- UK falls way down behind Nigeria
Tokyo, Japan’s pampered city has for the first time since 2012, emerged the global rankings most expensive city, freely beating UK cities in top 10 global rankings.
ECA International’s main cost of living surveys are carried out in March and September using a basket of day-to-day goods and services commonly purchased by assignees.
Central London drops 57 places & out of top 100, falling behind Nigeria. Hong Kong falls out of global top 10 rankings. Ranked locations in New Zealand average 64 place climb – becoming the highest risers of this survey.
But the city of Tokyo emerged as the world’s most expensive location for expatriates. This was one of the findings of the latest Cost of Living survey published by ECA International, the world’s leading provider of knowledge, information and software for the management and assignment of employees around the world. Tokyo rose by 11 places over the past year to top the global rankings for the first time since 2012.
“Over the past year, the Japanese yen has appreciated against most major currencies. The yen strengthened during our survey period resulting in Japanese locations dominating the top 10 of the regional and global rankings. However, their reign may be short lived as the yen has started to devalue again in recent weeks,” said Lee Quane, Regional Director – Asia, ECA International.
To ensure that an employee’s spending power is maintained when they are sent on international assignment, a cost of living allowance is often provided as part of the pay package. This allowance will be affected by differences in inflation levels as well as exchange rate movements between the employee’s home and host countries.
All four of the ranked locations in Japan rose in the regional and global rankings. Within Japan, Tokyo (1st globally) is just ahead of Yokohama (5th), Nagoya (7th) and Osaka (9th).
“For companies bringing talent into Japan the cost of an assignment will increase as higher allowances are required to maintain employees’ purchasing power. On the other hand, companies sending employees out of Japan can pay lower cost of living allowances and still provide sufficient remuneration to maintain their standard of living,” said Quane.
ECA International has been conducting research into cost of living for more than 40 years. It carries out two main 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 450 locations worldwide. 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.
Brexit sends UK cities tumbling down global rankings due to weaker pound
Central London has fallen out of the top 100 most expensive cities in the world. One year ago, London was among the top 50 most expensive cities.
“This is the first time Central London has not featured in the top 100 since ECA’s Cost of Living rankings began. The weakened pound means that UK businesses are paying more when sending staff to work overseas, although it is cheaper to bring staff to the UK”, said Steven Kilfedder, Production Manager, ECA International.
“London is now cheaper than Paris, Berlin and Brussels thanks to the weak pound”.
UK based locations have seen the largest declines in the European rankings this year and the third largest decline in the world, behind Nigeria and Mozambique. Edinburgh has fallen to 151st place globally, down from 67th last year. Cardiff is now ranked at 162nd place and Belfast has dropped 73 positions to 169th in 2016.
Zurich has fallen off the global top spot this year, moving into 3rd place in the rankings. Despite prices falling in the previous year, Swiss cities continue to top the European rankings with all ranked locations placed in the global top 10.
The relative strength of the euro between surveys has seen most Eurozone locations rise in the global rankings with French, Dutch and German ones among those rising most in the past year. However, over a 5-year period*, locations in the Eurozone have fallen dramatically by 51 places on average, with the most significant decline seen in Spanish and Greek locations. Madrid (154thglobally) and Barcelona (157th) have fallen 91 and 73 places respectively while Athens has fallen 86 places to 150th most expensive in the world.
The weakening of the Norwegian krone contributed to Oslo’s continued fall down the rankings – Oslo was the world’s second most expensive location for expatriates when surveyed in 2014; it has since fallen to 14th.
Moscow has risen nearly 50 places in the rankings this year, to 118th in the world, after the rouble strengthened. However, it has a long way to go to reach the heights of five years ago, when it was ranked 17th in the world.
Asia Pacific highlights:
Hong Kong falls out of global top 10 rankings
Hong Kong is now the 11th most expensive location in the world for expatriates, falling from 9th place last year. Over the past five years, Hong Kong has generally risen in the ECA global rankings from 60th in 2011, up 49 places to 11th in 2016. From a regional perspective, it is the 5thmost expensive in Asia Pacific with only Japanese locations ranking higher, down from 3rd place this time last year. The relative strength of the Japanese yen in the survey period pushed all Japanese cities above Hong Kong in the rankings.
Locations in New Zealand climb 64 places on average – the highest climbers in the last year
Surveyed locations in New Zealand now all rank in the world’s top 60 most expensive locations. Auckland is the costliest, in 44th position globally, followed by Wellington (47th) and Christchurch (54th).
“This is the first time since our Cost of Living rankings began that Auckland is more expensive than Sydney for expatriates, said Anna Michielsen, General Manager – Australia, ECA International. “On average, ranked locations in New Zealand now sit higher than their Australian counterparts. The New Zealand dollar has gone from strength to strength making New Zealand a relatively expensive place to live.”
Australian locations also rose in the rankings, by an average of 42 places compared to last year – a reflection of the stronger Australian dollar following an improved economic outlook domestically and from China over the survey period. Sydney remains the most expensive city in Australia at 53rd in the global rankings. This is a reversal of a recent trend which pushed the city down from 15th in 2011 to 81st last year.
Shanghai, which was ranked as the most expensive location for expatriates in the Asia Pacific region a year ago, has moved down six places to 7th. Within China, Shanghai (13thglobally) is just ahead of Beijing (15th), Guangzhou (25th) and Shenzhen (32nd). 13 out of the 14 ranked Chinese cities sit in the global top 50 most expensive locations for expatriates, with only Xiamen ranking just outside at 51st.
“We have seen a small depreciation of the renminbi against the yen and HK dollar over the past year and this has led to Shanghai and Beijing falling below Tokyo and Hong Kong in the rankings,” said Quane. “However, this does not truly follow the general trend seen in China over the past five years, during which locations in mainland China have averaged an 88 place increase in the global rankings. It is likely that major Chinese cities will remain expensive destinations for mobile employees for the foreseeable future.”
Singapore has remained relatively stationary in the Asia Pacific regional rankings, moving down to 9thposition from 8th last year; globally, it has climbed two places to 16th.
Rest of world highlights:
Luanda has risen from 5th position last year to 2ndplace this year, retaining its title as Africa’s most expensive location surveyed. Nigerian locations have seen the largest fall in our September 2016 survey, tumbling 137 places on average. Earlier this year, the Nigerian Central Bank abandoned the fixed rate for the naira against the U.S. dollar that it defiantly held for 16 months and allowed the currency to float more freely, leading to a significant currency depreciation.
Once again, Manhattan is the most expensive location in North America for expatriates. Manhattan has fallen to 24th place globally, down from last year’s 15th spot. This was one of many US locations to have fallen in the global rankings, with the 30 ranked locations here falling three places on average.
The Argentine capital, Buenos Aires, now ranks 77th globally – in sharp contrast to last year when it was 21st. The peso significantly weakened after the currency was allowed to float following the presidential elections in late 2015.
By contrast Brazilian cities in ECA’s rankings rose by an average of 60 places, one of the largest single-year rises in the survey. The real rebounded strongly, despite Brazil’s economic recession deepening, as a new government took power after the impeachment of Dilma Rousseff.
Israel remains the Middle East’s most expensive country for expatriates with Tel Aviv and Jerusalem occupying the top two spots in the region, at 19th and 22nd place respectively in the global rankings.