Japanese cities dominate the top 10 most expensive cities in the world, while cost of living in Greater China cities rise across the board, and locations in Europe plummet, according to a new Cost of Living survey from ECA International.
Singapore has dropped two places to become the region’s 8th most expensive location for expatriates, while retaining 31st position globally.
Hong Kong has shot up 26 places in the list of most expensive cities to become the 32nd most costly location for international assignees.
The survey reveals that Hong Kong is now more expensive than Manhattan (36th) and Paris (42nd), although it remains cheaper than other regional hubs such as Beijing (22nd), Shanghai (26th), which have also jumped up the ranking, and Singapore (31st)
"Over the past 12 months, we have seen the cost of our representative basket of goods and services in Hong Kong increase by 6.7% - slightly more than the regional average," said Lee Quane, regional director, Asia, ECA International.
"At the same time, the Hong Kong dollar’s peg to a stronger US dollar is making the SAR more expensive for many companies sending employees there on assignment," he said.
Within Asia, Hong Kong remains the 9th most expensive location – the same position it held a year ago. Tokyo has also retained its position as the most expensive location in Asia and the world.
Living costs for assignees are affected by inflation, availability of goods and exchange rates, all of which can have a significant impact on assignee remuneration packages.
"Certain living costs such as accommodation rental, utilities charges, car purchases and school fees are not included in this survey. Although such items can have a significant effect on overall cost of living, they are usually compensated for separately in expatriate packages so this data is researched and published separately," explained Quane.
China Increasingly Expensive for International Assignments
Despite Hong Kong’s rise in the global ranking, it remains cheaper than Beijing (22nd globally) and Shanghai (26th), which have climbed 13 and 15 places respectively over the year. Other mainland China locations, including Guangzhou (56th) and Shenzhen (59th), have also seen climbs.
While these do still remain cheaper than the SAR, they are now more expensive than Jakarta (123rd) and Bangkok (163rd) for international assignees.
"This year we have seen the cost of items in ECA’s shopping basket for China increase 5%. While this is down from the 9% increases we saw a year ago it is still high compared with price inflation witnessed in other parts of the world, particularly Europe and North America where the economy has not grown at the extreme pace witnessed in China in the last few years," said Quane.
"Additionally, the Renminbi has strengthened against many currencies. Together these two factors are making Chinese locations increasingly expensive. This could be stripping them of the competitive edge they once had over other locations in Asia as companies looking to set up in the region might think twice, now, about posting staff to China," he added.
Asia Region Highlights
Over the past three years, Asian locations have climbed up the global ranking. Nine Asian locations now feature in the top 50 most costly locations for international assignees worldwide.
In 2009, only four were in the top 50, none of which were Hong Kong, Singapore, Beijing, Shanghai or Seoul.
Tokyo is still the most expensive location in Asia and globally – despite Japan being the only location in Asia to experience price falls this year. On average, prices of items in ECA's Cost of Living basket for Asia have increased by 6.5% – significantly less than last year's average increase of 8.2%.
While Hong Kong and mainland Chinese locations have seen the biggest leaps up the Asian ranking this year, some of the region’s biggest falls have been witnessed in Indonesia. The weakening of the Rupiah against major currencies has contributed to Jakarta falling 32 places, to become the world's 123rd most expensive location for expatriates.
Karachi in Pakistan remains the least expensive Asian location in the ranking.
Australian Locations Remain Among Most Expensive
All Australian locations surveyed now rank in the world's top 30 most expensive locations. Sydney is the most costly, in 16th position globally, followed by Canberra (18th), Adelaide (21st), Melbourne (24th), Perth (25th), Darwin (27th) and Brisbane (28th).
"Just three years ago, none of the Australian locations in our survey featured in the top 60, and all were cheaper than Hong Kong. Since then, the Australian dollar has gone from strength to strength and remains high today. This makes Australia an expensive place to live: the cost of goods and services in Sydney, for example, is now 12% higher than the cost of the equivalent goods and services in Hong Kong," said Quane.
Auckland (41st globally) is the most expensive of the New Zealand locations surveyed. Christchurch has also risen 12 places over the year, and now sits in 55th position.
Locations Across Europe Fall in Global Ranking
Many locations across the region fell in the global ranking as the euro and other European currencies weakened against the US dollar while prices increased at a slower rate in Europe on average than other regions over the year.
The Norwegian locations of Oslo and Stavanger, ranked 3rd and 8th in the world respectively, are the region’s most expensive locations. The free-floating Norwegian krone has been strong for much of the last two years, reflecting the country's relative economic success. They are followed by the Swiss cities of Zurich (9th), Geneva (10th) and Bern (11th).
The on-going financial crisis in Greece and Spain has seen Athens fall 47 positions in 12 months to 109th spot in the global ranking, while Madrid, dropped 44 places to 105th.
One of the biggest falls down the global ranking has been witnessed in Portugal – another country hit by the sovereign debt crisis. Lisbon fell from 98th to 158th position over the year.
London and locations surveyed in Russia, Turkey and Ukraine have proved more resilient. London gained 11 places and now sits in 58th position globally. Istanbul rose 21 places to 34th while the Turkish capital, Ankara, rose 31 positions to 121st globally – one of the biggest rises in this survey. The lira has strengthened against major currencies in the past twelve months. In addition, prices in ECA’s cost of living basket in Turkey have increased at a faster rate this year than last.
The Moldovan capital of Chisinau remains the least expensive European city surveyed.
Vancouver Most Costly North American Location
The Canadian city of Vancouver is North America’s most expensive location for the second year in a row. The city ranks 35th globally and is followed by Manhattan. The strengthening of the US dollar against major currencies has led to all of the US locations surveyed moving up the ranking in the past 12 months – despite the cost of items in the cost of living basket increasing at a slower rate than many other parts of the world.
In South America, the Venezuelan capital, Caracas, sitting in 7th position globally, is the most expensive city followed by Argentina's Buenos Aires (47th globally). The Brazilian locations of Rio de Janeiro (64th) and Sao Paulo (69th) follow. However, both have fallen more than 40 places in the ranking in the past 12 months – largely a result of the weakening of the Brazilian real against the US dollar and other major currencies.
Angolan city of Luanda Most Expensive in Africa
Africa’s most expensive location is the Angolan capital, Luanda. Globally the city is back in the top 10 most expensive locations having moved up from last year's 11th position into 4th. It is followed by South Sudan capital of Juba (14th) and the Democratic Republic of Congo's Kinshasa (19th).
The Egyptian capital, Cairo has risen 15 places to 219th while South African locations continue to fall down the ranking. Johannesburg is currently in 222nd spot – down from last year's 204th position.
Despite falling 13 positions globally, the most expensive Middle Eastern location surveyed remains Tel Aviv, ranking 45th overall. Dubai has risen 14 places to 173rd worldwide while Jeddah, at 224th, is the least expensive location surveyed in the region.