When an employee is sent overseas to work, the cost is usually met by the employer. Now, they face paying even more for moving people to London, one of the world’s most popular expat locations.

London has become the world’s most expensive city for companies to relocate employees, overtaking Hong Kong, which had previously topped the ranking for an unbroken five year period, according to latest analysis from international real estate adviser, Savills.


New York and Paris complete the pack of the four leading cities, where the combined costs of renting residential and office space top US$100,000 per employee per year. Next in line is Tokyo, followed by Singapore, Moscow, Sydney, Dubai, Shanghai, Rio de Janeiro and Mumbai.

These four cities have dominated the Savills Live/Work Index Top 12 World Cities since its launch in 2008. The firm says this reflects the relative stability of both the residential and commercial markets of more mature global cities post-economic downturn compared to the more recently emerged new world cities.

The index measures the total costs per employee of renting, living and working space on a US dollar-basis in 12 world cities. Fluctuations in total live/work costs reflect not only the strength of a city’s residential and office markets and occupier taxes and costs, but also the impact of fluctuating exchange rates on the cost of doing business on a world stage. It is this that has contributed in large part to London’s recent ascendency in the rankings.

A combination of falling residential rents and, most importantly, a weakening currency, has boosted Hong Kong’s competitiveness, with total real estate costs down 5.6% in the first six months of this year, an annualised rate fall of 11.2% in dollar terms. The Savills Live/Work Index shows that the current average price of renting residential and office space in Hong Kong is back to 2008 levels, at US$116,000 per employee per year.

By contrast, London real estate costs grew in US dollar terms by an annualised rate of 10.6% in the first six months of the year, which means London is now the most expensive world city in which to accommodate staff, at US$121,000 per year. This is largely due to the UK pound’s recent appreciation against the US dollar.

Overall, the US dollar cost of residential and commercial accommodation in London has increased by 39% since 2008. Despite its climb in the rankings from fifth to first place since 2008, London is still a ways off the live/work accommodation costs record, set by Hong Kong in 2011 at US$128,000 a year.

Hong Kong remains the only ‘New World’ city, from a recently-emerged or emerging national economy, to feature in the top five cities. Its position relative to the emerging markets of mainland China means that it is unlikely to lose this status in the foreseeable future, despite property market cooling measures.

The city remains by far the most expensive city in which to buy residential property, with prices 40% higher than London, but the gap is narrowing.

Tokyo has fallen down the rankings from third to fifth as rents fell or were stagnant after 2008 by 23% in US dollar terms.  Recently, however, the economic policies adopted by Prime Minister Shinzo Abe have yielded improved economic conditions and spurred rental growth. Falls in the Yen have made Tokyo costs more competitive, but rental growth still provides incentives for investors, especially local ones. At US$76,000 per person, it is significantly cheaper for businesses to locate in Tokyo than in any of the leading group of four cities.

At the other end of the table, comparatively affordable Rio de Janeiro and Sydney have seen significant increases in live/work costs since 2008, up 85% and 58% respectively, though Rio still looks highly competitive at just US$32,000 per person. Mumbai retains its position as the cheapest world city, at US$30,000 per person per year, down 21%in US dollar terms since 2008.

‘This year has seen much more modest real estate price growth in nearly all our world cities and some have shown small falls. We expect this subdued trend to continue as investor interest and market activity shifts to second-tier cities,’ said Yolande Barnes, director of Savills World Research.

‘This lower level of price growth means that currency fluctuations have produced some of the biggest changes in our rankings, which are expressed in dollar terms. For multinationals looking at their local costs, it is this which is likely to exercise them more than property markets over the next year,’ she added.