For the first time in three years, Tokyo is no longer the most expensive location for international assignees. The city has been overtaken by Norway's capital Oslo, and now lies in sixth place in the ranking. These were among the findings of the latest cost of living research by ECA International.
Hong Kong has slipped slightly to 38th position down from last year’s 37th spot.
The city is two places lower than Singapore in the global ranking, but still one place above Paris and five places above Manhattan. Among Asian locations, Hong Kong is in 10th place, just below Singapore. It remains the third most expensive city in Greater China, behind Beijing and Shanghai.
At the top of the global list, Oslo is followed by the Angolan capital of Luanda, where the goods and services commonly purchased by expatriates are difficult to access and command a premium. Stavanger (Norway), Juba (South Sudan) and Moscow (Russia) are also now more expensive than Tokyo. These cities make up the top 5 most expensive locations for expatriates globally.
"Tokyo has always been an expensive place for global companies to send staff, and, despite its five-place fall since last year, that remains the case," said Lee Quane, ECA's regional director, Asia. "The significant depreciation of the Yen against other major currencies in recent months is the primary reason for this drop. It means that for many companies, the cost of maintaining their assignees' purchasing power while posted there has fallen. But it's important not to exaggerate the position – Tokyo is still the world's sixth most expensive city, and the most expensive in Asia."
Companies sending employees on international assignment will often pay an allowance to ensure that their assignees' spending power is not compromised. To help multinational companies calculate these allowances, ECA carries out two Cost of Living Surveys per year, comparing a basket of consumer goods and services commonly purchased by assignees in more than 400 locations worldwide.
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 usually compensated for separately in expatriate packages so this data is not included in this survey but researched and published separately.
Within Asia, Japanese cities still dominate the top of the cost of living ranking - 4 of the region's top 5 most expensive locations are found there. Seoul joins them, having jumped from 7th to 3rd most expensive Asian location (and from 29th to 14th globally). Not only have the prices of goods and services there increased at a faster rate than the previous year, but the Won has also strengthened against major currencies thereby pushing up costs there for many international assignees.
Beijing (24th globally), Shanghai (26th), Singapore (36th) and Hong Kong (38th) complete the list of the top 10 most expensive locations in Asia. On average, prices of items in ECA's cost of living basket for Chinese locations have increased little or even seen small decreases this year. As a result, Chinese locations have fallen slightly down the ranking but the on-going strength of the Yuan against major currencies has prevented them from dropping too far.
Hong Kong, ranked 38th in the global list and 10th most expensive location in Asia has only seen a slight fall in cost of living. Prices of goods and services in ECA's cost of living basket have gone up approximately 4% over the year on average there. This is a slightly slower rate of increase than the year before when prices rose 6% on average. With the Hong Kong dollar pegged to a stable US dollar, the cost of living for assignees in the SAR has remained steady.
Indian locations continue to be among the region's cheapest in terms of cost of living for international assignees. New Delhi, ranked 200th globally is followed by Mumbai (215th).
Karachi, ranked 256th globally, is the least expensive Asian location for expatriates.