Asian and European cities — particularly Hong Kong (2), Zurich (3), Singapore (4), and Geneva (5) — top the list of most expensive cities for expatriates, according to Mercer’s 2015 Cost of Living Survey.
The costliest city for the third consecutive year is Luanda (1), the capital of Angola. Despite being recognized as a relatively inexpensive city, the cost of imported goods and safe living conditions in this country are available at a steep price, said Mercer.
Other cities appearing in the top 10 for expatriates are Shanghai (6), Beijing (7) and Seoul (8) in Asia; Bern (9); and N’Djamena (10). The world’s least expensive cities for expatriates are Bishkek (207), Windhoek (206) and Karachi (205).
The survey is designed to help multinational companies and governments determine compensation allowances for expatriate employees. New York is used as the base city, and all cities are compared against it. Currency movements are measured against the U.S. dollar.
The survey includes 207 cities across five continents and measures the comparative cost of more than 200 items in each location, including housing, transportation, food, clothing, household goods, and entertainment.
Currency fluctuations — driven by economic and political unrest — are contributing to the cost of expatriate packages for those on the front line of globalization of their organizations.
“As the global economy has become increasingly interconnected, close to 75 per cent of multinational organizations are expecting long-term expatriate assignments to remain stable or increase over the next two years to address business needs,” said Ilya Bonic, senior partner and president of Mercer’s talent business. “Sending employees abroad is necessary to compete in markets and for critical talent, and employers need a reliable and accurate reflection of the cost to their bottom line.”
Canadian cities dropped in this year’s ranking with the country’s highest-ranked city, Vancouver (119), falling 23 places. Toronto (126) dropped 25 spots, while Montreal (140) and Calgary (146) fell 17 and 21 spots, respectively.
“The Canadian dollar continues to weaken against the U.S. dollar, triggering major slips in this year’s ranking,” said Nathalie Constantin-Métral, principal at Mercer.
Cities in the United States climbed dramatically in the cost of living ranking due to the strengthening of the U.S. dollar against other major currencies. While New York (16), the highest-ranked city in the region, remained the same as last year, cities on the West Coast, including Los Angeles (36) and Seattle (106) climbed 26 and 47 places, respectively. Among other major US cities, Chicago (42) moved up 43 places, Washington, DC (50) moved up 42 places, Honolulu (52) moved up 45 places, and Houston (92) moved up 51 places. Cleveland (133) and Winston Salem (157) were among the less expensive cities in the US surveyed for expatriates.
In South America, Buenos Aires (19) climbed 67 places to rank as the costliest city this year due to a strong price increase for goods and services, said Mercer. The Argentina capital and financial hub is followed by São Paolo (40) and Rio de Janeiro (67). Other cities in South America that rose on the list of costliest cities for expatriates include Santiago (70) and Managua (199).
Europe, the Middle East and Africa
Three European cities are in the list of top 10 most expensive cities for expatriates. Zurich (3), the most costly European city, is followed by Geneva (5) and Bern (9). Switzerland remains one of the most expensive locations for expatriates due to the surge of the Swiss franc against the EUR.
Moscow (50) and St. Petersburg (152) dropped 41 and 117 spots, respectively, as a result of Russia’s ruble losing significant value against the U.S. dollar, lower oil prices and a lack of confidence in the currency following Western sanctions over the crisis in Ukraine, said Mercer.
Aside from cities in the United Kingdom, Western European cities dropped in the rankings mainly due to the weakening of local currencies against the U.S. dollar. While London (12) remained steady, Aberdeen (82) and Birmingham (80) rose in the ranking. Paris (46), Vienna (56), and Rome (59) fell in the ranking by 19, 24, and 28 spots, respectively. The German cities of Munich (87), Frankfurt (98), and Berlin (106) dropped significantly as did Dusseldorf (114) and Hamburg (124).
As a result of local currencies depreciating against the U.S. dollar, most cities in Eastern and Central Europe fell in the ranking, as well. Prague (142), Budapest (170) and Minsk (200) dropped 50, 35, and nine spots, respectively, despite stable accommodations in these locations.
Tel Aviv (18) continues to be the most expensive city in the Middle East for expatriates, followed by Dubai (23), Abu Dhabi (33), and Beirut (44), which have all climbed in this year’s ranking. Jeddah (151) continues to be the least expensive city in the region despite rising 24 places, said Mercer.
Several cities in Africa continue to rank among the most expensive, reflecting high living costs and high prices of goods for expatriates. Luanda (1) remains the most costly city in Africa and globally, followed by N’Djamena (10), Victoria (17), and Libreville (30). Despite climbing 5 spots, Cape Town (200) in South Africa continues to rank as the least expensive city in the region reflecting the weak South African rand against the US dollar.
Five of the top 10 cities in this year’s ranking are in Asia. Hong Kong (2) is the most expensive city as a result of its currency pegged to the U.S. dollar and driving up the cost of living locally. This global financial center is followed by Singapore (4), Shanghai (6), Beijing (7), and Seoul (8) – all climbing in the ranking with the exception of Singapore which remained steady. Tokyo (11) dropped four places.
Australian cities have continued to fall in the ranking due to the depreciation of the local currency against the U.S. dollar, said Mercer. Sydney (31), Australia’s most expensive city for expatriates dropped five places in the ranking along with Melbourne (47) and Perth (48) which fell 14 and 11 spots, respectively.
India’s most expensive city, Mumbai (74), climbed 66 places in the ranking due to its rapid economic growth, inflation on the goods and services basket, and a stable currency against the U.S. dollar, said Mercer. This is followed by New Delhi (132) and Chennai (157) which rose in the ranking by 25 and 28 spots, respectively. Bangalore (183) and Kolkata (193), the least expensive Indian cities, climbed in the ranking, as well.
Elsewhere in Asia, Bangkok (45) jumped 43 places from last year. Hanoi (86) and Jakarta (99) also rose in the ranking, up 45 and 20 places, respectively. Karachi (205) and Bishkek (207) remain the region’s least expensive cities for expatriates.
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