Dubai: Falling rental prices is one of the main reasons behind a lower cost of living across the Middle East; helping to drive down the region’s ranking in the 2012 Worldwide Cost of Living Survey, produced by Mercer, a global HR consultancy.

The survey, released Tuesday showed that Abu Dhabi has fallen nine places over the last year, to rank at 76, and Dubai in turn has fallen 13 spots to position 94. Tokyo, meanwhile has taken over as the most expensive city in the world for expatriates, displacing Luanda, Angola, which dropped to second place. Further, the top ten most expensive cities continue to be predominantly led by those located in Europe and Asia.

In addition to the lower accommodation costs across the UAE, the fall in Abu Dhabi and Dubai’s ranking has come about as a result of several other factors that range from slower increase in the prices of goods and services in the country relative to the base city, New York, to the stabilisation of the real estate market in the Middle East.

UAE cities have lost the lead as the most expensive cities in the Middle East, with Beirut moving forward to position 67. The UAE is nonetheless still the most expensive place to live in the GCC, ahead of Riyadh, KSA (123), Manama, Bahrain (156), Kuwait City, Kuwait (134), Doha, Qatar (169), Muscat, Oman (179) and Jeddah, KSA (186).

Regarded as the most comprehensive in the region, Mercer’s survey, now in its 22nd year, is used by governments and firms alike to determine remuneration packages for expatriates across the globe. It outlines worldwide trends and details a host of statistics used to compare the cost of living in the Middle East, in relation to the rest of the globe.

Zaid Kamhawi, Mercer’s IPS Business Leader in the Middle East, commented, “Playing on an infusion of factors, the UAE has seen its cities prove less expensive on a global scale. The Cost of Living study continues to bring these developments to light, and allows companies to accurately determine allowances and remain competitive when attracting and retaining the best staff, while giving authorities the opportunity to adapt economic strategies accordingly.”

“Overall, there has not been a significant shift in the positions of cities in the Middle East — with the exception of Damascus, Syria. This shift is most likely linked to the sharp depreciation of the Syrian Pound compared to the US Dollar,” he added.

“Manama, Tunisia and Cairo have seen very little change in their cost of living ranking compared to last year. On the other hand, Kuwait City has moved up on the list to position 134, as rental accommodation costs there have increased.”

Moreover, the rate of inflation in the region is considerably lower than that of New York, which has resulted in more moderate price increases on Middle Eastern goods and services selected for our study.

In total, the survey calculates cost of living for 214 cities around the world, comparing costs for over 200 factors in each location including: housing, transport, food, clothing, household goods and entertainment. The base city for comparison has been set as New York City, with currencies measured against the US dollar.