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Two African cities—Luanda, Angola, and N’Djamena, Chad—top the list of most expensive cities for expatriates, according to Mercer’s
2014 Cost of Living Survey.
Experiencing a reconstruction boom after 27 years of civil war that ended in 2002, Angola remains one of the world’s poorest countries and imports 75 percent of the goods it consumes. One of Africa’s major oil suppliers, the country has attracted many foreign workers, driving prices higher.
“While Luanda and N’Djamena are relatively inexpensive cities, they are quite costly for expatriates since imported goods come at a premium,” said Ed Hannibal, partner and global leader for Mercer’s mobility practice, in a news release. Hannibal noted that some African cities rank high on the survey due to the challenges in finding secure living accommodations that meet expatriate workers’ standards.
Mercer’s survey is designed to help multinational companies and governments determine compensation allowances for their expatriate employees. New York City is used as the base city, and all cities are compared against it. Currency movements are measured against the U.S. dollar.
The survey covers 211 cities across five continents and measures the comparative cost of over 200 items in each location, including housing, transportation, food, clothing, household goods and entertainment.
Multinationals must be able to monitor and balance the cost of their expatriate programs, said Hannibal. “Employers need to evaluate the impact of currency fluctuations, inflation and political instability when sending employees on overseas assignments, while ensuring they retain talented employees by offering competitive compensation packages.”
Other African cities that ranked high in the 2014 survey include Victoria, Seychelles (13) and Libreville, Gabon (19). Nairobi, Kenya rose by 30 spots to be ranked 117 in this year’s survey. Conversely, Cape Town, South Africa fell eight places to 205 in the ranking, reflecting the weakening South African rand compared against the U.S. dollar.
Asia, Europe Fill Out the Top 10
Hong Kong, Singapore and Zurich ranked third, fourth and fifth on the survey, respectively. Geneva, Tokyo, Bern, Moscow and Shanghai filled in the fifth through 10th places.
Western European cities overall rose in the rankings mainly due to the strengthening of local currencies against the dollar, according to Mercer.
Cities in the United Kingdom and Germany experienced some of this year’s biggest surges in the rankings, with Glasgow (108) rising 49 places from 2013, and Aberdeen (94) and Birmingham (90) jumping 34 and 45 places, respectively. Munich (55) rose 26 places from last year, Frankfurt (59) jumped 24 spots, and Berlin (68) ascended 31 places from its previous ranking.
Mercer reported that most cities in Eastern and Central Europe fell in the ranking despite stable accommodations in these locations.
Although Asian cities take up nearly half of the top 10, the survey found that Japanese cities have dropped as a result of the yen’s weakening against the U.S. dollar. Bangkok (88) dropped 22 places from 2013, and Jakarta, Indonesia (119) fell 48 places. Karachi, Pakistan (211) remains the region’s least expensive city for expatriates.
On the other hand, Chinese cities such as Shanghai, Beijing and Shenzhen jumped up in the ranking, due to the strengthening of the Chinese yuan.
A rise in the rental accommodation market pushed New York up eight places to 16, the highest-ranked city in the U.S.
Canadian cities dropped in this year’s survey with the country’s highest-ranked city, Vancouver (96), falling 32 places, Toronto (101) dropping 33 spots, and Montreal (123) falling 28 spots.
São Paolo (49) ranked as the costliest city in South America, followed by Rio de Janeiro (65), yet both cities dropped 30 and 36 positions, respectively, as a result of the Brazilian real weakening against the dollar. Buenos Aires, Argentina (86) also dropped significantly this year following the devaluation of its currency. Managua, Nicaragua (207) is the least expensive city for expats in South America. Mercer left Caracas, Venezuela out of the rankings this year due to the country’s complex exchange rate situation.
The most expensive city in the Middle East for expatriates continues to be Tel Aviv, Israel (18), followed by Beirut (63), and Dubai (67) and Abu Dhabi (68) of the United Arab Emirates. Jeddah, Saudi Arabia (175) was ranked as the least expensive city in the region.
“Several cities in the Middle East experienced a jump in the ranking, as they are being pushed up by other locations’ decline, as well as the strong increase for expatriate rental accommodation costs, particularly in Abu Dhabi and Dubai,” said Nathalie Constantin-Métral, principal at Mercer, in a news release.
Mumbai (140) is India’s most expensive city, followed by New Delhi (157) and Chennai (185). Bangalore (196) and Kolkata (205) are the least expensive Indian cities ranked.
Australian cities overall experienced some of the most dramatic falls: Sydney (26), Australia’s most expensive city for expatriates, and Melbourne (33) both dropped 17 places, while Perth (37) fell 19 spots.
Roy Maurer is an online editor/manager for SHRM.
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