Provided by Mercer: 29/6/10
Luanda in Angola is the world’s most expensive city for expatriates, according to the latest Cost of Living Survey from Mercer. Tokyo is in second position, with Ndjamena in Chad in third place. Moscow is in fourth position followed by Geneva in Switzerland which placed fifth, while Karachi in Pakistan is ranked as the world’s least expensive city. The survey found that Luanda is three times as costly as Karachi.
About the survey
The survey covers 214 cities across five continents and measures the comparative cost of over 200 items in each location, including housing, transport, food, clothing, household goods and entertainment. It is the world’s most comprehensive cost of living survey and is used to help multinational companies and governments determine compensation allowance for their expatriate employees. New York is used as the base city for the index and all cities are compared against New York. Currency movements are measured against the US dollar. The cost of housing – often the biggest expense for expats - plays an important part in determining where cities are ranked.
For the first time, the ranking of the world’s top 10 most expensive cities includes three African urban centres: Luanda (1) in Angola, Ndjamena (3) in Chad and Libreville (7) in Gabon. The top ten also includes three Asian cities; Tokyo (2), Osaka (6) and Hong Kong (jointly ranked 8). Moscow (4), Geneva (5) and Zurich (joint 8) are the most expensive European cities, followed by Copenhagen (10).
Nathalie Constantin-Métral, a Senior Researcher at Mercer, said “In the past couple of years, corporate assignments have become truly global, with expatriates and ‘global assignees’ being transferred across all parts of the world. However, global mobility is still an expensive undertaking for companies, so selection of the right candidates and a real understanding of the costs involved in relocating staff to other countries are essential - especially in today’s economic environment.”
“Our cities are selected based on requests from our multinational clients,” she continued, “Notably African cities now figure prominently reflecting the growing economic importance of the region to global companies across all business sectors,” she said.
Asia Pacific
For companies extending their business to the Asia Pacific region, Australian and New Zealand cities remain cost competitive destinations for global workers in comparison to cities such as Tokyo (2) and Osaka (6), the region’s most expensive, and other major commercial hubs such as Hong Kong (8), Singapore (11) and Beijing (16) which ranked within the top 20 cities.
Australia’s most expensive city, Sydney, ranked 24th, followed by Melbourne (33), Brisbane (55), Perth (60) and Canberra (74), while Adelaide (90) is the country’s least expensive city. In New Zealand, Auckland ranks in 149th place, while Wellington is the least expensive city of the two (163). The Australian Dollar and the New Zealand Dollar significantly strengthened against the US Dollar, as at February 2010, making these cities more costly for expatriates coming from the US. These currency movements reflect the stability of the Australian and New Zealand economies earlier this year, relative to the rest of the world.
Anthony Shippard, Senior Associate at Mercer, said for organisations to establish true ‘value of living’ in a particular location, they must also take quality of living standards into consideration when making these decisions.
“If we take into account the results of Mercer’s 2010 Quality of Living survey earlier this year, it found that Australian and New Zealand cities rank among the world’s top 36 cities for overall quality of living, dominating the rankings in the Asia Pacific region,” Mr Shippard said.
“Combining the Cost of Living findings with overall Quality of Living standards reinforces the need for multinational organisations to regularly review multiple external factors and data shifts when determining their expatriate management programs,” he said.
Other highly ranked Asian cities are Seoul (14), Nagoya (19) in Japan, Shanghai (25) and Taipei (78). A total of seven Chinese cities appeared on the 2010 rankings, highlighting the increased commercial importance to multi-nationals of locations other than just Beijing, Shanghai and Hong Kong.
New Delhi (85) is India’s most expensive city followed by Mumbai (89) and Bangalore (190). Elsewhere, Jakarta in Indonesia ranks 94, followed by Vietnam’s Hanoi and Thailand’s Bangkok (both at 121) and Kuala Lumpur (138) in Malaysia. Pakistan’s Islamabad (212) and Karachi (214) are the region’s two least expensive cities.
Europe and the Middle East
After Moscow, Geneva, Zurich and Copenhagen, the most expensive cities in Europe are Oslo (11) in Norway, Milan (15) in Italy, London and Paris (both 17) and Bern (22) in Switzerland. Other expensive European cities include Rome (26), Vienna (28), St Petersburg (30) Amsterdam (35), Baku (36) Dublin (42), Istanbul (44), Barcelona (49), Frankfurt (50), Madrid (52) and Lisbon (72). Riga ranks 81 followed by Budapest (94), Warsaw (96) and Tallinn (115). The least expensive city in Europe is Tirana (200) in Albania, followed by Macedonia’s Skopje (197), Sarajevo (196) in Bosnia Herzegovina, Minsk (192) in Belarus and Belfast (182) in the UK.
Tel Aviv (19) is the most expensive city in the Middle East, followed by Abu Dhabi (50) and Dubai (55). Tripoli (186) in Libya is the least expensive Middle Eastern location followed by Jeddah (181) in Saudi Arabia and Muscat (I76) in Oman.
Nathalie Constantin-Métral commented: “Accommodation costs have continued to decrease in Abu Dhabi and Dubai, driving down the cost of living for expats. The rankings are also very susceptible to exchange rate fluctuations. However, in places like Jeddah and Tripoli, the lack of suitable accommodation for expats combined with strong demand, has pushed costs up.
Africa
Reflecting the increasing economic importance of this region across all business sectors, Mercer’s rankings prepared for this press release now includes many African cities. Many rank highly in the 2010 survey, reflecting the high living costs for expatriate employees. After Luanda, Ndjamena and Libreville, the region’s most expensive cities are Victoria (13) in the Seychelles, Niamey (23) in Niger and Dakar (32) in Senegal. In South Africa, Johannesburg and Cape Town rank 151 and 171, respectively. At the bottom of the ranking, Addis Ababa (208) in Ethiopia is the cheapest African city followed by Windhoek (205) and Gaborone (203) in Namibia and Botswana, respectively.
“We’ve seen demand increase for information on African cities from across the business spectrum – mining, financial services, airlines, manufacturer, utilities and energy companies,” commented Ms Constantin-Metral.
“Many people assume that cities in the developing world are cheap but this isn’t necessarily true for expatriates working there. To entice talented staff to these cities, multi-nationals need to provide the same standard of living and benefits that these employees and their families would experience at home. In some African cities, the cost of this can be extraordinarily high - particularly the cost of good, secure accommodation,” she added.
The Americas
Cities in Brazil are amongst the most expensive locations in the Americas with Sao Paulo (21) ranked as the most expensive city in both North and South America, as a result of the strengthening of the Brazilian Real against the US Dollar. In South America, Brazil’s Rio de Janeiro (29) is the second most expensive city followed by Havana (45) in Cuba, Colombia’s Bogota (66) and Brazil’s capital, Brasilia (70). Buenos Aires ranks 161. Nicaragua’s Managua (212), Bolivia’s La Paz (211) and Asuncion (204) in Paraguay were the least expensive cities in South America.
In the United States, New York (27) is the most expensive city followed by Los Angeles (55). Washington ranks 111. The least expensive City in the United States is Winston Salem (197). Mexico City (166) is the most expensive city in Mexico, while the cheapest is Monterrey (193). Vancouver (75) is the most expensive Canadian city followed by Toronto (76) and Montreal (98). Ottawa (136) is Canada’s least expensive city.
“The weakening of the US Dollar against a number of other currencies, combined with a decrease in the cost of rental accommodation, has pulled US cities down the rankings,” commented Ms Constantin-Metral. “However, since March 2010 the dollar has strengthened so the situation does fluctuate.”
More information
Individual cost of living and rental accommodation cost reports are produced for each city surveyed.
For further information or to purchase copies of the city reports, visit mercer.com/costofliving
This information has been prepared by Mercer (Australia) Pty Ltd ABN 32 005 315 917 for general information only. The information does not take into account your personal objectives, financial situation or needs. Therefore, you should not act on this information if you have not considered the appropriateness of this information to your personal objectives, financial situation and needs. You should consult a licensed or appropriately authorised financial adviser before making any investment decision.
