The Cost of Living: the Middle East’s Most Expensive Cities in 2025

As the global cost of living continues to fluctuate, the Middle East has emerged as a region with pronounced disparities. While traditionally viewed as a hub of tax-friendly policies and high expatriate earnings, a closer inspection reveals the significant financial challenges facing residents and newcomers alike. This is particularly evident in the latest cost of living index rankings, which benchmark cities worldwide using New York City (index 100) as a baseline. The following analysis explores the top 10 most expensive cities in the Middle East as of January 1, 2025, and the underlying factors driving their high costs.

1. Jerusalem, Israel (Index: 95) Jerusalem, the most expensive city in the Middle East, owes its high ranking to a convergence of geopolitical, economic, and cultural factors. The city’s housing market has been significantly strained by limited land availability and high demand, driving property prices sky-high. A robust tech ecosystem and an influx of international residents have increased living expenses. Imported goods, coupled with a strong shekel, also contribute to elevated costs. Additionally, the Israeli economy's centralized nature in key sectors like energy, food, and government services keeps prices high across the board. For potential newcomers, budgeting for housing and daily essentials will be critical.

2. Abu Dhabi, United Arab Emirates (Index: 80) Abu Dhabi stands out as a financial and political hub of the UAE. Its allure lies in its luxurious lifestyle offerings and high-quality infrastructure. However, this comes at a premium. Rental prices for villas and apartments, particularly in premium areas, are steep. Furthermore, the cost of utilities and imported goods adds to the financial burden. For expatriates, while tax-free income is attractive, the cost of education and healthcare can diminish financial benefits.

3. Dubai, United Arab Emirates (Index: 79.4) Dubai, a global tourism and business magnet, narrowly follows its Emirati counterpart. Known for its glitzy skyscrapers and world-class amenities, the city’s cost of living is driven by high rents and premium-priced leisure activities. Fuel and transportation costs remain relatively low, but the expense of international schools and private healthcare can be daunting for families considering relocation.

Housing is often the largest expense in any city. While Dubai has a broader range of housing options (from high-end luxury to affordable), Abu Dhabi’s rental market tends to be more limited and slightly more expensive overall.

Although both cities have well-developed infrastructure, public transport options are more extensive in Dubai (e.g., Dubai Metro, more buses). The reliance on personal vehicles in Abu Dhabi tends to make transportation slightly more expensive due to higher fuel consumption, insurance, and vehicle maintenance costs. Additionally, taxi fares and services like ride-hailing apps might be more expensive in Abu Dhabi compared to Dubai, where competition is higher and transport systems are more developed.

While healthcare and education costs are generally high across the UAE, Abu Dhabi tends to have higher prices for private healthcare and schools, primarily due to its smaller market. Private schooling, in particular, is more competitive in Dubai, where a wider range of international schools operate, leading to better pricing options.

The cost of leasing or buying commercial space in Abu Dhabi tends to be higher due to lower supply and more regulated development, impacting costs for businesses. This can trickle down to higher prices for services, goods, and overall living expenses.

Overall, while both Dubai and Abu Dhabi are expensive cities to live in, Abu Dhabi’s relatively smaller, more controlled market, combined with limited housing supply, higher transportation costs, and a focus on high-end services, tends to make its overall cost of living slightly higher than that of Dubai. However, Dubai’s rapid growth and tourism-heavy economy create more pricing variety, offering more affordable options in various sectors.

Both cities are approximately 20% cheaper than New York City but still offer a luxurious lifestyle that comes with a price. These emirates are known for their ambitious architecture, high-end shopping, and upscale dining, contributing to their high living costs.

4. Sanaa, Yemen (Index: 78.2) Sanaa’s high cost of living, despite Yemen’s economic struggles, is a paradox. Conflict and economic instability have disrupted supply chains, causing significant inflation for basic goods. Limited access to essential services, coupled with currency devaluation, has placed enormous strain on residents. Relocating to Sanaa is challenging, requiring extensive planning to navigate these constraints.

5. Kuwait City, Kuwait (Index: 74) Kuwait City’s high living costs stem from a reliance on imports and a robust demand for high-end services. Housing and transportation remain pricey, with limited availability of mid-range options. While expatriates enjoy subsidized utilities, private schooling and leisure activities drive up expenses, making careful financial planning essential.

6. Doha, Qatar (Index: 69.3) Doha’s rapid development, particularly in preparation for global events such as the FIFA World Cup, drove up living costs, but have become more reasonable in global terms in the past year. The city’s infrastructure investments and luxury lifestyle offerings appeal to expatriates but come with premium price tags. Housing costs, especially in central locations, are less of a premium for the majority of expats compared to the past few years.

7. Riyadh, Saudi Arabia (Index: 66) As Saudi Arabia undergoes economic diversification, Riyadh has emerged as a more costly destination than a decade ago. Vision 2030 projects have spurred infrastructure development, raising housing and service prices. Expats moving to Riyadh should anticipate higher living expenses, particularly for private education and imported goods.

8. West Bank, Palestinian Territories (Index: 64.4) The West Bank’s economic complexities, influenced by political tensions and restricted trade, have created a high cost of living. Essentials like food and housing are priced steeply due to supply constraints. For anyone moving to this region, understanding the local economic dynamics is vital to managing living expenses.

9. Beirut, Lebanon (Index: 61.9) Beirut’s ranking reflects the deep economic crisis gripping Lebanon. Currency devaluation and hyperinflation have made basic goods exorbitantly expensive. While the city remains a cultural hub, those relocating must navigate a volatile economy and prepare for fluctuating costs.

10. Jeddah, Saudi Arabia (Index: 61.2) Jeddah’s rising costs are linked to urban development and its role as a commercial hub. Though slightly more affordable than Riyadh, housing and utilities remain expensive, and private education costs are significant for families. Expats should weigh these factors when considering a move.

Understanding the COLI The Cost of Living Index (COLI) is a useful tool for understanding how expensive a city is compared to others. The index takes into account various expenses such as housing, transportation, groceries, and dining out. A city with a COLI closer to 100 is more expensive, with New York City serving as the benchmark at 100.

Impact on Relocation Decisions The high cost of living in these cities necessitates strategic planning for anyone considering relocation. Factors such as housing, education, healthcare, and daily expenses vary widely but are universally affected by local economic dynamics. Employers and policymakers must address these challenges to ensure the region remains an attractive destination for global talent.

Use Xpatulator’s Cost of Living Calculators and Tools for informed decision-making about the cost of living and the salary / allowance / assignment package required to maintain the current standard of living.