Expatica news

Survey shows European capitals drop as a costly expat location

Luanda in Angola is the world’s most expensive city for expatriates for the second year running, according to Mercer’s 2011 Cost of Living Survey that covered 214 cities across five continents and measures the comparative cost of over 200 items in each location, including housing, transport, food, clothing, household goods and entertainment.

Mercer claims the survey is the world’s most comprehensive cost of living survey, and is designed to help multinational companies and governments determine compensation allowances for their expatriate employees.

As a point of reference, New York is used as the base city and all cities are compared against New York. Currency movements are measured against the US dollar. The cost of housing – often the biggest expense for expatriates – plays an important part in determining where cities are ranked.

Recent world events, including natural disasters and political upheavals, have impacted the rankings for many regions through currency fluctuations, cost inflation for goods and services and volatility in accommodation prices.

Europe capitals drop

Tokyo remains in second position and N’Djamena in Chad in third place. Moscow follows in fourth position with Geneva in fifth and Osaka in sixth. Zurich jumps one position to rank seventh, while Hong Kong drops down to ninth.

Down one place from last year, London (18) is the UK’s most expensive city, followed by Aberdeen (144), Glasgow (148) and Birmingham (150). Belfast (178) is ranked as the UK’s least expensive city.

In Belgium, Brussels is placed at a low No. 42, and Germany’s presence is entirely absent from the top 50 slots. Amsterdam jumped down to No. 50 from its spot at No. 37 last year.

“Multinational companies have long understood the competitive advantage of a globally mobile workforce, though the enduring challenge is to balance the cost of their expatriate programmes,” said Nathalie Constantin-Métral, Senior Researcher at Mercer responsible for compiling the ranking each year.

“Currency fluctuations, inflation, political instability and natural disasters are all factors that influence the cost of living for expatriates. It is essential that employers ensure they retain talented employees by offering competitive compensation packages.”

Constantin-Métral points out that, overall, the cost of living in cities across Europe has remained relatively stable, while in Africa the picture is patchy “with the limited availability of accommodation leading to increased living costs in some key cities.”

“In North America increasing petrol prices continue to contribute to rising consumer prices, but many of its cities dropped in the rankings as price increases in other regions have been more severe pushing US cities down the list,” said Constantin-Métral.

Only three European cities remain in the top 10 list of most expensive cities. Moscow (4) is still the most costly European city on the list, followed by Geneva (5) and Zurich (7).

Oslo is down four places from last year at No. 15, whereas Bern has jumped six to No. 16 and Copenhagen dropped seven places from to No. 17. London (18) is followed by Milan (25) and Paris (27), both down 10 places from last year.

“In most Western European cities the cost of living for expatriates has remained relatively stable over the last 12 months. However, many of the region’s cities have still dropped in the ranking,” said Constantin-Métral.

“Some reduction in accommodation costs, due to the economic downturn, has also been behind changes in rankings for select European cities – most notably Athens and Barcelona.”

The Americas, Asia and rest of world

Ranking 24, Tel Aviv is down five places from 2010 but continues to be the most expensive city in the Middle East. Luanda (1) remains the most expensive city for expatriates across Africa and globally. In South Africa, Johannesburg (131) and Cape Town (158) have leapt 20 and 13 places in the ranking respectively, reflecting the strengthening of the South African rand.

“Finding good and secure accommodation for expatriate employees is a real challenge in most of the African cities on the list, and costs can be significant compared to other regions,” Constantin-Métral commented.

In the Americas, São Paolo (10) and Rio de Janeiro (12) are now the most expensive locations for expatriates in both North and South America. At rank No. 32, New York is the most expensive city in the United States. Los Angeles and Chicago have dropped significantly in the rankings (22 and 17 places respectively) as price increases on goods and services have been moderate compared to New York.

Toronto (59) has overtaken Vancouver (65) to become the most expensive Canadian city in the ranking.

Australian cities have witnessed some of the most dramatic jumps in the ranking as the local currency has gained almost 14 percent against the US dollar. Sydney is up ten places to No. 14, and Perth has surged 30 places to reach rank No. 30.

The most expensive city in Asia is Tokyo (2), and Singapore (8) has joined the list of the world’s top 10 most expensive cities, followed by Hong Kong at No. 9. New Delhi (85) is India’s most expensive city.

“Most Asian cities have moved up in the ranking as availability for expatriate accommodation prices is limited and demand is high,” said Constantin-Métral.

Mercer produces individual cost of living and rental accommodation cost reports for each city surveyed.

Mercer’s Top 10 expensive capital cities for expats

1. Luanda, Angola
2. Tokyo,  Japan
3. N’Djamena, Chad
4. Moscow, Russia
5. Geneva, Switzerland
6. Osaka, Japan
7. Zurich, Switzerland
8. Singapore, Singapore
9. Hong Kong, Hong Kong
10. Sao Paulo, Brazil

Other Expatica companies in the Top 10

No. 16: Zurich, Switzerland (from No. 8)
No. 18: London, United Kingdom (from No. 17)
No. 27: Paris, France (from No. 17)
No. 50: Amsterdam, The Netherlands (from No. 35)

Mercer / Expatica