Central London is back among the top 50 most expensive locations for expatriates in the world while Caracas in Venezuela is now in top spot. These are among the findings of the latest Cost of Living survey by ECA International, the world’s leading provider of knowledge, information and technology for the management and assignment of employees around the world.
Central London has jumped 40 spots to 46th position in the global ranking reversing the recent trend of UK cities falling in our rankings. The last time it was higher in the ranking was in 2008.
The price of items in ECA’s shopping basket of goods and services commonly purchased by expatriates has risen 3.5 percent in the UK overall a little higher than last year but still below the global average of over 5 percent.
“Prices in our shopping basket in the UK have risen a little more quickly over the past twelve months compared to last year. However, the main reason for London and other cities here climbing our ranking is largely due to the pound strengthening against many major currencies,” said Steven Kilfedder, Cost of Living and Remuneration Services at ECA International. “Depending on the currency used to pay their employees relocated to the UK, a company may well need to increase the cost of living allowance they include as part of the expatriate pay package to ensure they continue to give these employees the same level of spending power as they would have at home.
“On the other hand, companies sending staff out of the UK will be able to grant smaller allowances without compromising the purchasing power of their mobile talent.”
Oslo is Europe’s most expensive city for expatriates but dropped to 2nd place in the global rankings over the year after being overtaken by the Venezuelan capital, Caracas. The region’s top ten is dominated by cities in Switzerland, Scandinavia and Finland. Moscow has fallen from 3rd to 10th in the region and globally is down to 22nd position from last year’s 5th place. The rouble fell sharply against sterling and other major currencies over the year.
A stronger euro has contributed to many Eurozone locations also climbing the ranking. Paris has risen 10 places to 28th place while Frankfurt is up 15 spots to 74th globally.
Globally, Caracas and Oslo are followed by, Luanda, Angola, ahead of a raft of European cities, including Zurich, Geneva, Stavanger, Bern and Basel and Copenhagen. The only other non-European location in the top 10 list was Juba in South Sudan, which sits in 9th place, down from 4th in the previous ranking.
ECA carries out two main Cost of Living Surveys per year to help companies calculate cost of living allowances so that their employees’ spending power is not compromised while on international assignment. The surveys compare a basket of like-for-like consumer goods and services commonly purchased by assignees in over 440 locations worldwide.
Living costs for assignees are affected by inflation, availability of goods and exchange rates, all of which can have a significant impact on assignee remuneration packages. Certain living costs, such as accommodation rental, utilities, car purchases and school fees are usually covered by separate allowances. Data for these costs are collected separately and are not included in ECA’s cost of living basket.
Venezuela’s capital, Caracas, is the most expensive place in the world for expatriates, having overtaken Oslo in Norway six months ago. At that time it was widely anticipated that a devaluation of the bolivar would take place and that cost of living in Caracas would subsequently fall. This has not yet happened and, while a parallel exchange rate exists, it does not seem to be widely available. Annual inflation in Venezuela is now over 80% and the cost of living in Caracas is currently 40% higher than second-placed Oslo.
Manhattan is the region’s second most costly location, and in 39th position globally – up three places on last year. Although Vancouver is in 6th position in the Americas, it has fallen significantly in the global ranking from 50th to 88th. This is due largely to the weakening of the Canadian dollar against major currencies over the past 12 months.
Within Latin America, Caracas is followed by Haiti’s Port au Prince (77th globally). Brazilian cities have fallen dramatically in the ranking. Rio de Janeiro has dropped 72 places over the year to 123rd worldwide while Sao Paulo has fallen from 64th to 130th in the global ranking. The sharp depreciation in the Brazilian real over the past 12 months has made Brazil considerably cheaper for many expatriates.
Tokyo (11th globally) maintains its position as the most expensive Asian location for expatriates but after losing the world top spot a year ago it has now also dropped out of the global top ten for the first time in at least a decade. Economic policy and fiscal changes, such as the increase in sales tax from 5-8 percent, have led to a significant increase in prices in Japanese cities. However, the yen’s continued depreciation against major currencies over the year has caused these locations to fall in the rankings.
Chinese cities have surged up the list in recent years. Just five years ago Shanghai and Beijing were barely in the top 50 now they rank 18th and 20th respectively. Prices have risen over the past 12 months in contrast to last year when prices of items in ECA’s shopping basket for Chinese locations increased little or even fell. In terms of currency, while the renminbi has fallen over the year against the euro and sterling it has strengthened against the US dollar.
Hong Kong (29th) has overtaken Singapore (31st globally) where prices of items in ECA’s basket of goods and services for expatriates have increased at a slower rate overall and the local currency has weakened further against major currencies compared to the Hong Kong dollar.
Although Indian locations have seen some of the region’s highest inflation, this has more or less been countered by the weak rupee. Indian cities remain comparatively cheap for expatriates. New Delhi ranks 208th in the global ranking, while Mumbai is in 225th place.
Sydney has been overtaken by Auckland in the global ranking. The New Zealand city has risen 8 places over the year to take 36th position while Sydney fell from last year’s 17th place to 38th. Although the price of goods in ECA’s shopping basket for New Zealand have increased slightly overall, this has been at a slower rate than increases observed in Australia. However, the weakening of the Australian dollar against major currencies is the main factor behind all the Australian cities surveyed falling in the global ranking again this year.
The strengthening of the shekel against major currencies over the past twelve months has contributed to both Tel Aviv and Jerusalem being in the global top 30: they rank 21st and 25th respectively and remain the most expensive locations in the Middle East for expatriates. Both Dubai (165th globally) and Abu Dhabi (177th) have risen again in the ranking this year. Prices of items in ECA’s basket of goods for the United Arab Emirates overall have increased at almost three times the rate they did a year ago.
Luanda, Angola, remains Africa’s most expensive city for expatriates and ranks 3rd globally. Within the region it is followed by Juba (9th), Brazzaville (12th) and Libreville (14th). The high costs involved in importing and transporting international goods into these countries contributes to making them expensive for expatriates. Maseru in Lesotho is the cheapest location in Africa and in the ranking. Locations in Ghana, Namibia and South Africa have continued to fall in the global ranking of most expensive locations. Their weak currencies continue to make them cheaper locations for many employees being relocated there.