Tokyo has knocked Moscow off the top spot of the
world’s most expensive cities for expatriates.
According to the
latest Cost of Living Survey from Mercer, Osaka is in second
position, up nine places from last year, whereas Moscow is now in
third place. Geneva climbed four places to fourth position
and Hong Kong moved up one to reach fifth. Johannesburg replaced Asunción in Paraguay as
the least expensive city in the ranking.
In Mercer’s survey, New York is used as the base
city for the index and scores 100 points, all cities are compared
against New York and currency movements are measured against the
US dollar. Tokyo scored 143.7 points and is nearly three times as
costly as Johannesburg with an index score of 49.6.
The survey covers 143 cities across six continents and
measures the comparative cost of over 200 items in each location,
including housing, transport, food, clothing, household goods and
entertainment. It is widely regarded as one of the world’s most comprehensive cost of living
surveys and is used to help multinational companies and
governments determine compensation allowance for their
significant reshuffle of cities can be observed in this year’s
ranking, mainly due to considerable currency fluctuations
worldwide. The majority of European cities moved down in the
ranking with Warsaw experiencing the most dramatic change,
plummeting 78 places from 35th to 113th. London and Oslo, both
previously in the top 10, have dropped 13 and 10 places
respectively. The same trend can be seen in Australia, New Zealand
and India. Sydney has dropped 51 places from 15th to 66th and
Mumbai has slipped down to 66th from 48th place.
Cities in the US, China, Japan and the Middle East have surged
in the ranking. New York is a new entry in the top 10, jumping
from 22nd to 8th place, and so is Beijing, now in 9th place, up
from 20th in 2008. Japan now has two cities in the top 10 and
Dubai has climbed 32 places to reach 20th.
Nathalie Constantin-Métral, a senior researcher at Mercer,
said, “As a direct impact of the economic downturn over the
last year we have observed significant fluctuations in most of the
world’s currencies, which have had a profound impact on this
year’s ranking. Many currencies, including the Euro and British
Pound, have weakened considerably against a strong US Dollar
causing a number of European cities to plummet in the rankings.”
“With significant exposure to multiple
economies and currencies, multinational companies continue to be
greatly affected by the financial crisis. The cost of expatriate programmes
is heavily influenced by currency fluctuations and
inflation rates. Now that cost containment and reduction
is at the top of most company agendas, keeping track of
the change in factors that dictate expatriate cost of
living and housing allowances is essential,” Ms Constantin-Métral
“It is important for
multinational companies to continuously benchmark against their
peers to ensure compensation packages are fair and in line with
the rest of the market.”
Europe, Middle East and Africa
In third place and with an index score of 115.4, Moscow remains
the most expensive city in Europe for expatriates. However, a
dramatic depreciation of the rouble against the US dollar has led
to a sharp fall in the city’s index score compared to 2008
(142.4). Accommodation costs also started to decrease at the end
of last year after a sharp increase in the first part of 2008. The
next European cities in the ranking are Geneva and Zurich in
fourth and sixth place, up from eight and ninth respectively.
Copenhagen remains in seventh, and both Milan and Paris drop one
place to 11th and 13th.
European cities have
experienced some of this year’s steepest falls in the ranking,
with Warsaw plummeting from 35th to 113th and Glasgow (129th
place) and Birmingham (125th place) in the UK falling 60 and 59
places respectively. German and Spanish cities all fell between
eight and 11 places, whereas cities in Sweden, Ukraine, Czech
Republic, Romania and Hungary all fell between 36 and 48 places.
“As most European currencies have weakened against
the dollar it has become more costly for companies based in this
region to send expatriates and their families to US cities,” said
Oslo and London, both
previously in the top 10, are now in 14th and 16th place
respectively. “The decline of rental prices both in Oslo and
London, coupled with the fall in the value of British pound and
Norwegian krone against the US dollar, have caused these cities to
plummet in the ranking,” Ms Constantin-Métral explained.
While the vast majority of European cities have fallen in
the ranking, most Middle Eastern cities have experienced a reverse
trend. Both Dubai and Abu Dhabi have risen significantly in the
ranking, moving from 52nd to 20th and 65th to 26th respectively.
This is mainly due to the UAE dirham being fixed to the US dollar.
Tel Aviv remains the most expensive city in the Middle East,
although it is the only one in the region to move down in the
ranking, from 14th to 17th.
cities moved up in this year’s ranking, although their index
scores have decreased. Cairo jumps a substantial 44 places to 57th
as the Egyptian pound fared well against the US dollar. The sharp
decrease of the South African rand against the US dollar has
caused Johannesburg to slip to bottom position.
Due to the strengthening of the US dollar, all cities
in the US have experienced a rise in this year’s ranking. New York
remains the highest ranking city in the region and has also joined
the global top 10 list this year, jumping from 22nd to eighth
place. Los Angeles is up 32 places to 23rd and Washington is up 41
places to 66th.
Canadian cities have slipped down the
index with its highest ranking city Toronto down 31
places to 85th. Ottawa drops 36 places to 121st and
Montreal is now in 103rd place, down from 72nd in 2008.
In 15th place and up 74 places from
2008, Caracas in Venezuela is the top ranking city in
South America. Sao Paolo and Rio de Janeiro have
experienced a reverse move, plummeting from 25th to 72nd
and 31st to 73rd respectively, Similarly, Bogota has
moved down from 87th to 120th place. Buenos Aires has
climbed 26 to reach 112th place.
Tokyo moves up one place in the ranking to become the
most expensive city for expatriates both in Asia and globally. The
Japanese yen has strengthened considerably against the US dollar
which also lifts Osaka into second place from 11th in 2008. Hong
Kong follows in fifth place and Singapore has moved up three
places to reach 10th. In 140th place, Karachi continues to be the
least costly city in this region – up one place from last year.
The Indian rupee made a significant loss against
the US dollar last year and all the Indian cities have moved down
the ranking as a consequence. New Delhi moves from 55th to 65th
place and Mumbai drops from 48th to 66th.
Chinese cities experienced the reverse effect as the Chinese
renminbi performed relatively strongly compared to most other
currencies. Beijing is in ninth place, having moved up 11 places
to join the global top 10. Shanghai, Shenzhen and Guangzhou follow
in 12th, 22nd and 23rd place respectively.
Cities in this region have taken a significant
plunge in the ranking following a dramatic depreciation of the
Australian and New Zealand dollars against the US dollar. Sydney
remains the most expensive city for expatriates in this region but
has dropped from 15th to 66th. Melbourne follows in 92nd, down
from 36th. Auckland has moved down to 138th place from 78th and
Wellington follows in 139th down from 93rd.
The figures for Mercer’s cost of living and rental
accommodation costs comparisons are based on a survey conducted in
March 2009. The 2009 comparisons are based on a similar survey
conducted in March 2008. The choice
of cities surveyed is based on the demand for corresponding data
from companies and governmental organizations.
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