Around the World, City Living Is Costly

The “2013 Cost of Living Survey,” conducted by Mercer and designed to help multinational companies and governments determine compensation allowances for their expatriate employees, found Luanda, Angola, is the most expensive city, followed by Moscow, Russia.

Rounding out the top five most expensive cities for expatriate living are Tokyo, Japan; Ndjamena, Chad; and the city-state of Singapore.

“Recent world events, including economic and political upheavals, which resulted in currency fluctuations, cost inflation for goods and services, and volatility in accommodation prices have impacted these cities making them expensive,” said Barb Marder, senior partner and Mercer’s Global Mobility practice leader. “Despite being one of Africa’s major oil producers, Angola is a relatively poor country yet expensive for expatriates since imported goods can be costly.”

The survey covered 214 cities across five continents and measured the comparative cost of over 200 items including housing, transportation, food, clothing, household goods and entertainment. These costs varied greatly from city to city. For example:

• A cup of coffee in Managua, Nicaragua, cost $1.54, compared with $8.29 in Moscow, Russia;
• A fast food hamburger meal cost $3.62 in Kolkata (Calcutta), India, versus $13.49 in Caracas, Venezuela; and
• A movie ticket cost $5.91 in Johannesburg, South Africa, compared with $20.10 in London, UK.

The cost of expatriate housing was found to be the biggest expense for employers. Moscow and Luanda topped the list because of high costs for rental accommodation, as well as imported goods and services purchased by expatriates. A luxury two bedroom unfurnished apartment rental for one month in Moscow is $4,600 a month or 14 times as much than Karachi, Pakistan.

The Swiss cities of Geneva, Zurich and Bern made Mercer's top 10 list for most expensive cities for expatriates (at numbers seven, eight and nine, respectively). The city-state of Hong Kong ranked at number six and the Australian city of Sydney, New South Wales at number 10.

"Overall, the cost of living in cities across parts of Europe have gone up in the ranking as a result of the slight strengthening of local currencies against the U.S. dollar, whereas in Asia about half of the cities went down in the ranking, especially Japan, due to local currencies' weakening against the U.S. dollar," said Nathalie Constantin-Métral, a principal at Mercer who compiled the survey ranking.

According to the survey findings, Switzerland remains one of the costliest locations for expatriates despite decreasing or stable accommodation costs and a robust Swiss franc.

In the Americas, cities in South America are the most expensive locations for expatriates. Some locations, such as Brazilian cities, dropped in the ranking due to local currencies weakening against the U.S. dollar, while others jumped as a result of high inflation on goods and services and rentals. New York, New York, the base city for the ranking, is the most expensive city in the United States.

"Overall, U.S. cities either remained stable in the ranking or have slightly decreased due to the movement of the U.S. dollar against the majority of currencies worldwide," explained Constantin-Métral. "Yet several cities, including New York, moved up in the ranking due to a rise in the rental accommodation market."

The survey also found that Canadian cities generally moved down in the ranking this year as a result of a slight decrease of the Canadian dollar against the U.S. dollar, and because the prices of goods and services increased at a lower pace than in New York.

More information about the survey, including a seven-minute video, can be found here.