Caracas named as most expensive place in the world for expats

by Ray Clancy on December 31, 2013

Caracas, the capital of Venezuela has become the most expensive place in the world for expats to live, according to a biannual cost of living survey.

Oslo remains the most costly European location and Tokyo is still Asia’s most expensive city, but falls to tenth place globally while Australian cities have fallen out of the top 30, the survey by ECA international shows.

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The biannual cost of living survey outlines the most expensive places in the world for expats to live

The firm provides knowledge, information and technology for the management and assignment of employees around the world and says that ongoing rampant inflation and severe shortages of exported goods in Caracas has led to its rise up from last year’s seventh position to top the ranking.

This is despite large falls in the value of the Bolivar and means that Caracas is now more expensive for international assignees than Tokyo, Luanda and Oslo, cities that are regularly found in that top spot. However, it points out that Caracas’ position at the top of the list may be short lived, as building pressure on the currency could lead to a devaluation in the near future.

‘Prices for items in ECA’s shopping basket in Venezuela have gone up by over 60% on average since last year, and despite the government’s many attempts to manage the currency differently its peg to the US dollar means it remains considerably overvalued,’ said Lauren Smith, general manager of ECA International in New York.

‘Although a devaluation would push inflation up even higher, at least at first, the shortages of dollars and goods on shop shelves will worsen if no devaluation takes place. Companies with expat staff in the country will need to continue to monitor the situation closely to ensure they are granting appropriate cost of living allowances,’ she explained.

In the Americas, Manhattan is the region’s second most costly location, and is in 33rd position globally. The most expensive Canadian location is Vancouver which is in fifth position in the Americas and 53rd globally.

Within Latin America, Caracas is followed by Haiti at 57th globally and Buenos Aires at 61st. Brazilian cities have fallen dramatically in the ranking, with Rio de Janeiro falling 66 places to 130th worldwide. The sharp depreciation in the Brazilian Real over the past 12 months has made Brazil considerably cheaper for many expats.

In Asia Pacific, Tokyo still tops the list of the most expensive locations for expats but globally it has fallen to tenth place on the back of a weaker Yen, a significant drop from last year when it was the most expensive city in the world for expats.

After Japan, some of the biggest falls in living costs in Asia have been seen in Indonesia which is also partly as a result of a weaker currency. Jakarta has dropped 45 places to 172nd place globally. Beijing is now Asia’s second most expensive location after Tokyo. Globally, the Chinese capital is the fifteenth most expensive location for expats. Shanghai previously in 25th position is now in the 18th position in the global results. Hong Kong ranks 28th globally, while Singapore is in 30th position.

Sydney and Canberra, both in the top 20 most expensive locations in the world for expats a year ago, are now ranked 31st and 39th respectively. All locations in Australia have become cheaper due to the weakening of the Australian dollar against most major currencies.

Norway’s capital Oslo remains Europe’s most expensive city for expats and the third most costly in the world. With the exception of Moscow, the region’s top 10 is dominated by Western European cities in Switzerland, Scandinavia and Finland.

The report points out that the strengthening of the euro against the dollar over the 12 months between surveys has contributed to significant climbs up the ranking for Dutch and German locations. Turkish cities have seen some of the regions more significant falls, due largely to the depreciation of the Lira.

In the Middle East, the most expensive locations for expats continue to be the Israeli cities of Tel Aviv, ranked 24th globally, and Jerusalem at 27th. They have both climbed even further up the ranking this year due to the strengthening of the Shekel against other major currencies. In the United Arab Emirates, the price of items in ECA’s cost of living basket for expats has gone up significantly and both Dubai which is placed 171st globally and Abu Dhabi at 180th have also risen in the ranking.

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