Dubai cheaper than global heavyweights

DUBAI has become relatively cheaper to live in over the last two years, despite rising property prices. In a recently released update to its 2003 survey, the United Bank of Switzerland (UBS) ranks Dubai as the 46th most expensive city in the world but classes it as cheaper than global heavyweights London, New York, Hong Kong and Singapore.

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By  Rhys Jones Published  March 20, 2005

DUBAI has become relatively cheaper to live in over the last two years, despite rising property prices. In a recently released update to its 2003 survey, the United Bank of Switzerland (UBS) ranks Dubai as the 46th most expensive city in the world but classes it as cheaper than global heavyweights London, New York, Hong Kong and Singapore. The 2003 issue of ‘Prices and earnings’ by UBS rated Dubai as the 38th most expensive city in the world, going on the cost of a basket of 115 goods and services that European consumers typically buy. The methodology also takes rent prices of different properties into account, as well as wages and working hours across various professions. “Standardised price and earnings surveys were carried out in 71 cities around the world in the first quarter of 2003 and were updated towards the end of last year,” said Alexander Kobler, head of Swiss Economic Research, UBS. “In terms of living costs, Oslo remains the most expensive of the 71 cities surveyed, now followed by Copenhagen, Tokyo, Zurich and London,” he added. The report concludes that prices in Dubai have fallen slightly over the last two years but the drop has been offset by a decrease in wages. All the data UBS collected was subject to daily fluctuations in exchange rates and was then converted into a single reference currency. As such, in terms of global price comparisons, Dubai scored 65.1 out of 100 in 2003 and 57.9 in the 2005 update. However, wages fell by 1.4 points with Dubai’s workers earning considerably less, when wage figures, social security contributions, working hours, exchange rates and inflation were taken into account. UBS took account of exchange rates and economic growth when measuring wages, but also factored in productivity improvements passed on to employees in the form of higher pay. It also assumed that real wage growth equated to 40% of real GDP growth in industrialised countries and 60% in emerging markets. The report also measured purchasing power by comparing the price of popular, everyday products against wages in different cities. Hamburger lovers in Dubai, for example, have to work 20 minutes to pay for a Big Mac, whereas their counterparts in New York can afford one with just 12 minutes’ pay. A worker in Mumbai must work 89 minutes for a kilo of rice, while a Swiss needs only five to seven minutes, depending on the variety. “If the price of a kilo of bread in a given city is divided by the net hourly wage there (the weighted average of the 13 occupations surveyed), we find that the average global citizen must work 24 minutes to earn the money to pay for it,” said Kobler. The surveys were conducted by employees of local UBS offices, correspondent banks, consumer organisations and chambers of commerce as well as by universities, members of the student organisation AIESEC and selected individuals. survey is due in spring 2006.

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