Beirut most expensive city in Arab world

BEIRUT is now the most expensive city in the Arab world, according to a recently released report by a London-based research group. The Lebanese capital ranks at number 52 in the world.

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By  Rhys Jones Published  July 10, 2005

BEIRUT is now the most expensive city in the Arab world, according to a recently released report by a London-based research group. The Lebanese capital ranks at number 52 in the world. The annual study, conducted by Mercer Human Resource Consulting, considers cost of living factors such as utilities, transportation, rent, sport and leisure, restaurants alcohol and tobacco. The only city more expensive in the region is Tel Aviv, Israel, while the cheapest is Tehran, Iran, which ranks number 129 in the world out of 144 cities surveyed. Compared with New York, the study’s reference city, Beirut’s prices are the highest in sports and leisure and unfurnished house renting. Thanks to rising investment in real estate from the Gulf, a luxury apartment in Downtown Beirut can cost as much as US$4 million. Electricity, telephone lines, and other utilities are also vastly more expensive in Lebanon than in other Arab countries. “The prices continue to increase and we can’t do anything about it,” said Zuhair Berro, president of Consumer Lebanon. “Cellular costs are among the highest in the world. Electricity and water are the highest in the region,” he added. At $0.44 a minute, Lebanon’s pre-paid mobile phone rates are the highest in the Arab world. Electricity cost per kilowatt hour are more than three times the cost in neighboring Jordan and Syria. Berro said he plans to submit a letter to the country’s newly elected parliament asking that reforms in key state-owned sectors such as electricity and telecommunications be accelerated. “The government uses these services to expand their budget,” explained Berro. “We need competition in all the sectors,” he added. UAE cities such as Dubai and Abu Dhabi have risen in the rankings due to a housing crunch that has pushed rents up. All the other Gulf cities surveyed fell in the rankings apart from Dubai, which jumped by 10 places. Rapidly expanding Dubai is the eighth most expensive city in the region. In the past year, Dubai has risen above the likes of Washington and Toronto to become the world’s 73rd most expensive city. However, there are more expensive cities in the Middle East. Kuwait City ranks one place higher than Dubai at 72nd, but it has fallen 12 places since last year’s report. Beirut is also higher than Dubai, at 52nd, but has fallen 15 places in the last 12 months. Nevertheless, Dubai has by far the highest inflation rate in the Middle East. Mercer Human Resource Consulting carries out the annual survey in order to help multinational companies set appropriate compensation for their expatriate employees. “The challenge for multinational companies is to ensure their expatriate compensation packages remain fair and attractive enough to retain key employees, while making sure they do not pay over the odds and find themselves at a competitive disadvantage,” said Yvonne Sonsino, a partner at Mercer. “While there has been significant investment by multinationals in traditionally low-cost countries, the gap appears to be closing and local salaries are shooting up as a result of higher living expenses and an increased demand for skills. Companies need to keep pace with the changes, and we find that many are now seeking guidance as they make regular review of their expatriate compensation packages a standard procedure,” she added.

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