Karachi (214) is ranked as the world’s least expensive city for expatriates, less than one-third as expensive as Tokyo. Recent world events, including economic and political upheavals, have affected the rankings for many regions through currency fluctuations, inflation, and volatility in accommodation prices.
In the UK, London (25) is the most expensive city for expatriates, down seven places from last year. At 133, Birmingham is up 17 places, having overtaken Aberdeen (144) and Glasgow (161). Belfast (165) is the UK’s least expensive city, up 13 places in the ranking since 2011.
The survey covers 214 cities across five continents and measures the comparative cost of over 200 items in each location, including transport, food, clothing, household goods and entertainment. The cost of housing is also included and, as it is often the biggest expense for expatriates, it plays an important part in determining where cities are ranked. Mercer's cost-of-living survey is the world’s most comprehensive and is designed to help multinational companies and governments determine compensation allowances for their expatriate employees. New York is used as the base city and all cities are compared against it. Currency movements are measured against the US dollar.
Nathalie Constantin-Métral, Principal at Mercer, is responsible for compiling the ranking each year. She commented: “Deploying expatriate employees is becoming an increasingly important aspect of multinational companies’ business strategy, including expansion. But with volatile markets and stunted economic growth in many parts of the world, a keen eye on cost efficiency is essential, including on expatriate remuneration packages. Making sure salaries adequately reflect the difference in cost of living to the employee’s home country is important in order to attract and retain the right talent where companies need them.”
“When compared to New York, our benchmark city, most European cities have witnessed a decline in cost of living. Some exceptions exist where accommodation prices have increased or additional VAT taxes have pushed the cost of living up. In North America, most cities have gone up in the ranking, as the US dollar has strengthened against a large proportion of the world’s other currencies. In Asia, more than six in ten cities moved up in the rankings, including all surveyed cities in Australia, China, Japan and New Zealand. Cities in Australia and New Zealand witnessed some of the biggest jumps, as their currencies strengthened significantly against the US dollar.”
With a few exceptions, the remaining European cities have all dropped in the rankings, mainly due to a considerable weakening of local currencies, including the euro, against the US dollar. Oslo (18) is down three places from 2011, whereas the next European city on the list, London (25) is down seven places. In 28th position, St. Petersburg is up one place. Paris (37) is down 10 places, whereas Milan (38), Rome (42), Stockholm (46), Vienna (48) and Amsterdam (57) are all down from seven to 13 places. Helsinki (65) and Prague (69) have both slid down the list, 23 and 22 places respectively. Brussels (71) dropped a more moderate nine places, followed by Dublin (72) – down 14 places. Ranking 207, Skopje, Macedonia, is the least expensive city for expatriates in Europe.
Ms Constantin-Métral explained: “Despite some marked price increases across the region in the first half of last year and widespread increases in VAT charges, most European cities dropped in the ranking. This is mainly due to the unstable economic situation across Europe, which has led to the depreciation of most local currencies against the US dollar. Countries badly hit by the Eurozone crisis, including Greece, Italy and Spain, have also experienced drops in rental accommodation prices.”
Tel Aviv (31) continues to be the most expensive city in the Middle East for expatriates, despite dropping seven places since 2011. Ranking 67 and up eight places from last year, Beirut has overtaken Abu Dhabi (76, down nine places from last year). Jeddah, Saudi Arabia (186), continues to rank as the least expensive city in the region. “On the whole, most Middle Eastern cities have dropped in the ranking, mainly because price increases on goods and services have been more moderate here than in our benchmark city, New York. Slight decreases in expatriate accommodation costs were also observed in Abu Dhabi and Dubai,” said Ms Constantin-Métral.
Despite dropping off the top spot on the global list, Luanda, Angola (2), remains the highest ranking city in Africa. Ndjamena, Chad (8), follows, dropping five places since 2011. Dropping eight places, Libreville, Gabon (20), is the next African city on the list, followed by Khartoum, Sudan (26), which is up 18 places. “It might be surprising to see 20 African cities in the top third of the ranking. The main driver behind this is the difficulty finding good, secure accommodation for expatriates. So the limited supply of acceptable accommodation is very expensive. The cost of imported international goods is also high, contributing to many regional cities moving up the ranking,” said Ms Constantin-Métral.
In South Africa, Johannesburg (154) and Cape Town (179) have fallen 23 and 21 places, respectively, reflecting the considerable weakening the South African rand has suffered against the US dollar in the last year. Tunis, Tunisia (209), remains the least expensive city for expatriates in the region, down two places from last year.
Ms Constantin-Métral commented: “Inflation pressures continued to push some South American cities up the ranking, whereas for some of the region’s cities, weakening of the local currencies caused them to rank lower.”
Ranking 33 (down from 32 in 2011), New York City remains the most costly city in the United States. Los Angeles (68) and San Francisco (90) are slowly catching up, however, having jumped a respective nine and 16 places since last year. Amongst other major US cities, Washington (107) is up one place, Miami (110) is up five places and Chicago, also at 110, is down two places. Portland, Oregon (178), and Winston-Salem, North Carolina (195), remain the least expensive surveyed cities for expatriates in the United States. Ms Constantin-Métral said: “Although price increases have remained moderate overall, most US cities have gone up in the ranking, mainly as a result of the strong US dollar.”
Toronto (61) remains the highest ranking city in Canada, closely followed by Vancouver (63). Montréal (87) has dropped eight places, whereas Calgary (92) has climbed four.
In India, New Delhi (113) and Mumbai (114) have dropped considerably – by 28 and 19 places respectively. Elsewhere in Asia, Jakarta (61) is up eight places, Bangkok (81) is up seven and Kuala Lumpur (102) is up two places. Hanoi’s position remained unchanged at 136, and Karachi (214) remains the region’s least expensive city for expatriates.
Australian cities continue to rank high on the list in the Asia Pacific region and, following the strengthening of the Australian dollar, have all experienced further jumps up the global list since last year. Sydney (11) and Melbourne (15) experienced relatively moderate jumps, up three and six places respectively, whereas Perth (19) and Canberra (23) both jumped 11 places. Brisbane (24) rose by seven places, and Adelaide (27) shot up 19 places. Australia now has three surveyed cities in the top 20 and all six surveyed cities in the top 30. In New Zealand, both Auckland (56) and Wellington (74) both jumped a very significant 62 places.
“The leap up the list by cities in New Zealand follows large increases in both accommodation cost and demand, coupled with a stronger New Zealand dollar,” explained Ms Constantin-Métral. “Demand for rental properties has also increased significantly in all the Australian cities we rank. Coupled with very limited availability, the result has been very tight markets and increased prices.”
Mercer produces individual cost of living and rental accommodation cost reports for each city surveyed. For details, or to purchase copies of the individual city reports, visit www.mercer.com/costofliving or call Client Services, Warsaw on +48 22 434 5383.
The information is used by governments and major companies to protect the purchasing power of their employees when transferred abroad; rental accommodation costs data is used to assess local expatriate housing allowances. The choice of cities surveyed is based on the demand for data.
Mercer provides advice and market data on international and expatriate compensation management, and works with multinational companies and governments worldwide. It maintains one of the most comprehensive databases on international assignment policies, compensation practices, and data on worldwide cost of living, housing, and hardship allowances. Its annual global mobility forums provide companies with the latest trends and research on mobility issues. Follow Mercer’s mobility activities on Twitter @MercerMobility.
Mercer is a global leader in human resource consulting and related services. The firm works with clients to solve their most complex human capital issues by designing and helping manage health, retirement and other benefits. Mercer’s 20,000 employees are based in more than 40 countries. Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy and human capital. With 53,000 employees worldwide and annual revenue exceeding $10 billion, Marsh & McLennan Companies is also the parent company of Marsh, a global leader in insurance broking and risk management; Guy Carpenter, a global leader in providing risk and reinsurance intermediary services; and Oliver Wyman, a global leader in management consulting. Follow Mercer on Twitter @MercerInsights
Mercer international basket including rental accommodation costs
Base City: New York, US
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