By Andy Sambidge Tuesday, 7 July 2009 9:33 AM

Dubai and Abu Dhabi have both raced up the rankings in the latest list showing the world's most expensive places to live for expats, it was revealed on Tuesday.
While the vast majority of European cities have fallen in the ranking, most Middle Eastern cities have experienced a reverse trend, the Mercer Cost of Living Survey showed.

Both Dubai and Abu Dhabi have risen significantly in the ranking, moving from 52nd to 20th and 65th to 26th respectively.

Report authors said this was mainly due to the UAE dirham being fixed to the US dollar.

Tel Aviv remained the most expensive city in the Middle East, although it is the only one in the region to move down in the world ranking, from 14th to 17th.

The cost of living for expats based elsewhere in the GCC also rose with Kuwait City moving from 94th to 77th, Manama from 112th to 82nd, and Riyadh from 119th to 90th.

Jeddah was the least expensive city in the region ranking 109th from 126th.

Tokyo has knocked Moscow off the top spot to become the world’s most expensive city for expatriates, according to the survey.

Osaka came second, up nine places since last year, whereas Moscow was now in third place.

Geneva climbed four places to fourth position and Hong Kong moved up one to reach fifth.

Johannesburg has replaced AsunciĆ³n in Paraguay as the least expensive city in the ranking.

In Mercer’s survey, New York was used as the base city for the index and scores 100 points, all cities were compared against New York and currency movements were measured against the US dollar.

Tokyo scored 143.7 points and was nearly three times as costly as Johannesburg with an index score of 49.6.

The survey covers 143 cities across six continents and measured the comparative cost of more than 200 items in each location, including housing, transport, food, clothing, household goods and entertainment.

A significant reshuffle of cities was observed in this year’s ranking, mainly due to considerable currency fluctuations worldwide.

London and Oslo, both previously in the top 10, have dropped 13 and 10 places respectively. The same trend can be seen in Australia, New Zealand and India. Sydney has dropped 51 places from 15th to 66th and Mumbai has slipped down to 66th from 48th place.

Commenting on the study, Bassam Gazal, who heads the Mercer Survey practice across the Middle East said: "As a direct impact of the economic downturn over the last year, there have been significant fluctuations in most of the world's currencies.

"As currency fluctuations play a large role in the cost of living rankings this, has had a profound impact on this year's ranking.

"In the cases of Dubai and Abu Dhabi, a stronger US dollar meant an increase in rankings for these cities. That being said, in this study the currency fluctuations and inflation rates affect only the expatriate programmes for which the Cost of Living survey is dependent on - accounting for the jump in rankings for the GCC countries included."

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