GLOBAL/ WORLD COST OF LIVING RANKINGS 2014 / 2013

Cost of Living Rankings, published in July 2014, show the cost of living for expatriates in 211 cities worldwide, put Dublin, the Irish capital, at 51st up ten ranks compared with 2013.

The survey helps multinational companies and governments determine compensation allowances for employees on international assignments. It measures the comparative cost of more than 200 goods and services in each location, including housing, transportation, food, clothing, household goods, and entertainment.

Currency changes can be a big factor and London (12) jumped 13 positions from 2013 while Sydney fell 17 places to number 26.

In 2007, Dublin ranked the 16th most expensive city in the world by Mercer, a US firm which focuses on human resources, health, retirement, and investments.

African, European, and Asian cities most expensive for expatriates due to currency fluctuations and the impact of inflation on goods and services.

Rankings

Economist Intelligence Unit: Singapore most expensive city in 2014

Singapore world's most business-friendly location; Followed by Switzerland & Hong Kong

UBS: Prices and Earnings city report (2012 edition - published every 3 years)

Two African cities top the list of most expensive cities for expatriates according to Mercer’s 2014 Cost of Living Survey. Although not typically recognized as wealthy cities compared to others, Luanda in Angola is the world’s most expensive city for the second year in a row followed by N’Djamena, Chad. European and Asian cities also continue to dominate as the costliest cities with Hong Kong in third place, followed by Singapore. Zurich jumped three places to rank fifth, followed by Geneva in sixth. Tokyo dropped four spots to rank seventh.  

New York is used as the base city, and all cities are compared against it. Currency movements are measured against the US dollar.

“Rankings in many regions were affected by recent world events, including economic and political upheavals, which resulted in currency fluctuations, cost inflation for goods and services, and volatility in accommodation prices,” said Ed Hannibal, partner and global leader for Mercer’s Mobility practice. While Luanda and N’Djamena are relatively inexpensive cities, they are quite costly for expatriates since imported goods come at a premium. In addition, finding secure living accommodations that meet the standards of expatriates can be challenging and quite costly as well. This is generally why some African cities rank high in our survey."

Other cities appearing in the top 10 of Mercer’s costliest cities for expatriates are Bern, Moscow, and Shanghai. Karachi, ranked 211, is the world’s least expensive city for expatriates, and the survey found that Luanda is more than three times as costly as Karachi.

According to Hannibal, “While multinationals continue to recognize the importance of having a global workforce and corporate assignments remain prevalent, they must be able to monitor and balance the cost of their expatriate programs. Employers need to evaluate the impact of currency fluctuations, inflation, and political instability when sending employees on overseas assignments while ensuring they retain talented employees by offering competitive compensation packages.”

Currency fluctuations and the impact of inflation on goods and services have influenced the cost of expatriate programs as well as the city rankings.

Nathalie Constantin-Métral, principal at Mercer with responsibility for compiling the survey ranking, said, “Interestingly, several cities jumped up the list this year following large increases in both accommodation cost and demand, coupled with strong local currencies. Dhaka and Nairobi (both 117) and Dubai (67) soared thirty seven, thirty and twenty-three spots, respectively.”

The Americas

Cities in the United States have climbed in the ranking due to the relative stability of the US dollar against other major currencies, in addition to the significant drop of cities in other regions which resulted in US cities being pushed up the list. A rise in the rental accommodation market pushed New York up 8 places to rank 16, the highest-ranked city in the region. Los Angeles (62) climbed 10 places from last year while San Francisco (74) jumped eighteen places. Among other major US cities, Honolulu (97) is up twenty places, Miami (98), is up sixteen places, and Boston (109) is up fourteen spots. Cleveland (167) and Winston Salem, North Carolina (182) remain the least expensive surveyed cities for expatriates.

Hannibal added, “Even though we saw US cities rise in the rankings this year due in part to the strength of the US dollar, it’s important to note that relative costs shift with currency volatility, making overseas assignment costs sometimes greater and sometimes smaller.”

In South America, São Paolo (49) ranked as the costliest city, followed by Rio de Janeiro (65).

Yet, both cities dropped thirty and thirty-six positions, respectively, as a result of the Brazilian real weakening against the US dollar despite increases in rental prices. Buenos Aires also dropped significantly this year to rank 86, following the devaluation of its currency, and despite a strong price increase for goods and services. Other cities in South America that fell on the list of costliest cities for expatriates were Santiago, Chile, dropping twenty-five places to rank 88 and Bogota, falling thirty-eight places to rank 98. Managua, Nicaragua (207) is the least expensive city in South America.

As explained, the exchange rate has a major impact on a city ranking. This year Mercer left Caracas out of the ranking due to the multiple, complex exchange rate situation; its ranking would have varied greatly depending on the official exchange rate selected.

Canadian cities dropped in this year’s ranking with the country’s highest-ranked city, Vancouver, falling thirty-two places to rank 96. Toronto (101) dropped thirty-three spots, while Montreal (123) fell twenty-eight spots. Calgary’s ranking dropped to rank 125. “The Canadian dollar weakened significantly against the US dollar, which accounts for the major slips we saw in this year’s ranking,” explained Hannibal.

Europe, the Middle East, and Africa

Four European cities remain in the top 10 list of most expensive cities. Zurich (5) is the most costly European city on the list, followed by Geneva (6) and Bern (8). Switzerland remains one of the most expensive locations for expatriates following the slight strengthening of the Swiss franc against the US dollar. Moscow (9) and St. Petersburg (35) dropped seven and twelve spots, respectively, due to a dramatic depreciation of the ruble against the US dollar.

Overall, Western European cities have all risen in the rankings mainly due to the strengthening of local currencies against the US dollar. In particular, cities in the United Kingdom and Germany experienced some of this year’s biggest surges in the ranking, with Glasgow (108) rising forty-nine places from 2013, while Aberdeen (94) and Birmingham (90) jumped thirty-four and forty-five spots, respectively. Munich (55) rose twenty-six places from last year, Frankfurt (59) jumped twenty-four spots, and Berlin (68) soared thirty-one places from its previous ranking.  Dusseldorf and Hamburg also rose significantly.

Other cities that jumped in the ranking include Paris (27), up ten places from last year, Milan (30), up eleven spots, Rome (31), up thirteen and Vienna (32) up sixteen spots.

Constantin-Métral explained, “Despite moderate price increases in most of the European cities, European currencies for the most part slightly strengthened against the US dollar, which pushed most Western European cities up in the ranking. There have been some increases in accommodation costs, due to strong demand for rentals, which has also been behind upward movement in rankings for some European cities – most notably Copenhagen, Amsterdam, and Frankfurt.”

Most cities in Eastern and Central Europe, however, fell in the ranking as a result of local currencies depreciating against the US dollar. Prague (92), Almaty (111), and Minsk (191) fell nineteen, sixteen, and four spots, respectively, despite there being stable accommodations in these locations.

Tel Aviv (18) continues to be the most expensive city in the Middle East for expatriates, followed by Beirut (63), Dubai (67), and Abu Dhabi (68). Jeddah, Saudi Arabia, (175) continues to rank as the least expensive city in the region. “Several cities in the Middle East experienced a jump in the ranking, as they are being pushed up by other locations’ decline, as well as the strong increase for expatriate rental accommodation costs, particularly in Abu Dhabi and Dubai,” said Constantin-Métral.

Quite a few African cities continue to rank high in the 2014 survey, reflecting high living costs and prices of goods for expatriate employees. Luanda (1) remains the most expensive city for expatriates across Africa and globally, and Ndjamena follows in second place. Victoria, Seychelles (13) is the next costliest city in Africa followed by Libreville, Gabon (19). In South Africa, Cape Town (205) fell eight places in the ranking, reflecting the weakening the South African rand has suffered against the US dollar.

Asia Pacific

Four of the top 10 cities in this year’s ranking are in Asia. The most expensive city, Hong Kong (3), jumped three places from last year. Singapore (4) is the next most expensive city in the region, gaining one position from last year, followed by Tokyo, which ranked 7 dropping four places this year. Jumping four spots since last year, Shanghai (10) is the next Asian city on the list, followed by Beijing (11), Seoul (14), and Shenzhen (17).

“Japanese cities have dropped in the ranking this year as a result of the yen’s weakening against the US dollar,” said Constantin-Métral. “However, Chinese cities jumped in the ranking, including Shanghai, Beijing, and Shenzhen, due to the strengthening of the Chinese yuan.”

Australian cities have witnessed some of the most dramatic falls in the ranking this year as the local currency has depreciated against the US dollar. Sydney (26), Australia’s most expensive ranked city for expatriates, and Melbourne (33) dropped seventeen places while Perth (37) fell nineteen spots.

Mumbai (140) is India’s most expensive city, followed by New Delhi (157) and Chennai (185). Bangalore (196) and Kolkata (205) are the least expensive Indian cities ranked. Elsewhere in Asia, Bangkok (88) dropped twenty-two places from last year. Kuala Lumpur, Malaysia, ranks 115, followed by Indonesia’s Jakarta which ranked 119, falling forty-eight places from 2013. Hanoi jumped three spots to rank 131. Karachi, Pakistan (211) remains the region’s least expensive city for expatriates.

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