If you’re company is sending you to an assignment outside your country, make sure you know what the cost of living is in that city. Your company should provide you with cost of living allowances so you do not lose out.
Of course, if you are sent to a cheaper location, you will gain in terms of cost of living expenses even without those allowances – although your quality of life might suffer a bit and, in extreme cases, you might have to be extra careful because of security risks.
If your new assignment is Hong Kong and your home assignment is Singapore, make sure to ask for a cost of living allowance. Hong Kong is now Asia Pacific’s most expensive location for expatriates
In Hong Kong, Ask for More
ECA International is a provider of knowledge, information and software for the management and assignment of employees around the world. Companies use its cost of living surveys to decide on how much to provide in cost of living allowance (or if it is provided at all) to ensure an employee’s spending power is maintained on international assignment.
This allowance will be affected by differences in prices as well as exchange rate movements between that employee’s home and host countries.
If your new assignment is Hong Kong and your home assignment is in Singapore, for example, make sure to ask for a cost of living allowance. According to ECA’s latest Cost of Living survey, Hong Kong is now Asia Pacific’s most expensive location for expatriates.
From a global perspective, it has climbed seven places to become the second-most expensive location for expatriates – its highest ever rankings on both fronts.
On the other hand, Singapore, seen as Hong Kong’s rival financial and business center in Asia, is ranked tenth most expensive in Asia and 24th globally. Tokyo, formerly No. 1 in Asia, drops one rung to second place regionally and is ranked seventh most expensive globally.
Shanghai, Beijing and other Chinese cities have become cheaper as well, falling 1-5 rungs in the ranking. But Taipei is up 12 spots to No. 14, from No. 26 a year ago.
Most Expensive Places to be an Expat in Asia
Impact of Currency Movements
A key factor in Hong Kong’s rise is its strong currency vis-à-vis other regional currencies.
“Over the past few years, the Hong Kong dollar has appreciated against most major currencies, owing to its peg to the US dollar, which has pushed up the price of goods and services relative to those in locations whose currencies have weakened against the greenback,” says Lee Quane, Regional Director – Asia, ECA International.
“For companies who send staff into Hong Kong and provide cost of living allowances to protect their purchasing power, they will likely need to increase them to ensure that their employees’ buying power remains protected.”
“The continued weakness of the Malaysian ringgit is responsible for Johor Bahru’s status as the location with the second-lowest cost of living in the region”
ECA International carries out two main surveys every year to help companies calculate cost of living allowances, so their employees' spending power is not compromised while on international assignment. The surveys compare a basket of like-for-like consumer goods and services commonly purchased by assignees in over 460 locations worldwide.
Certain living costs, such as accommodation rental, utilities, car purchases and school fees are usually covered by separate allowances. Data for these costs are collected separately and are not included in ECA’s cost of living basket.
Hong Kong’s property prices have surged in the past year, along with rentals, so employees on assignment to this city should make sure they negotiate a separate rent allowance as well.
Japan and China
In Japan, Tokyo has fallen by one place to second-most expensive location in Asia. All other ranked locations in Japan maintained their positions in the regional rankings.
On a global scale, there has been some movement. Other than Tokyo (which remains in 7th position globally), all other ranked Japanese cities have fallen by four places, with Yokohama at 16th), Nagoya at 17th and Osaka at 18th.
"Prices in Japan have remained stable over the past year,” explains Quane. “The yen, on the other hand, has weakened against most major currencies, contributing to the decline of Japanese cities in our rankings.”
“This means that for many companies, the cost of maintaining their assignees' purchasing power while posted here has fallen and international assignees based in Japan may see their cost of living allowances decrease.”
Macau has climbed both the regional and global rankings this year, approaching the regional top ten and now making the global top 25. It ranks 11th in Asia Pacific and 25th in the world. Since 2012, it has risen by 17 places in the regional rankings – the third-highest climber in Asia Pacific over this period.
“Prices have risen faster in Macau than elsewhere in the Greater China region in the last 12 months,” says Quane. “The strength of the currency owing to its peg to the strong Hong Kong dollar has also contributed to Macau becoming the second-most expensive location in the Pearl River Delta, overtaking Guangzhou and Shenzhen.”
Shanghai remains the most expensive city in mainland China, but has fallen in the global rankings to the 13th most expensive location. All other first-tier Chinese cities have seen more significant declines in both ECA’s regional and global rankings – Beijing is now 20th globally, Guangzhou 27th and Shenzhen 32nd.
Within China, all ranked mainland Chinese locations have fallen in the regional and global rankings this year.
“Although the Chinese yuan has retained its relative strength against some major currencies, it has continued to depreciate against the US dollar,” says Quane. “This means that assignees from the United States can expect to see lower cost of living allowances.”
“Inflation has increased only marginally during the past 12 months, with higher fuel prices making significant contributions to this trend.”
Singapore and the Rest of Asia
Singapore has remained stationary in the Asia Pacific regional rankings – it remains in 10th position after 12 months. However, it has fallen by six places to 24th globally, making it a cheaper place for expatriates from the international perspective.
Elsewhere, cities in Taiwan have been the highest climbers in the regional rankings, with Kaohsiung rising the most in the region from 31st to 18th this year.
Ulaanbaatar, Mongolia, remains the cheapest location in the region followed by cities in Malaysia and Myanmar.
Thanks to the weak pound, London is now cheaper than Bangkok, Rio de Janeiro and Buenos Aires in terms of cost of living for expats, as well as its European rivals Paris, Berlin and Brussels
“Much of the movement in the rankings among Asian locations in the past 12 months has been strongly influenced by currency movements,” says Quane.
“Yangon has fallen in the regional rankings on account of depreciation of its currency in the past year, while the continued weakness of the Malaysian ringgit is responsible for Johor Bahru’s status as the location with the second-lowest cost of living in the region.”
Sydney remains the most expensive city in Australia. It currently ranks 50th in the global rankings, up from 70th place last year. All ranked locations within Australia rose in ECA’s global rankings this year, with Adelaide climbing the most, by 34 places to 75th position – although it is still the cheapest ranked location in Australia.
Luanda in Angola has risen from 8th position last year to top ECA’s global rankings this year.
“The cost of goods typically purchased by international assignees in Luanda, which were already high due to poor infrastructure and high oil-fuelled demand, have been pushed much higher in the last year,” says Quane.
“The Angolan kwanza is increasingly overvalued, which pushes up relative costs; while the continued weakness of the black-market exchange rate has also inflated the price of imported goods.”
Buenos Aires, the Argentine capital, ranks 35th globally this year, in sharp contrast to 2016 when it was much cheaper at 163rd. It has risen by 128 places in the global rankings, mainly because of soaring inflation, and is the second-highest climber this survey, behind Caracas.
Central London is the 132nd most expensive location in the world for expatriates, down 67 places from last year – falling out of the top 100 most expensive cities in the world.
London is now cheaper than Bangkok, Rio de Janeiro and Buenos Aires, as well as its European rivals Paris, Berlin and Brussels, thanks to the weak pound.