Beirut is the 10th most expensive city

Dubai has fallen from the ranks of the world’s most expensive places to live in a development that could harm the city’s economic recovery, a survey has revealed.

Dubai has been steadily falling in the ranks of the most expensive cities in the world but this year it dropped off the scale of the top 20, the report said.

It came in at 31st, compared with its position of 12th last year.

“Price decreases have been … spectacular in Dubai,” the report by the consultancy EuroCost International said.

Billy Rautenbach, the managing director of The Property Store, said renting a home could take up as much as 70 per cent of a resident’s salary in 2008, while it cost only 20 per cent now.

“Maybe your salary has been cut or your turnover has declined, but the cost of living in Dubai has gone down considerably more,” Ms Rautenbach said.

Rental and sales prices have dropped between 15 and 70 per cent since their peaks. Abu Dhabi moved down one slot to 12th, from its position of 11th most expensive city last year.

The capital has seen its rental rates decline across the board but they are still at a significant premium to Dubai’s vast residential supply.

Shanghai and Beijing also dropped off the top 20 rankings, due to the global housing recession and exchange rate fluctuations.

Tokyo, London, and Hong Kong were the three most expensive cities for rents, according to the survey. Meanwhile, Beirut surged to the 10th most expensive city from a previous ranking of 28. “Beirut is now the most expensive city in the Middle East, just before Abu Dhabi,” the report said.

Ms Rautenbach said Beirut was seeing rents increase because of a sharp undersupply of homes.

EuroCost said four new cities had joined the ranking as their commercial importance increased.

Sydney became the 14th most expensive place to rent, up from its rank of 41st last year, as the Australian dollar appreciated against the euro.

Kinshasa in the Democratic Republic of Congo is now the second most expensive city in Africa at 18th, behind Luanda, Angola, which is ranked fifth.

Rio de Janeiro made the biggest jump, to 19th from 71st last year.