London ranked most expensive world city to live and work

by Ray Clancy on October 6, 2015

London, Hong Kong and New York are the world’s most expensive cities for expat working abroad, according to the latest annual life and work index.

London is just ahead of the others, but London and New York real estate costs remain less expensive than other costly locations such as Hong Kong, Shanghai and Mumbai, the index from international property advisor Savills shows.

tower-bridge-london-ukHong Kong, Shanghai and Mumba look least affordable, while Sydney, Los Angeles and San Francisco offer best value by this measure.

Overall London’s costs averaged US$118,425 in the first half of 2015, an increase of 20.7% since the index was launched in 2008. This is marginally more expensive than Hong Kong, where costs have risen just 0.4% since 2008, and New York, which has seen 28.4% growth.

San Francisco has been the biggest riser, with growth of 59.8% since 2008. The cheapest city in the index is Mumbai, where it costs just US$29,088 to accommodate an employee, up only 2.4% since 2008, while Shanghai comes in at US$38,089, up 15.6%.

But, says Savills, accommodation costs are only part of evaluating affordability. To measure this the firm has compared the per head accommodation costs to the per capita GDP of each world city in the index to create a value indicator.

Sydney and Los Angeles offer the best value live/work rent combination at 70% and 80% of per head GDP respectively, followed by San Francisco. Mumbai is most expensive relative to city productivity at a very high five times per head GDP. This reflects the fact that most workers in the city do not live and work in the international standard accommodation that Savills measures.

The average cost per head across the 12 leading world cities in the Savills study is US$74,945 per year, which is 1.4 times the average city GDP per head of population. Hong Kong’s ratio is three times and falling, London two times and stabilising and New York 1.5 times and rising.

“This may not be a perfect measure of real estate affordability, but it gives a good indication of which cities may be fully rented if GDP does not rise and those which have greatest ability to absorb rising total accommodation costs, whether through office or residential rent increases,” said Yolande Barnes, director, Savills world research.

This is borne out by the performance of US cities. San Francisco has seen total accommodation costs for both financial and creative/digital businesses rise most rapidly, up nearly 60% since 2008.

The report points out that the economic recovery in the USA has also led to rapid rent rises in New York and Los Angeles, meaning that American cities take the top three spots for cost growth. Anglophone cities have generally seen the highest rental growth, with London and Sydney completing the top five.

The report adds that this may be bad news for occupiers in those cities, but shows how income returns for investors in real estate in these ‘old world’ economies have paid off since the recession. Rental growth has been a sure sign of city business growth and prosperity.

Tokyo, Dubai and Singapore have all seen live/work costs fall by between 8% and 16.6% over the period since 2008.

“This reflects high growth and relatively high levels of rents seen in these cities prior to 2008 and cheaper rents will help correct affordability and may be seen as a competitive advantage on the global stage,” said Barnes. “Singapore will likely see rental growth over the mid to long term as supply is absorbed and economic growth resumes on the back of Indian and Asia Pac growth, which Singapore is well-placed to service.”

Barnes also anticipates rental growth in Dubai, linked to economic and business growth in the Gulf region, though this could be tempered by volatility and high levels of supply.

“Tokyo, with much lower population and economic growth, has capacity to provide investors with higher yields and more stable income streams,” said Barnes.

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انجام پایان نامه October 7, 2015 at 1:06 pm

thank you.

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