World Cost of Living 2010: Luanda in oil-rich Angola is the world’s most expensive city for expatriates, according to the latest Cost of Living Survey from Mercer. Tokyo is in second position, with Ndjamena in Chad in third place. Moscow is in fourth position followed by Geneva in fifth while Karachi is ranked as the world’s least expensive city. The survey found that Luanda is three times as costly as Karachi. Dublin, Ireland got a 42nd ranking and Belfast is at 182.

The survey covers 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. It is the world’s most comprehensive cost of living survey and is used to help multinational companies and governments determine compensation allowance for their expatriate employees. New York is used as the base city for the index 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 expats - plays an important part in determining where cities are ranked.

In some cities, it is only practical for an expat to live in an enclave because of crime problems and the availability of of modern services. In others, the choice of where to live is flexible. The cost of restaurant food in a city can be much lower for locals than what is assumed would be the preference for expats. For example in Kuala Lumpur, a meal per person can cost as low as $1.50 up to $25 (excluding drink) in a good Italian restaurant. Choice of location in a city often depends on proximity to an international school.

For the first time, the ranking of the world’s top 10 most expensive cities includes three African urban centres: Luanda (1) in Angola, Ndjamena (3) in Chad and Libreville (7) in Gabon. The top ten also includes three Asian cities; Tokyo (2), Osaka (6) and Hong Kong (jointly ranked 8). Moscow (4), Geneva (5) and Zurich (joint 8) are the most expensive European cities, followed by Copenhagen (10).

According to Nathalie Constantin-Métral, a Senior Researcher at Mercer with responsibility for compiling the ranking each year: “In the past couple of years, corporate assignments have become truly global, with expatriates and ‘global assignees’ being transferred across all parts of the world. However, global mobility is still an expensive undertaking for companies, so selection of the right candidates and a real understanding of the costs involved in relocating staff to other countries are essential - - especially in today’s economic environment.”

“Our cities are selected based on requests from our multinational clients,” she continued, “Notably African cities now figure prominently reflecting the growing economic importance of the region to global companies across all business sectors.”

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City rankings table

The most expensive city in the world for expatriates to live is Angola's capital Luanda, according to research from Mercer. Milan Taylor from Mercer has more on the cost of living index:

Europe and the Middle East

After Moscow, Geneva, Zurich and Copenhagen, the most expensive cities in Europe are Oslo (11) in Norway, Milan (15) in Italy, London and Paris (both 17) and Bern (22) in Switzerland. Other expensive European cities include Rome (26), Vienna (28), St Petersburg (30) Amsterdam (35), Baku (36) Dublin (42), Istanbul (44), Barcelona (49), Frankfurt (50), Madrid (52) and Lisbon (72). Riga ranks 81 followed by Budapest (94), Warsaw (96) and Tallinn (115). The least expensive city in Europe is Tirana (200) in Albania, followed by Macedonia’s Skopje (197), Sarajevo (196) in Bosnia Herzegovina, Minsk (192) in Belarus and Belfast (182) in the UK.

Tel Aviv (19) is the most expensive city in the Middle East, Abu Dhabi (50) and Dubai (55). Tripoli (186) in Libya is the least expensive Middle Eastern location followed by Jeddah (181) in Saudi Arabia and Muscat (I76) in Oman.

Nathalie Constantin-Métral commented: “Accommodation costs have continued to decrease in Abu Dhabi and Dubai, driving down the cost of living for expats. The rankings are also very susceptible to exchange rate fluctuations.

However, in places like Jeddah and Tripoli, the lack of suitable accommodation for expats combined with strong demand, has pushed costs up."

Africa

Reflecting the increasing economic importance of this region across all business sectors, Mercer’s rankings prepared for this press release now includes many African cities. Many rank highly in the 2010 survey, reflecting the high living costs for expatriate employees. After Luanda, Ndjamena and Libreville, the region’s most expensive cities are Victoria (13) in the Seychelles, Niamey (23) in Niger and Dakar (32) in Senegal. In South Africa, Johannesburg and Cape Town rank 151 and 171, respectively. At the bottom of the ranking, Addis Ababa (208) in Ethiopia is the cheapest African city followed by Windhoek (205) and Gaborone (203) in Namibia and Botswana, respectively.

“We’ve seen demand increase for information on African cities from across the business spectrum – mining, financial services, airlines, manufacturer, utilities and energy companies,” commented Constantin-Metral.

“Many people assume that cities in the developing world are cheap but this isn’t necessarily true for expatriates working there. To entice talented staff to these cities, multi-nationals need to provide the same standard of living and benefits that these employees and their families would experience at home. In some African cities, the cost of this can be extraordinarily high - particularly the cost of good, secure accommodation,” she added.

Americas

Cities in Brazil are amongst the most expensive locations in the Americas with Sao Paulo (21) ranked as the most expensive city in both North and South America, as a result of the strengthening of the Brazilian Real against the US Dollar. In South America, Brazil’s Rio de Janeiro (29) is the second most expensive city followed by Havana (45) in Cuba, Colombia’s Bogota (66) and Brazil’s capital, Brasilia (70). Buenos Aires ranks 161. Nicaragua’s Managua (212), Bolivia’s La Paz (211) and Asuncion (204) in Paraguay were the least expensive cities in South America.

In the United States, New York (27) is the most expensive city followed by Los Angeles (55). Washington ranks 111. The least expensive City in the United States is Winston Salem (197). Mexico City (166) is the most expensive city in Mexico, while the cheapest is Monterrey (193). Vancouver (75) is the most expensive Canadian city followed by Toronto (76) and Montreal (98). Ottawa (136) is Canada’s least expensive city.

“The weakening of the US Dollar against a number of other currencies, combined with a decrease in the cost of rental accommodation, has pulled US cities down the rankings,” commented Constantin-Metral. “However, since March 2010 the dollar has strengthened so the situation does fluctuate.”

Asia Pacific

Two Japanese cities, Tokyo and Osaka, are the region’s most expensive cities. Other highly ranked Asian cities are Hong Kong (8), Singapore (11), Seoul (14), Beijing (16), Nagoya (19) in Japan, Shanghai (25) and Taipei (78). A total of seven Chinese cities appeared on the 2010 rankings, highlighting the increased commercial importance to multi-nationals of locations other than just Beijing Shanghai and Hong Kong.

New Delhi (85) is India’s most expensive city followed by Mumbai (89) and Bangalore (190). Elsewhere, Jakarta in Indonesia ranks 94, followed by Vietnam’s Hanoi and Thailand’s Bangkok (both at 121) and Kuala Lumpur (138) in Malaysia. Pakistan’s Islamabad (212) and Karachi (214) are the region’s two least expensive cities.

Sydney (24) is Australia’s most expensive city followed by Melbourne (33) and Brisbane (55) while Adelaide (90) is the country’s least expensive city. Auckland (149) is the most expensive city in New Zealand while Wellington (163) is the cheapest. The Australian Dollar and the New Zealand Dollar have strongly strengthened against the US Dollar, which has moved the cities up in the ranking.

“At the end of 2009 and the beginning of 2010, residential property prices in many Asian countries rose as the economic environment began to stabilise and demand for good expat housing increased,” commented Constantin-Metral. “The strengthening of the Australian and New Zealand Dollar against the US Dollar also made Australian and New Zealand cities more costly for expatriates coming from the US.”

Top 50 cities: Mercer's cost of living ranking

Base City: New York, US = 100