023 to 2024, among the highest across major cities.
Global Challenges: Rising Living Costs Impact Talent Mobility
“Increasing housing costs globally have posed challenges for talent mobility among employers. Volatile inflation patterns have further reduced the purchasing power of international assignees, placing additional strain on their compensation packages. These factors can hinder employers in attracting and retaining top talent, leading to increased expenses in compensation and benefits, restricted talent mobility, and higher operational costs,” Mercer stated in its recent report. Yvonne Traber, Mercer’s global mobility leader, added, “High living costs may prompt assignees to adjust their lifestyles, reduce discretionary spending, or even struggle to meet basic needs.”
Rental rates soared dramatically post-pandemic, according to real estate consultancy Asteco, doubling in popular areas like Jumeirah Islands, Palm Jumeirah, Dubai Sports City, Dubai Hills Estate, and Damac Hills due to an influx of foreign workers.
The survey encompassed 226 cities across five continents, comparing the costs of over 200 items in each location, including housing, transportation, food, clothing, household goods, and entertainment. New York City served as the base city, and currency fluctuations were measured against the US dollar. In Dubai, grocery and personal care item costs also contributed to the overall increase in living expenses.
Price Hikes on Essentials Drive Up Dubai’s Cost of Living
The study highlighted price hikes for eggs, olive oil, and coffee, while costs for petrol, haircuts, and jeans declined between March 2023 and March this year.
Within the Middle East region, Tel Aviv ranked next as the most expensive city, dropping eight places to 16th, followed by Abu Dhabi (43), Riyadh (90), Jeddah (97), Amman (108), Manama (110), Kuwait City (119), Doha (121), and Muscat (122).
Globally, aside from Hong Kong and Singapore, Swiss cities Zurich, Geneva, and Basel rounded out the top five most expensive cities. Conversely, Abuja and Lagos in Nigeria, along with Islamabad in Pakistan, were identified as the least expensive cities for international employees by Mercer.
