There is a new city at the top of Mercer’s Cost of Living Ranking; Hong Kong is now the most expensive city for an expat to live in (knocking the previous title holder Luanda – the Angolan capital, off the leader board). Many European and North American countries are counted among the priciest places to live; Switzerland has a high cost of living and VAT attached to everything, Denmark has exceedingly high tax rates, and Canada has one of the most overvalued real estate markets in the world.
It is surprising then, that in the Mercer ranking, only two European cities rank in the top 10 and the highest ranking North American city is New York, which places at 11. London has also dropped five places to 17th.
Interestingly the current top 10 most expensive countries for an expat to live in are primarily Asian and African cities:
- Hong Kong
- Luanda, Angola
- Zurich, Switzerland
- Tokyo, Japan
- Kinshasa, Democratic Republic of Congo
- Shanghai, China
- Geneva, Switzerland
- N’Djamena, Chad
- Beijing, China
Mercer has described the rankings as being affected by “volatile markets and stunted economic growth in many parts of the world”. Their survey ensures that businesses are made aware of how expensive cities can be for the employees they send abroad. The survey takes into account accommodation as well as basic goods and services, comparing the price of more than 200 items in each location.
As a result, with the most unaffordable housing in the world, it is no surprise then that Hong Kong has taken the top spot. The rent for a typical two-bedroom flat with no furniture in a good neighborhood is a mammoth $6809 (USD), compared with London $4583 and New York $5100. Hong Kong’s expense doesn’t stop at housing – a cup of coffee will set you back on average $7.80 (USD) whereas in London this is around $4 (USD) and in New York less than $2.50 (USD).
Many of these cities are financial and industrial centres around the world and cannot be avoided for many international businesses. For the most part, in cities such as Hong Kong or Geneva the average wage for expats is also higher than average to counteract living costs. However, an important consideration remains before any company sends their employees abroad: are the corporate financial gains of such a placement worth the increased expense?