Dubai has fallen sharply in a new list calculating the cost of living in 130 cities around the world.
The World Cost of Living Survey 2012 published by the Economist Intelligence Unit, ranked Dubai in 94th position - a drop of 16 places from last year.
Neighbouring Abu Dhabi, the capital of the UAE, also dropped five places to 91st, the EIU said.
The survey, which looked at the price of more than 400 commodities and goods, ranked Karachi in Pakistan as the cheapest destination globally.
Zurich in Switzerland was named the most expensive place across the world.
The EIU survey showed that three of the four cheapest locations globally - Karachi, Mumbai, Tehran and New Delhi - were from the Indian subcontinent.
Muscat, Oman and Jeddah, Saudi Arabia were also among the least expensive cities in the global list.
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The main reason behind low cost of living in the Middle Eastern cities was the use of price controls and the pegging of currencies to the US dollar, the report said.
At the other end of the list, Zurich toppled Tokyo as the world's most expensive city.
The top 10 also included Geneva, Osaka Kobe, Oslo, Paris, Sydney, Melbourne, Singapore and Frankfurt.
The survey compared over 400 individual prices across 160 products and services. They included food, drink, clothing, household supplies and personal care items, home rents, transport, utility bills, private schools, domestic help and recreational costs.
Last July, Mercer's Cost of Living Survey showed that Abu Dubai (67) was ranked the most expensive city in the Gulf region after Dubai fell 26 places to be ranked at number 81 out of 214 cities covered.
Other cities across the GCC were ranked as follows: Riyadh, Saudi Arabia (135), Manama, Bahrain (157), Kuwait City, Kuwait (159), Doha, Qatar (164), Muscat, Oman (184) and Jeddah, Saudi Arabia (185).