Luanda, Moscow and Tokyo names as the most expensive cities for expats

by Ray Clancy on July 25, 2013

Luanda, Moscow and Tokyo names as the most expensive cities for expats

Luanda, Moscow and Tokyo names as the most expensive cities for expats

Luanda in Angola, Moscow and Tokyo are the world’s most expensive cities for expats, according to the latest cost of living index from business services company Mercer. Ndjamena in Chad is fourth most expensive followed by Singapore, Hong Kong, Geneva, Zurich, Bern and Sydney.

The survey found that a cup of coffee in Moscow can cost $8.29 compared to $1.54 in Managua, Nicaragua, a fast food hamburger meal in Caracas can cost $13.49 compared to $3.62 in Calcutta in India and a cinema ticket is $5.91 in Johannesburg compared to $20.10 in London. The annual rankings of 214 cities are based on their cost of living for expats and are regarded as the world’s most comprehensive report of its kind. It helps multinational companies and governments set compensation for their expat employees.

While more European cities dominate the world’s top costliest locations for expats, several cities in Asia are among the top 10. New York is used as the base city, and all cities are compared against it. Currency movements are measured against the US dollar and the survey covers over 200 items in each location, including housing, transportation, food, clothing, household goods, and entertainment.

Quote from ExpatForum.com : “My monthly budget is 83,000 yen. I am aware that one of the bad sides of living in Japan will be the lack of space but I would like to have some “minimum space” to avoid depression. Ideally I would like to have a balcony with nice views (at least some fresh air) so I am avoiding ground floor places. I know that the further I would go from the city the cheaper and nicer places I can find, but my company will NOT pay for my commute to work so I cannot live very very far from the city (my office is in Nishi Shinjuku)… On the other hand, I am a single woman living on my own.”

Moscow follows Luanda as the second most expensive city because of high costs for rental accommodation with imported goods and services commonly bought by expats commanding a premium. A luxury two bedroom unfurnished apartment rental for one month in Moscow is $4,600 a month or 14 times as much as Karachi. Rounding out the top five most expensive cities for expat living, which also have pricey rental accommodations, are Tokyo, Ndjamena, and Singapore.

‘Recent world events, including economic and political upheavals, which resulted in currency fluctuations, cost inflation for goods and services, and volatility in accommodation prices have impacted these cities making them expensive,’ said Barb Marder, senior partner and Mercer’s Global Mobility Practice Leader. ‘Despite being one of Africa’s major oil producers, Angola is a relatively poor country yet expensive for expats since imported goods can be costly. In addition, finding secure living accommodations that meet the standards of expats can be challenging and quite costly,’ added Marder.

According to the firm, organisations need to evaluate the impact of currency fluctuations, inflation, and political instability when sending employees on overseas assignments while ensuring they can facilitate the moves they need to drive the business results by offering fair and competitive compensation packages.

Currency fluctuations and the impact of inflation on goods and services have affected the cost of expat programmes as well as the city rankings. ‘Overall, the cost of living in cities across parts of Europe has gone up in the ranking as a result of the slight strengthening of local currencies against the US dollar. Whereas in Asia about half of the cities went down in the ranking, Japan especially, due to local currencies’ weakening against the US dollar,’ said Nathalie Constantin-Metral, principal at Mercer with responsibility for compiling the survey ranking.

In the Americas, cities in South America are the most expensive locations for expats and some dropped in the ranking as a result of local currencies weakening against the US dollar such as Brazilian cities, while others jumped as a result of high inflation on goods and services and rentals.

‘Overall, US cities either remained stable in the ranking or have slightly decreased due to the movement of the US dollar against the majority of currencies worldwide,’ explained Constantin-Metral. Yet several cities, including New York, moved up in the ranking due to a rise in the rental accommodation market. Canadian cities generally moved down in the ranking this year as a result of a slight decrease of the Canadian dollar against the US dollar, and because the prices of goods and services increased at a slower pace than in New York.

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