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Tokyo No Longer World’s Most Expensive City for Expats
 

By Roy Maurer  6/13/2013
 
 

For the first time since 2010, Tokyo is not the most expensive location for international job assignments, having been surpassed by Oslo, Norway, according to a new survey by ECA International, a global human resource consulting firm. Tokyo actually slipped to sixth place in the 2013 international rankings.

“Prices in Oslo tend to be more expensive compared to other parts of the world because of the cost of production and labor,” said Lee Quane, regional director for Asia at ECA International, in a news release.

In the latest listing, Oslo is followed by the Angolan capital of Luanda, where goods and services commonly purchased by expatriates are difficult to acquire and command a premium price. Stavanger, Norway; Juba, South Sudan; and Moscow round out the top five priciest locations for expatriates.

“Tokyo has always been an expensive place for global companies to send staff, and, despite its five-place fall since last year, that remains the case,” said Lauren Smith, general manager of ECA International’s New York office. “The significant depreciation of the yen against other major currencies in recent months is the primary reason for this drop. It means that for many companies, the cost of maintaining their assignees’ purchasing power while posted there has fallen. But it’s important not to exaggerate the position. Tokyo is still the world’s sixth most expensive city and the most expensive in Asia.”

ECA conducts two cost-of-living surveys per year, comparing the prices of consumer goods and services commonly purchased by expatriate professionals in more than 400 locations worldwide.

Inflation, availability of goods, and currency exchange rates affect the living costs for expatriates, which, in turn, can have a significant impact on compensation packages, ECA officials said. Certain living costs, such as housing, utilities, vehicle purchases and school fees, are typically separate items in expatriate compensation packages, so statistics on them are not included in this survey but are researched and published separately.

Africa

Four of the world’s 20 most expensive expatriate locations are in Africa: Luanda (2nd globally); Juba (4th); Brazzaville, Republic of the Congo (18th); and Kinshasa, Democratic Republic of the Congo (19th). The cost of exporting and transporting items commonly purchased by expatriates in these locations is likely to be more expensive, placing these locations high on the list, the ECA report explains.

South African locations Durban (253rd) and Cape Town (251st) are among the cheapest locations in the world.

The Americas

Caracas, ranked 33rd globally, remains the costliest location in the Americas for expatriates. Manhattan (a borough of New York) and Vancouver, British Columbia, follow, ranking 43rd and 51st,  respectively. Manhattan, a borough of New York City, was the only location in the United States listed among the top 50 most expensive cities.

The weakening of Brazil’s currency, the real, has more than offset the 6 percent price increase overall of items in the ECA’s cost-of-living basket. While Rio de Janeiro is the fourth most costly location in the Americas, it dropped 20 places, to No. 52, in the most recent global rankings. Sao Paulo is now in 65th place, a drop from its ranking of No. 37 in 2012. And Brasilia has fallen 30 places, to No. 77.

The cost of living for expatriates in the Americas is cheapest in Managua, Nicaragua (248th).

Asia

Japanese cities still dominate the Asian cost-of-living rankings. Besides Tokyo, four (Nagoya, Yokohama, Kobe, Osaka) of the world’s top 21 most expensive locations are in Japan. Seoul, South Korea, jumped from the seventh to the third priciest Asian location (and from 29th to 14th globally). Prices of goods and services in Korea have increased, and the Korean won has strengthened against major currencies.

Beijing (24th), Shanghai (26th), Singapore (36th) and Hong Kong (38th) complete the list of the 10 most expensive Asian locations.

One surprise, according to Quane, is the Philippine capital of Manila, which rose 19 spots since the 2012 survey.

“What we have seen is that the Philippines has been one of the strongest economies in Asia in the last 12 months, as we’ve seen more foreign direct investment go there. Because of that, we’ve seen the currency strengthen, and that pushed the Philippines up in ranking.”

Indian locations continue to be cheap for international assignments. New Delhi ranked 200th globally and is followed by Mumbai, in 215th place.

Karachi, Pakistan, ranked 256th, is the least expensive Asian location for expatriates.

Australia

Australian cities have dropped in the global rankings for the first time in recent years. While the Australian dollar remains a strong global currency, it has weakened against other major currencies. Taking 17th place worldwide, Sydney remains the costliest of the Australian locations surveyed—followed by Canberra (23rd).

Europe

Norway has among the highest standards of living in the world, largely derived from oil revenue. Even though prices there have increased little in the last past year, the free-floating Norwegian krone has remained strong, reflecting the country’s relative economic resilience, according to the ECA report.

The Russian ruble has weakened since the last survey, but the cost of goods and services in Moscow has, nevertheless, increased more than 10 percent.

Despite falls in prices and the weakening of the Swiss franc over the past year, Swiss locations remain among the top 10 most expensive locations in the world.

London dropped 21 places, to No. 87, largely as a result of depreciation of the British pound. The eurozone debt crisis still affects much of Europe; thus, the cost of living in many locations across the region fell as a result of the weak euro and low inflation compared with other regions, the ECA survey reports. Chisinau, Moldova (225th), is the cheapest European location for international assignments.

Middle East

At No. 37, Tel Aviv, Israel, remains the most expensive place in the Middle East. Dubai jumped eight spots and is 174th worldwide. Because of a new floating exchange rate designed to offset runaway inflation, Tehran, Iran, plummeted in the cost-of-living rankings to become the cheapest location. By using the official exchange rate, Tehran would be among the world’s top 10 most expensive cities, illustrating the dramatic impact that currency value has on the global rankings, the ECA report concluded.

Roy Maurer is an online editor/manager for SHRM.

Follow him at @SHRMRoy

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