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

Life in the Middle East often conjures images of bustling bazaars, opulent skyscrapers, and sweltering deserts. Yet for expatriates eyeing relocation, the region's economic realities are just as critical as its cultural allure. Xpatulator's April 2025 Cost of Living survey underscores this sharply, placing Jerusalem at the summit of the Middle East's priciest locales. Jerusalem, almost matching New York City with a cost of living index of 97.3 (where New York is 100), stands markedly apart from its regional neighbours.

Curiously, the next tier of cities—Sanaa in Yemen, Abu Dhabi and Dubai in the United Arab Emirates (UAE)—hover around an index of 80, roughly 20% cheaper than New York. Yet their relative costliness within the region remains considerable. Notably, the UAE alone claims two spots within the top five, underscoring its unique position as a financial and commercial nucleus.

Most cities across the Middle East maintain indexes significantly lower than their counterparts in Europe, the Asia-Pacific, and the Americas. This affordability reflects varied economic structures, government subsidies, lower taxation, and generally lower cost bases. However, anomalies persist, driven primarily by local factors ranging from political instability to wealth derived from energy resources.

Jerusalem’s elevated costs stem from several interlocking dynamics. Israel's strong economic infrastructure, advanced healthcare and education systems, combined with its geopolitical tensions, fuel higher prices, especially in housing, security, and goods reliant on imports. Its proximity to Western economic standards exacerbates this effect, making daily life notably expensive compared to most neighbouring cities.

Contrastingly, Sanaa presents an exceptional anomaly. Its high index of 80.0 is primarily the result of ongoing conflict and severe economic disruption, causing dramatic inflation and shortages. Prices are driven upwards by scarcity rather than economic prosperity. Thus, despite appearing expensive, the quality of life and amenities in Sanaa starkly contrast with more prosperous counterparts like Abu Dhabi and Dubai.

The UAE's prominence in the rankings, with both Abu Dhabi and Dubai featuring strongly, is no surprise. Both emirates leverage substantial hydrocarbon revenues alongside a robust diversification strategy into tourism, finance, and logistics. The resultant affluent lifestyles, modern infrastructure, and expansive expatriate communities naturally lift the cost structures, particularly in housing, international education, and luxury goods.

Kuwait City, ranked fifth with an index of 73.4, similarly derives its relatively high costs from oil wealth and subsequent government spending that boosts local economic activity and demand. Doha, Qatar’s capital, follows at sixth place with an index of 69.2. Doha's costliness is tempered by significant government subsidies, though its luxury accommodation, education, and leisure sectors remain expensive, buoyed by preparations for global events and a steady influx of expatriates.

Riyadh, Saudi Arabia’s burgeoning capital, ranked seventh, reflects a strategic vision transforming the kingdom into a commercial and cultural hub, raising living costs in the process. The ongoing economic liberalisation and infrastructure expansion under Saudi Vision 2030 significantly contribute to the rising living standards and expenses.

Completing the list, West Bank (Palestinian Territories), Beirut (Lebanon), and Manama (Bahrain) occupy ranks eight, nine, and ten respectively. While these cities show lower cost indexes than their regional peers, unique local circumstances drive their relative expenses. The West Bank grapples with political constraints inflating import costs, while Beirut endures prolonged economic crises, paradoxically elevating basic commodity prices through shortages and currency devaluation. Manama, while relatively moderate, maintains costliness due to Bahrain's steady reliance on expatriate labour and imported goods.

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.

For potential expatriates, these insights are invaluable. Higher indexes in cities like Jerusalem or Dubai translate into greater expectations for salary negotiations and living allowances, necessitating careful financial planning. Employers and individuals must evaluate not only the raw numbers but the qualitative dimensions—security, stability, and quality of life—that accompany these costs.

In summary, while most Middle Eastern cities remain notably cheaper than many global economic hubs, distinct pockets of elevated costs persist. Driven by unique mixtures of wealth, conflict, policy, and development, these cities underscore the complexities inherent in evaluating life across this diverse and dynamic region.

Index Note: All figures represent Xpatulator’s April 2025 international cost of living indexes. New York = 100.

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.