Mercer’s 2019 Cost of Living Survey finds that eight out of the top ten of the world’s most expensive cities for expatriates are Asian cities, resulting from high costs for expatriate consumer goods and a dynamic housing market. Tokyo (2), Singapore (3) and Seoul (4) top the list, while the costliest city in the world for the second consecutive year is Hong Kong (1). Other cities appearing in the top ten are Zurich (5), Shanghai (6), Ashgabat (7), Beijing (8), New York City (9), and Shenzhen (10). The world’s least expensive cities for expatriates are Tunis (209), Tashkent (208), and Karachi (207).
UK cities have fallen in the ranking this year, with London dropping 4 places (from 19 to 23), Birmingham (135) falling 7 places, Aberdeen (137) falling 3 places, and Belfast (158) falling 6 places in this year’s ranking. The exception to this was Glasgow, where increases in the cost of living saw it climb three places in the ranking (from 148 to 145).
“UK cities’ fall in this year’s ranking is mainly due to a strengthening of the US dollar against the pound,” said Kate Fitzpatrick, Global Mobility Practice Leader, UK & Ireland. “Price inflation remains low, keeping any increases in the cost of living to a minimum for expatriates and locals alike. When considered alongside consistently high positions in our affiliated Quality of Living ranking, these findings indicate that the UK remains an attractive destination for organisations looking to relocate personnel to international business and financial centres, in spite of well-publicised macro headwinds, including Brexit.”
In a rapidly changing world, mobility programmes have become a core component of multinational organisations’ global talent strategy. Organisations realise that to thrive they must embrace change, adapt to new technologies, and build emerging skills to attract, motivate, and enhance talent. According to Mercer's 2019 Global Talent Trends report, 65% of employers across all industries and countries are using mobility programmes to enhance their workforce strategies. As a result, multinational organisations are carefully assessing the cost of expatriate packages for their international assignees. Mercer’s 25th annual Cost of Living Survey finds that a number of factors, including currency fluctuations, cost of inflation for goods and services, and volatility in accommodation prices, contribute to the overall cost of expatriate packages for employees on international assignments.
“In a skill-focused economy driven by digital disruption and the need for a globally connected workforce, deploying expatriate employees is an increasingly important aspect of a competitive business strategy for global companies,” said Ilya Bonic, President of Mercer’s Career business. “There are numerous personal and organisational advantages for sending employees overseas, including career development, global experience, new skillsets, and re-allocation of resources. By offering fair and competitive compensation packages, organisations can facilitate moves that drive business results.”
Mercer's widely recognised survey is one of the world’s most comprehensive, and is designed to help multinational companies and governments determine compensation allowances for their expatriate employees. New York City is used as the base city for all comparisons, and currency movements are measured against the US dollar. The survey includes over 500 cities throughout the world; this year’s ranking includes 209 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.
Only one European city is among the top ten list of most expensive cities, which is Zurich at number five, followed by Bern (12). Geneva (13) is down two places. Eastern and Central European cities, including Moscow (27), St. Petersburg (75), Prague (97), and Warsaw (173), dropped ten, twenty-six, fourteen, and nineteen spots, respectively.
Cities in Western Europe, including Milan (45), Paris (47), Oslo (61), and Madrid (82), fell in the ranking as well, by twelve, thirteen, fourteen, and eighteen spots, respectively. The German city Stuttgart (126) dropped significantly as did Berlin (81) and Dusseldorf (92). Cities in the United Kingdom saw modest drops, including Birmingham (135), which fell seven places, Belfast (158) six spots, and London (23) four spots.
“Despite moderate price increases in most of the European cities, European currencies have weakened against the US dollar, which pushed most cities down in the ranking,” explained Ms Fitzpatrick. “Additionally, other factors like recent security issues and concern about the economic outlook, have impacted the region.”
Tel Aviv (15) continues to be the most expensive city in the Middle East for expatriates, followed by Dubai (21), Abu Dhabi (33), and Riyadh (35). Cairo (166) remains the least expensive city in the region. “Many currencies in the Middle East are pegged to the US dollar, which pushed cities up in the ranking, as well as steep increases for expatriate rental accommodations,” said Ms. Traber.
Despite dropping from the top ten most expensive cities for expatriates, N’Djamena (11) remains the highest-ranking city in Africa. Following are Victoria (14) rising seven places, and Kinshasa (22) rising fifteen spots. Libreville (24) dropped six places. Dropping one spot, Tunis (209) in Tunisia ranks as the least expensive city in the region and globally.
Cities in the United States climbed in the ranking due to the strength of the US dollar against other major currencies as well as the significant drop of cities in other regions. New York jumped four places to rank 9, the highest-ranked city in the region. San Francisco (16) and Los Angeles (18) climbed twelve and seventeen places, respectively, while Chicago (37) jumped fourteen places. Among other major US cities, Washington, DC (42) is up fourteen places, Miami (44) is up sixteen places and Boston (49) is up twenty-one spots. Portland (107) and Winston Salem, North Carolina (138) remain the least expensive US cities surveyed for expatriates.
In South America, Montevideo, Uruguay (70) ranked as the costliest city followed by San Juan (72), which jumped twenty-three spots. Other cities in South America that climbed on the list of costliest cities for expatriates include Panama City (93), San Jose (131), and Havana (133) rising twenty-one, ten, and twenty-two spots, respectively. Cities that fell in the ranking despite price increases on goods and services and accommodation costs include Brazil and Argentina. In particular, São Paolo (86) dropped twenty-eight spots. Rio de Janeiro (121) dropped twenty-two places, while Buenos Aires (133) fell fifty-seven places. Managua (200) is the least expensive city in South America.
Although most Canadian cities remained stable in the ranking, the country’s highest-ranked city, Vancouver (112), dropped three places. Toronto (115) dropped six spots, while Montreal (139) climbed eight spots. Calgary (153) and Ottawa (161) remained stable.
Eight of the top ten cities in this year’s ranking are in Asia due in part to a strong housing market. Hong Kong (1) remains the most expensive city for expatriates both in Asia and globally as a result of the housing market and currency being pegged to the US dollar, driving up the cost of living locally. This global financial centre is followed by Tokyo (2), Singapore (3), Seoul (4), Shanghai (6), and Ashgabat, Turkmenistan (7).
Mumbai (67) is India’s most expensive city, followed by New Delhi (118) and Chennai (154). Bengaluru (179) and Kolkata (189) are the least expensive Indian cities ranked. Elsewhere in Asia, Bangkok (40) jumped twelve places from last year. Hanoi (112) and Jakarta (105) also rose in the ranking, up twenty-five and twelve spots, respectively. Bishkek (206) and Tashkent (208) remain the region’s least expensive cities for expatriates.
Australian cities have continued to fall in the ranking due to the depreciation of the local currency against the US dollar. Sydney (50), Australia’s most expensive ranked city for expatriates, dropped twenty-one places. Melbourne (79) and Perth (87) dropped twenty-one and twenty-six spots, respectively.
Mercer produces individual cost of living and rental accommodation cost reports for each city surveyed. For more information on city rankings, visit https://mobilityexchange.mercer.com/Insights/cost-of-living-rankings.
To purchase copies of individual city reports, visit https://mobilityexchange.mercer.com/multinational-approach-cost-of-living-data
or call Mercer Client Services at +48 22 434 5383.
Notes for editors
The figures for Mercer’s cost of living and rental accommodation cost comparisons are derived from a survey conducted in March 2019. Exchange rates from that time and Mercer’s international basket of goods and services from its Cost of Living Survey have been used as base measurements.
Governments and major companies use data from this survey 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 demand for data.
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Mercer also 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 conferences and other events provide companies with the latest trends and research on mobility issues. Visit https://mobilityexchange.mercer.com/ for details. Follow Mercer’s mobility news on Twitter @Mercer.