African, European, Asian cities dominate top 10 most expensive locations for expatriates

Although more European cities dominate the world’s top costliest locations for expatriates, several cities in Asia are among the top 10 while Luanda holds the number one position, according to Mercer’s latest Cost of Living Survey.

The survey is designed to help multinational companies and governments determine compensation allowances for expatriate employees, with New York used as the base city and currency movements measured against the United States dollar. The survey covers 214 cities across five continents and measures the comparative cost of more than 200 items in each location, including housing, transportation, food, clothing, household goods and entertainment.

The difference in cost can be dramatic, found Mercer. For example, the cost of a cup of coffee in Managua, Nicaragua is $1.54 compared to $8.29 in Moscow; a fast food hamburger meal is $3.62 in Calcutta, India, versus $13.49 in Caracas, and a cinema ticket is $5.91 in Johannesburg compared to $20.10 in London.

For the cost of expatriate housing, Moscow follows Luanda as the second most expensive city. A luxury two-bedroom, unfurnished apartment rental for one month in Moscow is $4,600 per month or 14 times as much than Karachi. Rounding out the top five most expensive cities for expatriate living, which also have pricey rental accommodations, are Tokyo, the Chad city Ndjamena and 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. In addition,finding secure living accommodations that meet the standards of expatriates can be challenging and quite costly."

The other cities appearing in Mercer’s list of top 10 costliest cities for expatriates are Hong Kong, Geneva, Bern and Zurich.

The Americas

In the Americas, cities in South America are the most expensive locations for expatriates with São Paolo (19) ranked as the costliest city. San Jose, Costa Rica (126) and Mexico City (138) are the most expensive cities in Central America and Mexico. U.S. cities generally remained stable in the ranking or have slightly decreased due to the movement of the U.S. dollar against the majority of currencies worldwide.

New York is the most expensive city in the U.S.while Vancouver (64) is the highest ranking Canadian city, found Mercer.

“Overall, Canadian cities moved down in the ranking this year as a result of a slight decrease of the Canadian dollar against the U.S. dollar,” said Luc Lalonde, principal with responsibility for Mercer's information solutions business in Eastern Canada. “In addition, the prices of goods and services increased at a lower pace than in New York.” 

Four European cities are among the top 10 most expensive despite moderate price increases in most European countries. Switzerland remains one of the costliest locations for expatriates despite decreasing or stable accommodation costs and a robust Swiss franc.  

“The cost of living in cities across parts of Europe have generally 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 — Japan especially — due to local currencies’ weakening against the U.S. dollar,” said Nathalie Constantin-Métral, principal at Mercer with responsibility for compiling the survey ranking.

Some African cities rank high in Mercer’s 2013 survey, reflecting high living costs for expatriate employees.

Top 10 costliest cities for expatriates