World Cost of Living 2012
Tokyo is the world’s most expensive city for expatriates, pushing Luanda, Angola, down to second position, according to Mercer’s latest Cost of Living Survey. Osaka is in third position, up three places from last year, whereas Moscow remains in fourth and Geneva in fifth positions.
Singapore and Zurich share sixth place, up two and one places respectively since 2011. Ndjamena, Chad, drops five places, but Hong Kong retains its ninth place. Dublin, Ireland fell 14 places to a 72 ranking while changes in exchange rates impact the rankings.
Karachi (214) is ranked as the world’s least expensive city for expatriates, less than one-third as expensive as Tokyo. Recent world events, including economic and political upheavals, have affected the rankings for many regions through currency fluctuations, inflation, and volatility in accommodation prices.
In the UK, London (25) is the most expensive city for expatriates, down seven places from last year. At 133, Birmingham is up 17 places, having overtaken Aberdeen (144) and Glasgow (161). Belfast (165) is the UK’s least expensive city, up 13 places in the ranking since 2011.
The survey covers 214 cities across five continents and measures the comparative cost of over 200 items in each location, including transport, food, clothing, household goods and entertainment.
The cost of housing is also included and, as it is often the biggest expense for expatriates, it plays an important part in determining where cities are ranked. Mercer’s cost-of-living survey is designed to help multinational companies and governments determine compensation allowances for their expatriate employees.
New York is used as the base city and all cities are compared against it. Currency movements are measured against the US dollar.
A pair of jeans costs $174 in Luanda while expats in Moscow pay about $9.60 for an international newspaper, Mercer said. In Tokyo, a cup of coffee including service averages $8.15 and the monthly rent on a luxury two-bedroom unfurnished apartment runs $4,766, according to the firm.
Nathalie Constantin-Métral, principal at Mercer, is responsible for compiling the ranking each year. She commented: “Deploying expatriate employees is becoming an increasingly important aspect of multinational companies’ business strategy, including expansion.
But with volatile markets and stunted economic growth in many parts of the world, a keen eye on cost efficiency is essential, including on expatriate remuneration packages.
Making sure salaries adequately reflect the difference in cost of living to the employee’s home country is important in order to attract and retain the right talent where companies need them.”
“When compared to New York, our benchmark city, most European cities have witnessed a decline in cost of living. Some exceptions exist where accommodation prices have increased or additional VAT taxes have pushed the cost of living up. In North America, most cities have gone up in the ranking, as the US dollar has strengthened against a large proportion of the world’s other currencies.
In Asia, more than six in ten cities moved up in the rankings, including all surveyed cities in Australia, China, Japan and New Zealand. Cities in Australia and New Zealand witnessed some of the biggest jumps, as their currencies strengthened significantly against the US dollar.
Europe, the Middle East and Africa:
At number four in the global ranking, Moscow remains the most expensive city in Europe for expatriates. Geneva follows in fifth position and Zurich in sixth (up one place from last year). The next European city in the ranking, Bern (14), is up two places from last year, following the strengthening of the Swiss franc against the US dollar.
With a few exceptions, the remaining European cities have all dropped in the rankings, mainly due to a considerable weakening of local currencies, including the euro, against the US dollar. Oslo (18) is down three places from 2011, whereas the next European city on the list, London (25) is down seven places. In 28th position, St. Petersburg is up one place.
Paris (37) is down 10 places, whereas Milan (38), Rome (42), Stockholm (46), Vienna (48) and Amsterdam (57) are all down from seven to 13 places. Helsinki (65) and Prague (69) have both slid down the list, 23 and 22 places respectively. Brussels (71) dropped a more moderate nine places, followed by Dublin (72) – – down 14 places. Ranking 207, Skopje, Macedonia, is the least expensive city for expatriates in Europe.
Constantin-Métral explained: “Despite some marked price increases across the region in the first half of last year and widespread increases in VAT charges, most European cities dropped in the ranking. This is mainly due to the unstable economic situation across Europe, which has led to the depreciation of most local currencies against the US dollar. Countries badly hit by the Eurozone crisis, including Greece, Italy and Spain, have also experienced drops in rental accommodation prices.
Tel Aviv (31) continues to be the most expensive city in the Middle East for expatriates, despite dropping seven places since 2011. Ranking 67 and up eight places from last year, Beirut has overtaken Abu Dhabi (76, down nine places from last year). Jeddah, Saudi Arabia (186), continues to rank as the least expensive city in the region.
On the whole, most Middle Eastern cities have dropped in the ranking, mainly because price increases on goods and services have been more moderate here than in our benchmark city, New York. Slight decreases in expatriate accommodation costs were also observed in Abu Dhabi and Dubai,” said Ms Constantin-Métral.
Despite dropping off the top spot on the global list, Luanda, Angola (2), remains the highest ranking city in Africa. Ndjamena, Chad (8), follows, dropping five places since 2011. Dropping eight places, Libreville, Gabon (20), is the next African city on the list, followed by Khartoum, Sudan (26), which is up 18 places.
“It might be surprising to see 20 African cities in the top third of the ranking. The main driver behind this is the difficulty finding good, secure accommodation for expatriates.
So the limited supply of acceptable accommodation is very expensive. The cost of imported international goods is also high, contributing to many regional cities moving up the ranking,” said Constantin-Métral.
In South Africa, Johannesburg (154) and Cape Town (179) have fallen 23 and 21 places, respectively, reflecting the considerable weakening the South African rand has suffered against the US dollar in the last year. Tunis, Tunisia (209), remains the least expensive city for expatriates in the region, down two places from last year.