"A lot of federal taxes are not going to be increased and certain fees have been reduced or frozen; all these measures will lower the cost of living and ease of doing business, improve competitiveness and boost the overall economy," he said.

Commenting on VAT's impact on cost of living in the UAE, Kumar said the levy is not a big amount when compared globally. "Going forward, the cost of living will go down despite the introduction of VAT because the government's recent initiatives will have a far-reaching effect."

Nimish Makvana, senior partner at Crowe, said rents had dipped in Dubai and Abu Dhabi because more projects were delivered and many more are in the pipeline to be handed over.

"Due to reduction in commercial rents, the UAE becomes more affordable and competitive for retailers, who pass on these benefits to consumers and end-users," Makvana said, adding that when the market becomes competitive, consumers benefit by availing of various offers and promotions.

Rob Thissen, Senior Associate at Mercer in Dubai and responsible for Global Talent Mobility Services, said given the decreased relative cost of living in Dubai compared to other cities, the UAE continues to be an attractive country for expat employees.

According to Mercer, the two UAE cities are still the most expensive in the Gulf. Globally, six out of the top 10 most expensive cities are in Asia, with Hong Kong topping followed by Tokyo, Zurich, Singapore, Seoul, Luanda, Shanghai, Ndjamena, Beijing and Bern rounding off the top 10 cities. Tashkent, Tunis, Bishkek, Banjul and Karachi are the top five least expensive cities.

"On the whole, most Middle Eastern cities have dropped in the ranking due to decreases in rental accommodation costs throughout the region," said Yvonne Traber, global mobility product solutions leader at Mercer.

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